On December 14, 2000, the district court for the Eastern District
of North Carolina issued a preliminary injunction against certain con-
duct of defendants Trade Associates Group, Limited and Terry's Vil-
lage. By that order, the defendants were directed to cease and desist
from violating the copyright owned by Candle Factory, Incorporated
and Cheryl Hannant for seashell-shaped candles. Trade Associates
Group ("TAG") appeals to this Court from the entry of the injunction
order, maintaining that it should be vacated. As explained below, the
district court committed no reversible error, and we affirm.

I.

In January 1993, plaintiff Cheryl Hannant ("Ms. Hannant"), doing
business as Candle Factory, obtained a copyright for seashell-shaped
candles -- Copyright Registration VAU 245-286-- from the Copy-
right Office of the United States. Ms. Hannant then incorporated
plaintiff Candle Factory, Inc. in the State of North Carolina, and she
assigned Candle Factory all her rights in the copyright relating to the
seashell-shaped candles. Candle Factory manufactures and markets its
seashell-shaped candles in North Carolina.

TAG is a corporate entity headquartered in the State of Illinois. It
conducts its business, as a retailer of candles and other household-
related products, on a nationwide basis, including in North Carolina.
In the fall of 1999, TAG added seashell and starfish-shaped candles
to its product line. TAG's candles are made for it by a company
known as Will & Baumer at a manufacturing facility in Mexico. Can-
dle Factory and Ms. Hannant (collectively "Candle Factory") allege
in this injunction proceeding that TAG's manufacturing and market-
ing of seashell-shaped candles infringes upon their copyright. TAG
denies these allegations, contending that its candles are non-
infringing, and that they were independently created from molds of
actual seashells and starfish.

On November 15, 1999, Candle Factory forwarded TAG a letter
advising that "Candle Factory has a copyright on the sea-shell candles
that you are showing in your 2000 Catalogue." J.A. 46. This letter fur-
ther asserted that, unless a settlement could be reached between Can-
dle Factory and TAG within ten days, TAG would be made a
defendant in a copyright-infringement lawsuit being pursued by Can-
dle Factory in the Eastern District of North Carolina against an unre-
lated business called Two's Company, Inc. On January 28, 2000,
Candle Factory sent TAG another letter, with which it enclosed a
copy of its copyright. That letter asserted that, if TAG would cease
the marketing and selling of its allegedly-infringing seashell-shaped
candles, Candle Factory would abandon its potential claims for dam-
ages against TAG.

In response to the contentions and assertions made in these letters,
TAG promptly filed a declaratory judgment action against Candle
Factory in the Northern District of Illinois ("Illinois Proceeding"). On
March 30, 2000, Candle Factory moved to dismiss the Illinois Pro-
ceeding for lack of jurisdiction and improper venue, asserting that it
conducted no business in Illinois. At the same time, Candle Factory
filed its complaint in the Eastern District of North Carolina for declar-
atory and injunctive relief against TAG and Terry's Village. Candle
Factory alleged therein, inter alia, that the defendants were infringing
on its copyright for seashell-shaped candles ("North Carolina Pro-
ceeding").

Thereafter, on June 26, 2000, TAG filed a motion in the North Car-
olina Proceeding seeking to dismiss, stay, or transfer that lawsuit to
the Northern District of Illinois. In response, Candle Factory agreed
to a stay in the North Carolina Proceeding while the Illinois court
considered Candle Factory's motion to dismiss. Accordingly, the
North Carolina district court, on August 10, 2000, entered a sixty-day
stay of proceedings. On September 13, 2000, before the stay had
expired, the Illinois Proceeding was dismissed.

In October 2000, TAG filed its answer in the North Carolina Pro-
ceeding, and Candle Factory promptly moved, pursuant to Rule 65 of
the Federal Rules of Civil Procedure, for entry of a temporary
restraining order ("TRO") against TAG and Terry's Village. The dis-
trict court, on November 20, 2000, conducted a hearing on Candle
Factory's TRO request, and it decided to convert the motion into a
request for a preliminary injunction. Thereafter, on December 14,
2000, the district court issued its preliminary injunction order, Candle
Factory, Inc. v. Trade Assocs. Group, Ltd., No. 2:00-CV-15-BO(2)
(E.D.N.C. Dec. 14, 2000) ("Preliminary Injunction "). In its order,
from which this interlocutory appeal is taken, the court found that
"the balance of hardship in this case favors the Plaintiffs," and con-
cluded that the "Plaintiffs have demonstrated a likelihood of irrepara-
ble harm that outweighs any harm to Defendants." Id. at 3. The
Preliminary Injunction directed TAG and Terry's Village to "cease
and desist from violating [Candle Factory's] copyright on the seashell
candles." Id.

TAG promptly sought appellate review of the Preliminary Injunc-
tion in this Court and, on December 18, 2000, it filed its notice of appeal.1
It also promptly moved in the district court for a stay of the Prelimi-
nary Injunction pending appeal, which was denied on March 30,
2001. We possess jurisdiction over this interlocutory appeal pursuant
to 28 U.S.C. S 1292(a) (courts of appeals possess jurisdiction over
appeals from "[i]nterlocutory orders of the district courts of the
United States . . . granting . . . injunctions").

* * *

Click the case caption above for the full text of the Court's opinion.

Because the district court did not abuse its discretion in awarding
Candle Factory the Preliminary Injunction against TAG, we affirm.

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Reported by Kent Morlan