IP Law Daily, COPYRIGHT—4th Cir.: Copyright and trademark claims were properly barred in home design case, (Dec 9, 2025)

By Matthew Hersh, J.D.

The copyright infringement claims were barred by res judicata and the Lanham Act claims were barred by laches.

A home designer could not bring a copyright infringement lawsuit against a competing design firm or the homeowner and general contractor who hired that firm because issues arising out of the same claim had already been resolved by arbitration involving many of the same parties, the U.S. Court of Appeals for the Fourth Circuit has held. The court, in affirming a pair of decisions by the federal district court for South Carolina, also found that the designer was barred by the doctrine of laches from bringing claims under the Lanham Act ( Design Gaps, Inc. v. Distinctive Design & Construction LLC , No. 24-1860 (4th Cir. Dec. 8, 2025)).

The opinion arises out of a lengthy dispute between a pair of homeowners, a general contractor, and two companies that design and install cabinets and closets. The homeowners, Jason and Kacie Highsmith, hired general contractor Shelton Custom Built Living in 2020 to renovate their Charleston home. Shelton turned to Design Gaps, a design firm that specializes in custom cabinetry, to handle the cabinets and closets. But when the homeowners grew dissatisfied with Design Gaps’ work, they gave that company’s drawings to another design firm, Distinctive Design, that was hired to finish the job.

The switch in design firms led to extensive litigation between the parties. The first step was arbitration. The homeowners and the general contractor brought a claim for arbitration against Design Gaps, claiming breach of contract and fraud. Design Gaps, in turn, counterclaimed for copyright infringement as well as a series of common law claims of its own. In 2022, the arbitrator ruled for the homeowners and the general contractor—awarding them roughly $150,000 in damage—and rejected Design Gaps’ counterclaims. With respect to the copyright claim, the arbitrator noted that Design Gaps never even introduced evidence that it had registered a copyright in its designs. But even if it had, the arbitrator concluded, the second design firm didn’t wind up exploiting those designs anyway, so any sharing of the designs was protected as fair use.

The failure in arbitration led Design Gaps to file two federal lawsuits. In late 2022, after the award came down, Design Gaps filed a petition to vacate the award. The district court rejected the petition in 2023 and confirmed the award. In so doing, the district court found that the arbitrator’s decision on fair use was not unreasonable—especially given that the nature of the fair use balancing test “precludes bright-line rules.” As the court concluded, “the arbitrator weighed the evidence, balanced the statutory factors, and concluded that the Highsmiths’ use constituted fair use under the Copyright Act.”

Not satisfied merely to challenge the arbitral award, however, Design Gaps also brought a host of federal and common law claims in a separate action against the homeowners, the general contractor, and the design firm that completed the job. The complaint, as amended, asserted claims of copyright infringement, false advertising and false designation of origin under the Lanham Act, and several other state law claims. The court disposed of this complaint in two steps. First , it found that the copyright infringement claim and many of the state law claims were barred by the doctrine of res judicata because they had already been addressed in the arbitral proceedings. As to the remaining claims, the court granted summary judgment in favor of the defendants, finding that the contract claims were barred by the doctrines of waiver and statute of limitations while the Lanham Act claims were barred by the doctrine of laches.

The design firm appealed, leading to this opinion.

Res judicata/copyright infringement claims. The court of appeals affirmed the district court’s decision to dismiss many of the claims, including the copyright infringement claim, based on the doctrine of res judicata. To the extent that the claims had already been arbitrated between the same parties (or parties in privity with one another), the court found, the claims were barred under the doctrine of claim preclusion. As to the claims against the other design firm, Distinctive Design, which had not been a party to the arbitration, the court found that those claims were barred by the doctrine of issue preclusion because the arbitrator made factual findings that rendered the claims without merit.

That was particularly true, the court found, for the copyright claims. For example, the court noted, in the arbitration Design Gaps claimed that the general contractor, Shelter, committed infringement when it shared the design plans with Distinctive Design. But in order to resolve that claim, the arbitrator had to determine whether Distinctive Design used the drawings after it stepped in to finish the cabinet job—and the arbitrator found that it did not. “That finding was not just fatal to Design Gaps’ claims against Shelter; it was fatal to its claim in this lawsuit that Distinctive Design infringed on Design Gaps’ copyright,” the court reasoned. “That’s because, if Distinctive Design did not use Design Gaps’ drawings in its work completing the cabinet job for the [] home, it would not face copyright liability.” The same logic held true for the remaining claims against Distinctive Design.

Laches/Lanham Act claims. The court of appeals also affirmed the district court’s judgment on the issue of laches. Design Gaps’ Lanham Act claims, which involved the design for a different property than the one otherwise at issue in the case, revolved around the general contractor’s alleged use of its work in promotional materials without attribution. But these claims were brought after the expiration of South Carolina’s three-year statutes of limitations for analogous claims of fraud and unfair trade practices, the court noted—thus triggering a presumption that the Lanham Act claims were equally untimely. Nor did Design Gaps have any basis to overcome the presumption, the court found. Design Gaps was on notice of its claim against the general contractor at the time of the arbitration, the court found, because it had already sent a cease and demand letter over its alleged conduct. Nor was there any evidence that Design Gaps had relied to its detriment on any good faith assertion of its rights by the contractor or any good faith settlement talks between the parties. The district court had it right on the laches issue, the court concluded.

The Case is No. 24-1860.

Judge: Quattlebaum, A.

Attorneys: Todd Maurice Hess (Hess Law, PLLC) for Design Gaps, Inc. Andrea L. McDonald (Womble Bond Dickinson (US) LLP) for Distinctive Design & Construction LLC, d/b/a Distinctive Design LLC.

Companies: Design Gaps, Inc.; Distinctive Design & Construction LLC, d/b/a Distinctive Design LLC

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