When a plaintiff alleging trade secret misappropriation obtains a judgment for substantial damages, the award may serve solely to compensate for past wrongs, or it may redress both past and future injuries.
The plaintiff filing a post-trial motion for the entry of a permanent injunction presumably is claiming that the defendant’s continued use of the misappropriated trade secrets will cause damages that were not included in the judgment. Under what circumstances should this post-trial motion be granted?
There are prerequisites that apply to every motion for an injunction. These include a showing of irreparable harm in the absence of an injunction, inadequate remedy at law, balance of the hardships favoring the moving party, and little or no injury to the public interest. Further, the injunction must be tailored to the specific case and no broader than necessary to provide complete relief. Some jurisdictions require proof by clear and convincing evidence that each of the foregoing requirements is satisfied.
Having just been tagged with an award of money damages, the party opposing the motion for a permanent injunction is likely to argue that any alleged future grievance — just like past harm — can be remedied by suing at law. An additional argument could be that the damages award constituted adequate relief for both past and future injuries. For example, if the trade secret involved in the case is a compilation of customer and market data that becomes stale over time, and if a period of years has elapsed between the misappropriation and the judgment, there may be no future injury for which compensation will be owed. On the other hand, highly technical and sensitive data may have a longer useful life that continues for an extended period.
A requested injunction, following a substantial damages award, that prevents a former employee — even one who misappropriated trade secrets — from pursuing the occupation for which she or he is trained may be scrutinized more closely than an injunction ordering that confidential information be returned or not used. Similarly, a request for an injunction that would prevent the defendant from doing business with a customer whose relationship with the defendant pre-dates the misappropriation may be suspect.
In a few recent decisions, courts have indicated more reluctance to enter an injunction with respect to a trade secret developed not by the party seeking the injunction but by an entity that merged with or was acquired by the movant. Some courts presented with a motion for entry of a permanent injunction after a large damages judgment in a misappropriated trade secrets case also have expressed skepticism about the need for the requested injunctive relief if there was no earlier attempt to obtain a preliminary injunction.
In short, there can be obstacles to obtaining both a lot of money and a permanent injunction as a result of a trade secret misappropriation. However, in an appropriate case, those obstacles may be overcome.