The Ninth Circuit’s decision in Perrin Bernard Supowitz, LLC v. Morales continues to highlight the high bar necessary for a motion for preliminary injunction, the evidence required to establish irreparable harm, and the limited “abuse of discretion” standard that may be applied during any appeal.  Case No. 23-55189, 2023 WL 1415572 (9th Cir. Feb. 5, 2024).

In Perrin, the Ninth Circuit found no abuse of discretion in the Central District of California’s decision to deny a preliminary injunction that Individual FoodService (“IFS”), a supplier of food service products, sought against two former employees who formed a competing business while still employed at IFS, for misappropriation of a trade secret – IFS’s customer list. 

Although the Court noted that “there was no dispute that IFS’s customer order history qualified as a trade secret,” the Court found that any trade secrets the former employees may have misappropriated from IFS were “old and stale,” and therefore IFS was at no risk of suffering irreparable harm by being “wronged again” by their continued use.  The Court explained that this finding of staleness sufficed to deny the preliminary injunction because such a remedy should only last as long as it is necessary to preserve the rights of the parties and eliminate the commercial advantage gained through misappropriation. 

The Court further reasoned that barring the two former employees from doing business with any customer they serviced while still employed at IFS was a punitive measure, “whereas the purpose of a preliminary injunction is to preserve the status quo.”  The Court explained that by refusing to enjoin activity that potentially extended beyond the two former employees’ trade secret misappropriations, the lower court properly balanced the competing public interests of protecting trade secrets and allowing open competition and employee mobility. 

This case highlights the need to critically assess the bases for a request for preliminary relief when claims of misappropriation of trade secrets are being asserted.  One should be particularly careful about the scope and strength of the trade secrets at issue and be able to articulate the various harms that may be encountered if those secrets are allowed to be misused on an ongoing basis. 

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Paul Keller is a first-chair intellectual property trial lawyer with nearly three decades of experience advising clients in high-stakes patent, trademark, copyright, and complex commercial matters, including successfully litigating disputes in federal and state courts in a range of jurisdictions. He also has…

Paul Keller is a first-chair intellectual property trial lawyer with nearly three decades of experience advising clients in high-stakes patent, trademark, copyright, and complex commercial matters, including successfully litigating disputes in federal and state courts in a range of jurisdictions. He also has extensive experience with alternative dispute resolution, including arbitration and mediation. A recognized leader in the field, he advises clients on a wide spectrum of technologies (from small molecule pharmaceuticals to lithium batteries) through bespoke strategies that meet the particular legal and business needs of the client. Clients consistently cite Paul’s “out of the box” thinking and use of strategies that align with the company’s global business objectives.

Some highlights of Paul’s varied experiences include:

High Tech

  • Artificial intelligence, IoT, distributed ledger, smart contract, 3D printing, eHealth, Big Data, 5G, encryption, and cryptocurrency technologies.
  • Self-driving tech, image processing, GPS systems, V2X communications, regenerative braking, and batteries.
  • Industrial equipment, recycling facilities, waste and water management; kinetic energy structures.

Life Science

  • Pharmaceutical and biotechnical matters for both innovator and generic manufacturers
  • Chemical and agriscience
  • Medical devices

In addition to his extensive litigation experience, Paul’s practice involves counseling clients on matters relating to the preparation and implementation of IP monetization strategies. This part of his practice includes IP asset valuations, competitive threat analyses, the preparation of legal offensive and defensive strategy “playbooks,” and licensing campaigns.

Paul’s thought leadership is reflected in his numerous publications, presentations, and speeches on IP issues as well as his involvement as the host of Crowell & Moring’s transportation-focused podcast, &Motion. Paul also is active in the firm’s pro bono program, focusing his community service efforts on defensive asylum cases before the U.S. Immigration Court.