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Kadant, Inc. v. Seeley Mach., Inc. - 244 F. Supp. 2d 19 (N.D.N.Y. 2003)

Rule:

In order for plaintiff to successfully move for a preliminary injunction, it must demonstrate: (1) a likelihood of irreparable harm if the injunction is not granted; and (2) either a likelihood of success on the merits of its claims, or the existence of serious questions going to the merits of its claims plus a balance of the hardships tipping decidedly in its favor. Because the issuance of a preliminary injunction is a drastic remedy, plaintiff is required to make a "clear showing" of these requirements. 

Facts:

Plaintiff trademark owner sued defendants, a competitor, and a former employee, alleging unfair competition, trademark infringement, and theft of trade secrets in violation of federal and state law, violation of N.Y. Gen. Bus. Law § 360-1, breach of contract, and breach of fiduciary duty. Plaintiff manufactured and sold to customers worldwide products that clean and condition papermaking machines and filter water used in the papermaking process. Plaintiff claimed that defendant infringed its product by stealing its trade secrets. Defendant asserted that it had reverse engineered the products from existing products that were freely available in the public domain and unprotected by published patent applications, in-force patents, or trade secrets. The trademark owner moved for a preliminary injunction.

Issue:

Was the trademark owner entitled to a preliminary injunction on all claims?

Answer:

No

Conclusion:

The court granted the motion for a preliminary injunction as to the trademark owner's trademark claims and against the destruction of computer-stored information by defendants. The court denied injunctive relief on the claims for misappropriation of trade secrets, breach of contract, and breach of fiduciary duty. Plaintiff presented no evidence that the means used by defendants to obtain the alleged trade secret were improper or dishonest. In short, it showed no evidence defendant actually stole the design specifications. It instead necessarily relied upon an inference that the only way defendants could develop, market, and sell their products in so short of time was if defendant stole the design specification information. Plaintiff did not argue that reverse engineering was impossible, just that it would take a great deal of time, skill, and expense, and that the lack thereof demonstrated that the design specifications must have been stolen. Defendants argued that the plaintiff's products were simple, consisting of non-technical and few parts, that reverse engineering would take little time, and that, in any event, they only reverse engineered a small fraction, not all, of plaintiff's products. Plaintiff did not sufficiently rebut these contentions. 

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