4-8 TEMPORARY RESTRAINING ORDERS AND TEMPORARY OR PRELIMINARY INJUNCTIONS

• Jurisdiction: United States

4-8 Temporary Restraining Orders and Temporary or Preliminary Injunctions

Almost all trade secret cases begin with a plaintiff's request for preliminary relief to stop the alleged trade secret's use or disclosure while the case is pending. These initial requests for injunctive relief often require the parties to move quickly and generate a significant amount of discovery over a short period of time. They also typically involve a preliminary or temporary injunction hearing with live testimony. For many plaintiffs, the initial injunctive relief represents the most important aspect of the case because, in many instances, the lawsuit is brought to halt a soon-to-be-completed transaction or employment relationship that involves (or threatens to involve) the use or disclosure of the plaintiff's trade secrets. Because the DTSA contains unique procedures for preliminary relief, this section will focus primarily on early injunctive relief in the state court context. Chapter 10, which addresses the DTSA in detail, will provide an analysis of the DTSA's provisions on this topic.

4-8:1 Temporary Restraining Order

Under the Texas Rules of Civil Procedure, a plaintiff can seek an ex parte temporary restraining order (TRO) to protect use or disclosure of the trade secret prior to the temporary injunction hearing.⁷⁰ Rule 680 allows Texas courts to enter a TRO without notice and a hearing if "immediate and irreparable injury, loss, or damage will result" before notice and a hearing could occur.⁷¹ Such an application must be verified by specific facts in an affidavit. The TRO may not exceed a period of 14 days but may be extended "for good cause" for another 14 days.⁷² Only one extension will be permitted "unless subsequent extensions are unopposed" by the adverse party.⁷³

Typically, a trade secret plaintiff will seek a TRO when an immediate threat exists related to the use or disclosure of the trade secret. One example of such a threat is where the plaintiff is in danger of losing important customers or prospective customers to a former employee with access to customer lists.⁷⁴ Another example is the threat of public disclosure of a trade secret that would allow competitors to reproduce the trade secret.⁷⁵

4-8:2 Temporary Injunction (State Court)/Preliminary Injunction (Federal Court)

A temporary injunction can be used "to preserve the status quo of the litigation's subject matter pending trial on the merits."⁷⁶ In a trade secret case, as with the TRO, the temporary injunction serves to prevent the use or disclosure of the trade secret in a way that would irreparably harm the plaintiff. The "status quo" is defined as "the last actual, peaceable, noncontested status which preceded the pending controversy."⁷⁷ Issuance of a temporary injunction requires notice to the adverse party.⁷⁸ "The grant or refusal of a permanent or temporary injunction is ordinarily within the sound discretion of the trial court[.]"⁷⁹ On appeal, a court reviews the trial court's decision for a clear abuse of discretion, which exists only if its decision "was so arbitrary that it exceeded the bounds of reasonable discretion."⁸⁰

Although a trial court can impose reasonable limits on the parties' presentation of evidence in a temporary injunction hearing, the standard rules of evidence typically apply to such a hearing.⁸¹ In fact, several cases have upheld the use of hearsay rules to exclude evidence in a temporary injunction hearing.⁸² As a practical matter, however, absent some sort of agreement between the parties on what types of evidence is admissible, a temporary injunction hearing is just like trial for purposes of putting on evidence.

To obtain a temporary injunction, the applicant must establish three elements: "(1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim."⁸³ It is not necessary to show that the applicant will succeed in the litigation on the merits; a probable right to recover and a probable injury will suffice.⁸⁴

As a general matter, the plaintiff can prove irreparable harm by establishing that "the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard."⁸⁵ To satisfy this standard, the party seeking injunctive relief must "negat[e] the existence of adequate legal reme-dies."⁸⁶ The opposing party is not required to "disprove the notion" that damages cannot be calculated.⁸⁷ "[I]f damages do not provide as complete, practical and efficient a remedy as may be had by injunctive relief, the trial court does not err in granting temporary injunction" as long as all of the elements are met.⁸⁸

Costs and delay are not sufficient injuries to be considered irreparable.⁸⁹ It is well-settled in Texas that an "injunction will not issue if damages are sufficient to compensate the plaintiff for any wrong committed by the defendant and if the damages are subject to measurement by an ascertainable pecuniary standard."⁹⁰ Yet, "[s]imply because the applicant for a temporary injunction asks only for damages as ultimate relief does not guarantee that damages are completely adequate as a remedy. Although . . . unusual, circumstances can arise in which a temporary injunction is appropriate to preserve the status quo pending an award of damages at trial."⁹¹

Section 134A.003 of the Civil Practice and Remedies Code provides that only "[a]ctual or threatened misappropriation may be enjoined" and "an injunction shall be terminated...