Viken Detection Corp. v. Videray Techs. Inc.

District Court, District of Columbia
384 F.Supp.3d 168 (2019)

ELI5:

Rule of Law:

A plaintiff seeking a preliminary injunction for trade secret misappropriation must present specific evidence that its proprietary information was used in a competitor's product; mere product similarity, a former employee's access to information, and speculative allegations are insufficient to warrant the extraordinary remedy of injunctive relief.

Facts:

In November 2013, Viken Detection Corporation hired Paul Bradshaw as its Director of Engineering, requiring him to sign a non-disclosure agreement (NDA) to protect proprietary information.
Bradshaw was part of a team that developed Viken's hand-held x-ray scanner, the HBI-120, and had access to its confidential design, performance, and marketing information.
During his employment, Bradshaw stored approximately 1,800 files related to the HBI-120 in his personal Dropbox account, a practice known to Viken's then-CEO and other employees.
In June 2017, a Viken employee, Katie McCabe, informed the company that Bradshaw planned to leave, start a competing company, and had solicited coworkers to join him.
Based on McCabe's allegations, Viken terminated Bradshaw's employment.
A few days later, Viken's then-CEO, believing McCabe's allegations were false or exaggerated, offered to reinstate Bradshaw, but Bradshaw declined the offer.
Within two months of leaving Viken, Bradshaw formed a new company, Videray Technologies Inc., and began developing a competing x-ray scanner, the PX1.
The PX1 shared a similar external design and operating characteristics with Viken's HBI-120.

Procedural Posture:

Viken Detection Corporation sued Videray Technologies Inc. and its founder, Paul Bradshaw, in the United States District Court for the District of Massachusetts.
The complaint alleged violations including misappropriation of trade secrets under federal and state law, breach of contract, and violation of the Computer Fraud and Abuse Act.
In April 2019, Viken filed a motion for a temporary restraining order (TRO) and a preliminary injunction to stop defendants from commercializing their competing product.
The district court denied Viken's motion for a TRO.
The district court then held a hearing on Viken's motion for a preliminary injunction.

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Issue:

Does a plaintiff seeking a preliminary injunction for trade secret misappropriation demonstrate a reasonable likelihood of success on the merits when it cannot identify any specific proprietary information in the defendant's competing product and relies primarily on circumstantial evidence and previously discredited allegations?

Opinions:

Majority - Nathaniel M. Gorton

No. A plaintiff fails to demonstrate a reasonable likelihood of success on the merits for trade secret misappropriation or breach of contract when it cannot identify any specific proprietary feature or combination of features in the defendant's product. Viken failed to meet its burden for a preliminary injunction because its case relies on speculation rather than concrete evidence. The court found that Viken was unable to point to a single feature of Videray's PX1 that contained Viken's proprietary information. Instead, the evidence showed that the similarities between the two devices were based on features that are generic, universal, and generally known in the x-ray scanner industry, or were based on components from a third-party supplier. Furthermore, the court was unpersuaded by Viken's circumstantial evidence, noting that Bradshaw's use of a personal Dropbox was known and implicitly permitted by Viken's former management, and the allegations of misconduct by a former coworker had been discredited by that same management. Viken’s counsel effectively conceded the lack of evidence by stating that discovery would be needed to determine what proprietary information was misappropriated, which is insufficient to justify the extraordinary remedy of a preliminary injunction.

Analysis:

This decision underscores the high evidentiary burden a plaintiff must meet to obtain a preliminary injunction in a trade secrets case. It establishes that mere suspicion, circumstantial evidence of access, and general product similarity are insufficient to restrain a former employee from competing. The ruling serves as a strong precedent against using preliminary injunction motions as a tool for 'fishing expeditions' to find evidence of misappropriation, requiring plaintiffs to present specific, concrete proof of wrongdoing at the outset. Consequently, this case reinforces the principle that an employee's general knowledge and skill are not protectable trade secrets, and courts are hesitant to stifle legitimate competition without a clear showing of unlawful conduct.

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