In obtaining a preliminary injunction for a trade secrets violation, a court can’t make the assumption of irreparable harm, according to a 10th Circuit opinion from last week.
The court ruled in First Western Capital Management Co. et al. v. Kenneth D. Malamed that the U.S. District Court should not have granted a preliminary injunction against a former First Western employee without the company first demonstrating it would suffer irreparable harm. Rather than shaking up trade secrets law, the appellate court simply solidified what was already suggested by the U.S. Supreme Court in prior cases, according to experts in the area.
First Western, a Denver-based company, sought a preliminary injunction after Kenneth Malamed, a former employee, took copies of his client book with him, which contained a list of approximately 5,000 First Western contacts, including hundreds of current clients. The client book also contained the market value of the clients’ holdings and the fees First Western was charging them.
The same day Malamed was fired, First Western served him with a complaint that was filed a month earlier, claiming misappropriation of trade secrets under the Defend Trade Secrets Act among other charges. First Western moved for a temporary restraining order and preliminary injunction to prevent Malamed from soliciting First Western’s clients.