Opinion ID: 2832140
Heading Depth: 1
Heading Rank: 1

Heading: The Presumption of Irreparable Harm

Text: ¶72 One of the necessary elements of a claim for injunctive relief is proof of irreparable harm. See UTAH R. CIV. P. 65A(e) (a preliminary injunction requires a showing that ―[t]he applicant will suffer irreparable harm unless the order or injunction issues‖). ―Irreparable injury justifying an injunction is that which cannot be adequately compensated in damages or for which damages cannot be compensable in money.‖ Hunsaker v. Kersh, 1999 UT 106, ¶ 9, 991 P.2d 67 (internal quotation marks omitted). ―It is thus wellestablished that an injury is irreparable only if it cannot be undone through monetary remedies.‖ Dennis Melancon, Inc. v. City of New Orleans, 703 F.3d 262, 279 (5th Cir. 2012) (internal quotation marks omitted). ¶73 Several jurisdictions have adopted a presumption that the disclosure of a trade secret constitutes an irreparable harm that justifies an injunction. The presumption of irreparable harm is based upon the fact that the disclosure of a trade secret has the potential to destroy the legal protections afforded to a trade secret if it becomes generally known. See 4 ROBERT M. MILGRIM & ERIC E. BENSEN, MILGRIM ON TRADE SECRETS § 15.02[1][c] (2013) (noting that ―unprotected disclosure of a trade secret destroys the secret‖). Because ―of the difficulties involved in valuing the consequences of the destruction of a trade secret,‖ id., some courts have adopted a presumption that the harm associated with an unauthorized disclosure is irreparable, see FMC Corp. v. Taiwan Tainan Giant Indus. Co., 730 F.2d 61, 63 (2d Cir. 1984) (holding that ―the loss of 34 Cite as: 2015 UT 80 J. DURHAM, dissenting trade secrets cannot be measured in money damages‖); Kendall Holdings, Ltd. v. Eden Cryogenics LLC, 630 F. Supp. 2d 853, 867 (S.D. Ohio 2008) (holding that ―[t]he loss of trade secrets is usually considered an irreparable harm [that] cannot be measured in money damages― (alterations in original) (internal quotation marks omitted)). Thus, once the risk of future disclosure has been established, courts have presumed that the harm caused by the disclosure would be irreparable, justifying injunctive relief. ¶74 But we need not decide whether to espouse this judicially created presumption because it does not apply here. The key issue in this case is not whether an unprotected disclosure of InnoSys‘s trade secrets would produce an irreparable harm that could not be readily measured in money damages. Rather, the question presented is whether InnoSys produced evidence of a threatened future disclosure of InnoSys‘s files. Infra ¶¶ 79–86. ¶75 The majority, however, adopts a broader interpretation of the judicially created presumption that the harm occasioned by an unauthorized disclosure of a trade secret is irreparable—i.e., not easily remedied by money damages. The majority opinion holds that there is ―a presumption of harm upon proof of misappropriation.‖ Supra ¶ 34. Thus the majority appears to endorse the proposition that when a plaintiff seeks an injunction in a case involving trade secrets, there is a presumption of a threat of future harm rather than merely a presumption that any harm would be irreparable. ¶76 The majority‘s broad interpretation of the presumption of irreparable harm, however, is not supported by the reasoning that produced the presumption in the first place. The unauthorized disclosure of a trade secret has been presumed to lead to irreparable harm because of the difficulty of assigning a monetary value to the loss of the secret. The presumption of irreparable harm is not based upon an assumption that a plaintiff‘s allegations of threatened future use or disclosure are particularly trustworthy, shifting the burden of proof on this issue. See Water & Energy Sys. Tech., Inc. v. Keil, 1999 UT 16, ¶¶ 8, 14, 974 P.2d 821 (party seeking an injunction for misappropriation of trade secrets bears the burden of proof); Amylin Pharm., Inc. v. Eli Lilly & Co., No. 11-CV-1061 JLS NLS, 2011 WL 5237558, at  (S.D. Cal. June 8, 2011) (rejecting as speculative a plaintiff‘s assertion that the defendant would misuse confidential information at a future date), aff’d, 456 F. 35 INNOSYS, INC. v. MERCER J. DURHAM, dissenting App‘x 676 (9th Cir. 2011). Indeed, the leading commentator on trade secrets has noted that the presumption of irreparable harm is not a presumption that harm will occur: ―[C]ourts have often ruled that a trade secret claimant is entitled to a rebuttable presumption of irreparable harm for the purposes of injunctive relief, at least where there is a threat of disclosure of the trade secret.‖ 4 ROBERT M. MILGRIM & ERIC E. BENSEN, MILGRIM ON TRADE SECRETS § 15.02[1][c] (2013) (emphasis added) (footnote omitted). ¶77 The Second Circuit has affirmed that absent evidence of a risk of prospective disclosure, a presumption of irreparable harm simply would not arise: We have previously observed that the loss of trade secrets cannot be measured in money damages where that secret, once lost, is lost forever. Some courts in this Circuit have read this passing observation to mean that a presumption of irreparable harm automatically arises upon the determination that a trade secret has been misappropriated. That reading is not correct. A rebuttable presumption of irreparable harm might be warranted in cases where there is a danger that, unless enjoined, a misappropriator of trade secrets will disseminate those secrets to a wider audience or otherwise irreparably impair the value of those secrets. Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) (internal quotation marks omitted). The presumption of irreparable harm does not apply, however, where there is not a risk of ―further dissemination or irreparable impairment of value.‖ Id. Thus the Second Circuit directly rejected the proposition that the presumption applies in the absence of a showing of future harm through unauthorized disclosure. See also Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86, 92–93 (3d Cir. 1992) (rejecting a plaintiff‘s argument that ―irreparable harm must be presumed where . . . the elements of a trade secret claim have been satisfied‖ and refusing to apply the presumption where the plaintiff did not show that the defendant intended to use or disclose the trade secret). ¶78 Therefore, the presumption of irreparable harm does not apply to the threshold question of whether InnoSys has produced 36 Cite as: 2015 UT 80 J. DURHAM, dissenting evidence of a threat of future injury through unauthorized disclosure of its trade secrets. The issue in this case is not whether a future harm is irreparable because it cannot be remedied through money damages, but rather whether there is evidence of a threat of future harm at all. I turn now to that question.