Opinion ID: 3012973
Heading Depth: 2
Heading Rank: 3

Heading: Abuse of Discretion in Setting the Bond

Text: Fed. R. Civ. P. 65(c) requires that before granting a preliminary injunction the court must require the applicant to post a bond “in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.” Neo Gen argues that the amount of the bond was insufficient to cover the potential harm Neo Gen may incur and constituted an abuse of discretion. Specifically, Neo Gen claims that the bond should have been set based on the liquidated damages clause in the Pre-Incorporation Agreement of $1,000,000. However, there was nothing in the PreIncorporation agreement that permitted Neo Gen to disclose TeleChem’s trade secrets, so even if the liquidated damages clause was compensatory and not punitive, it was unrelated to any harm suffered by Neo Gen here. As noted, supra, Neo Gen produced no 2 In addition, if it is true that TeleChem does not have any microarray secrets that were not revealed in the Schena patent application, this portion of the injunction will have absolutely no effect on Neo Gen, so its continuation would not be inequitable. 11 evidence of any irreparable harm to it from the injunction. Therefore, a nominal bond was appropriate here. Finally, Neo Gen points out that the District Court set the bond for the temporary restraining order (“TRO”) at $10,000, and the Eighth Circuit has found that a trial court abuses its discretion by not examining the need for additional bond after setting the bond for a TRO. See Rathman Group v. Tannenbaum, 889 F.2d 787 (8 th Cir. 1989). However, unlike the court in Rathman, the District Court in this case did set an additional bond; it just happened to set the injunction bond at the same amount as the TRO. Absent any evidence by Neo Gen showing that its potential harm would be greater than $10,000, we cannot find that the District Court abused its discretion in setting the bond.