Opinion ID: 2403365
Heading Depth: 1
Heading Rank: 15

Heading: Scope of permanent injunctive relief

Text: The Appellants contend that the district court erred in awarding ClearOne permanent injunctive relief because that relief was not limited in geographic, temporal, or prohibitive scope, and ClearOne had an adequate remedy at law. This court reviews a district court's grant of a permanent injunction for abuse of discretion. Rocky Mountain Christian Church v. Bd. of Cnty. Comm'rs, 613 F.3d 1229, 1239 (10th Cir.2010). A district court abuses its discretion when it issues an arbitrary, capricious, whimsical, or manifestly unreasonable judgment. Id. at 1239-40 (internal quotation marks omitted). It is well settled [that] an injunction must be narrowly tailored to remedy the harm shown. Garrison v. Baker Hughes Oilfield Operations, Inc., 287 F.3d 955, 962 (10th Cir.2002). The second amended (and final) permanent injunction entered by the district court on August 13, 2010, prohibited the WideBand defendants and Donald Bowers: a) from disclosing, using or transferring in any way the trade secret owned by ... ClearOne ... called the Honeybee Code (including its unique algorithms or sub-algorithms that are not in the public domain), whether in the form of source code, object code, or any form, and any code or product substantially derived from the Honeybee Code; and b) from disclosing, using, or transferring in any way the product development documentation for the Honeybee Code or any other documentation that reveals the contents of the Honeybee Code. JA at D23459. The injunction further provided: Because the following Infringing Products contain or are substantially derived from the Honeybee Code, they are also subject to the permanent injunction: the AEC2W object code licensed to Biamp ...; the computer code licensed to Harman Music Group, Inc....; WideBand's FC101 product; WideBand's WC301 product; WideBand's WC301A product; WideBand's Simphonix product; DialHD, Inc.'s products sometimes identified as the AEC4, the Mix-4 or Automixer, and the HD4551; and the Longoo ACON1001. Id. at D23460. Finally, the injunction emphasized that these restrictions appl[ied] not only to each of the WideBand Defendants..., but also to each of their agents, servants, officers, employees, entities, and those acting in concert with them (including, but not limited to, DialHD, Inc. and Longoo in China, as represented by the website www.longoocn.com), and/or those acting under their direction or control, to the fullest extent allowed by law. Id. The Appellants first argue on appeal that the injunction is overly broad because it would require enforcement efforts outside of the United States.... Aplt. Br. at 32-33. We find this argument wholly unpersuasive. The only portion of the injunction that addresses activity outside of the United States is the language that (a) prohibits production and distribution of the Longoo ACON1001 product, and (b) prohibits Longoo in China, or any other persons or entities acting in concert with the WideBand defendants, from violating the injunction. Far from being overly broad, this language focuses exclusively on activities that were determined by the district court to have occurred in violation of its original permanent injunction order, i.e., the production of offending products in China. Such language was, in light of the district court's findings, entirely warranted. Indeed, without this language, the district court's original permanent injunction would have been rendered meaningless. The Appellants next argue that the injunction has forever prohibited [them] from participating in the acoustic echo cancellation/noise reduction industry in any form or fashion anywhere and at any time. Id. at 33. They in turn argue that [n]othing on the record supports the imposition of or can establish the necessity of an injunction of unlimited duration. Id. They further argue that ClearOne's purported `trade secret' could be reproduced by any party reasonably versed in audio/echo cancellation software in approximately three months, and could certainly be reproduced in less than a year. Id. Any unlawful `head start' the WideBand Defendants may have gained at the time ClearOne was awarded the Injunction evaporated long ago, they argue, and thus the permanent injunction is ripe for dissolution. Id. at 33-34. We reject these arguments for a number of reasons. First, the record on appeal, including the jury's verdict, does not support the Appellants' suggestion that an identical algorithm could be developed from scratch in a year or less. Although Yang made similar assertions during his testimony at trial, those assertions were directly refuted by ClearOne's witnesses (who indicated that development of an AEC algorithm is difficult and can take years), and were likewise obviously rejected by the jury. Further, the district court, in entering the original permanent injunction against the WideBand defendants, expressly noted that it [wa]s exceptionally difficult to create a functional [AEC] code and algorithm.... JA at D17508. Second, regardless of how long it takes to develop a new AEC algorithm, the evidence presented at trial refutes the Appellants' suggestion that they, or anyone for that matter, could develop AEC software identical to the Honeybee Code. As ClearOne's witnesses explained at trial, there are a host of algorithmic and programming choices that can be made in developing competing AEC software, making it difficult, if not impossible, for two individuals working independently to produce the same algorithm. Third, the district court's injunction does not effectively prohibit the Appellants from working in the audio/echo cancellation industry; rather, it simply prohibits them from making use of ClearOne's trade secret, i.e., the Honeybee Code. Fourth, Utah's Uniform Trade Secrets Act (UUTSA), under which ClearOne proceeded, expressly provides for the imposition of injunctive relief during the life of the trade secret at issue, as well as for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation. Utah Code Ann. § 13-24-3(1). Finally, the Appellants' post-trial contemptuous conduct clearly supports the unlimited duration of the district court's injunction. In sum, we conclude the district court did not abuse its discretion with regard to the temporal restrictions (or lack thereof) of its injunction. The Appellants argue that injunctive relief was not warranted at all because ClearOne had an adequate remedy at law, i.e., it obtain[ed] multimillion dollar awards against each ... of the WideBand Defendants.... Aplt. Br. at 35. Importantly, however, the district court expressly found otherwise. When the district court entered its original permanent injunction, it found that damage to Clear-One's competitive market position and goodwill was likely to occur if the WideBand defendants' use of the Honeybee Code was not enjoined. The district court noted that [b]ecause of the value of the unique and functional Honeybee Code ..., any possession and use by a competitor (such as Biamp and WideBand) of that functional algorithm would irreparably harm ClearOne. JA at D17508. Further, the district court found that ClearOne ha[d] established a `cognizable danger' that the WideBand Defendants w[ould] commit future violations, and it noted that the WideBand defendants had acted willfully and maliciously in misappropriating the Honeybee Code, had been less than forthcoming with the court, id., and exhibited a blatant disregard for clear duties owed to ClearOne, and thus could not be relied on by the district court or ClearOne to act in a lawful manner, id. at 17509. Moreover, the district court concluded that enjoining sales of specific WideBand products containing and using the Honeybee Code was a necessary consequence of the WideBand Defendants' misconduct, and would thus eliminate any competitive advantage WideBand obtained over ClearOne by misappropriating its technology. Id. Notably, the WideBand defendants have not attempted to refute any of these rationales. Moreover, it is apparent from the record on appeal that ClearOne has had, and is likely to continue to have, difficulty in actually collecting on the monetary judgments entered in its favor against the WideBand defendants. Thus, the injunctive relief awarded by the district court may end up being the more meaningful of the two forms of relief. In sum, then, we conclude there was no abuse of discretion on the part of the district court in imposing a permanent injunction in addition to the damage awards. Lastly, the Appellants argue that the injunction fails to delineate between the general knowledge and experience possessed by Yang, and the trade secrets owned by ClearOne. The injunction, they argue, should have allowed Yang to make productive use of [his] own skill[s] and knowledge obtained during his education and career. Aplt. Br. at 36. We reject these arguments. The language of the injunction focuses narrowly on the Honeybee Code, its algorithm and sub-algorithms, its supporting documentation, and the products created by the Appellants that utilized the Honeybee Code. Nothing in the permanent injunction prohibits, or remotely purports to prohibit, Yang from creating, from scratch (or from publicly available materials), his own new and unique AEC algorithms. Thus, there was no abuse of discretion on the part of the district court.