Court Opinion

ID: 2960342
Source: CourtListenerOpinion
Date Created: 2015-09-17 17:47:37.535463+00
Date Added: 2024-06-11T12:46:08.094437
License: Public Domain

08-5126-cv
Faiveley Transport Malmo AB v. Wabtec Corporation

                                 UNITED STATES COURT OF APPEALS
                                    FOR THE SECOND CIRCUIT

                                                    August Term, 2008

(Argued: February 9, 2009                                                               Decided: March 9, 2009)

                                               Docket No. 08-5126-cv

FAIVELEY TRANSPORT MALMO AB,

                   Plaintiff-Appellee,

                   v.

WABTEC CORPORATION ,

                   Defendant-Appellant.

Before: CABRANES and WESLEY , Circuit Judges, and KORMAN , District Judge.*

         Defendant-appellant Wabtec Corporation appeals from an order of the United States

District Court for the Southern District of New York (Jed S. Rakoff, Judge), granting in part and

denying in part plaintiff-appellee Faiveley Transport Malmo AB’s application for a preliminary

injunction. Finding that Wabtec had likely misappropriated certain of Faiveley’s trade secrets

concerning the manufacture of an air brake system, the District Court enjoined Wabtec from

disclosing Faiveley’s proprietary information to any third party and from entering into new contracts

to sell the disputed air brake system or its parts. Because the record evidence does not support the

conclusion, and the District Court did not find, that Faiveley would suffer irreparable harm in the

absence of this relief, a preliminary injunction was not warranted.

         Vacated and Remanded.

         *
             The Honorable Edward R. Korman, of the United States District Court for the Eastern District of New
York, sitting by designation.

                                                           1
                                           A. JOHN P. MANCINI (Vanessa M. Biondo, Christine M.
                                                  Hernandez, and Daniel B. Kirschner, on the brief),
                                                  Mayer Brown LLP, New York, NY, for Faiveley
                                                  Transport Malmo AB.

                                           JAMES C. MARTIN (Daniel K. Winters, Reed Smith LLP, New
                                                  York, NY, and Colin E. Wrabley, Reed Smith LLP.
                                                  Pittsburgh, PA, on the brief), Reed Smith LLP,
                                                  Pittsburgh, PA, for Wabtec Corporation.

JOSÉ A. CABRANES, Circuit Judge:

        The question presented in this case—whether a manufacturer who likely misappropriated

trade secrets may be preliminarily enjoined from (a) entering into contracts that will cause it to use

those trade secrets and (b) disseminating further those trade secrets—concerns a rarely celebrated

but instantly recognizable feature of everyday life in New York City: subway brakes. To the parties

in this case, subway brakes are known as “Brake Friction Cylinder Tread Break Units” (“BFC

TBU”). For the rest of us, BFC TBU are “that loud squeaking, sparking braking system that so

reliably stops the New York City Transit subway system.” In re Faiveley Transp. Malmo AB, 522 F.

Supp. 2d 639, 640 (S.D.N.Y. 2007) (“Faiveley I”) (internal quotation marks omitted). Twenty-four

hours a day and 365 days a year, the City’s subway cars safely stop at 468 passenger stations—and,

as any straphanger knows, many times in between—depositing riders of all classes and descriptions

at homes, workplaces, ballparks, and every other destination imaginable. See generally MacWade v.

Kelly, 460 F.3d 260, 264 (2d Cir. 2006) (“The New York City subway system . . . is an icon of the

City’s culture and history, an engine of its colossal economy, a subterranean repository of its art and

music, and, most often, the place where millions of diverse New Yorkers and visitors stand elbow to

elbow as they traverse the metropolis.”).

        The subway is an indelible feature of the City’s culture. Its legend and lore fascinate locals

and visitors alike. See, e.g., Carrie Melago, It’s the Rail Thing: Subway Ride Record is Official, N.Y. Daily

                                                       2
News, Aug. 8, 2007, at 24 (reporting that six alumni of Regis High School set a new world record

for stopping at all 468 stations on a single fare: 24 hours, 54 minutes, and 3 seconds). A point of

personal pride for many New Yorkers, the City’s subterranean transit has appeared in song, on stage

and screen. See, e.g., Leonard Bernstein, et al., “New York, New York,” from On the Town (“New

York, New York—a helluva town, / The Bronx is up but the Battery’s down, / And the people ride

in a hole in the ground; / New York, New York—It’s a helluva town[!]”), as quoted in The Oxford

Dictionary of Humorous Quotations 329 (Ned Sherrin, ed., 1995) (attributed to Betty Comden and

Adolph Green, lyricists). The subway’s rhythm and sound have also rumbled into the canon of

American literature. See, e.g., Tom Wolfe, The Bonfire of the Vanities 36 (Farrar Straus Giroux 1998)

(1987) (“On the subway, the D train, heading for the Bronx, Kramer stood in the aisle holding on to

a stainless-steel pole while the car bucked and lurched and screamed.”).

        Moving forward, our next stop is the trade secret dispute concerning the distinctive brakes

used by the New York City subway system.

                                               BACKGROUND

        During the 1970s, SAB Wabco—a corporate descendant of the Westinghouse Air Brake

Company and the predecessor-in-interest to plaintiff-appellee Faiveley Transport Malmo AB

(“Faiveley”)—developed BFC TBU, a unique air brake system designed to stop trains quickly and

smoothly, if not always quietly. The original patents for the BFC TBU have since expired.

        In 1993, SAB Wabco entered into a license agreement (“the 1993 Agreement”) with Wabco,

then a sister company.1 Pursuant to the 1993 Agreement, Wabco was authorized to use SAB Wabco

“know-how”—including “manufacturing data, specifications, designs, plans, trade secrets” and other

information, J.A. 37 (1993 Agreement)—as well as “Patents, Patent Applications, and New

        1
            Wabco, like SAB Wabco, is a corporate descendant of the Westinghouse Air Brake Company.

                                                         3
Technology,” id. at 38, to produce and market BFC TBU. The 1993 Agreement was originally

scheduled to expire on December 31, 2003, but could be renewed annually for one-year terms after

that time by agreement of the parties. Upon the expiration of the 1993 Agreement, Wabco was to

“cease manufacture” of licensed products, except insofar as required to meet contracts entered into

prior to the expiration of the agreement. Id. at 46.

         In 2004, Faiveley acquired SAB Wabco. As part of the acquisition, Faiveley assumed

ownership of SAB Wabco’s intellectual property, including that related to BFC TBU, as well as SAB

Wabco’s rights and obligations under the 1993 Agreement. At that time, Wabtec Corporation

(“Wabtec”), the successor-in-interest to Wabco, was still producing BFC TBU parts and

components pursuant to the 1993 Agreement. In December 2004, Faiveley notified Wabtec that the

1993 Agreement would not be renewed, as a result of which the 1993 Agreement terminated on

December 31, 2005.

         Beginning in 2005, Wabtec began to develop its own line of BFC TBU through “reverse

engineering.” In 2007, the New York City Transit Authority (the “Transit Authority”)2 awarded a

“sole source” contract to Wabtec whereby Wabtec was to provide BFC TBU for the City’s overhaul

         2
            The Transit Authority is a public benefit corporation whose principal business is the operation of public
subways and buses within New York City. It was created by New York State in the early 1950s to consolidate the
multiple subway and bus lines that operated more-or-less independently since the turn of the century. See The Encyclopedia
of New York City 827 (Kenneth T. Jackson, ed., 1995); see also Gilchrist v. Interborough Rapid Transit Co., 279 U.S. 159, 190-91
(1929) (summarizing, in a dispute over a proposed fare hike from five cents to seven cents, the early financing and
development of New York City’s subway system). We use in this opinion the Transit Authority’s legal name, see, e.g.,
Transp. Workers Union, Local 100 v. N.Y. City Transit Auth., 505 F.3d 226 (2d Cir. 2007), but note that since the mid-1990s
the agency has “branded” itself “M.T.A. New York City Transit.” See James C. McKinley, Jr., What’s in a Symbol? A Lot,
the M.T.A. Is Betting, N.Y. Times, Aug. 28, 1994, at A31 (“Among the changes being made, the venerable Transit
Authority, the subsidiary that runs the subways and most of the city’s buses, becomes M.T.A. New York City Transit.”).
The “M.T.A.” prefix refers to the Metropolitan Transportation Authority, a public benefit corporation created by the
State of New York in 1968 to oversee the various transportation agencies serving New York City and its environs,
including the Transit Authority. See Jackson, supra, at 758. According to what was once known as the “newspaper of
record,” the word “Authority” was dropped from the agency’s public name “as a way to make the service[ ] a little more
friendly.” McKinley, supra, at A31. Cf. Daniel Okrent, Editorial, Paper of Record? No Way, No Reason, No Thanks, N.Y.
Times, April 25, 2004, at D4 (stating that the moniker “paper of record” is now “a compliment used as a cudgel,” but
noting that “[t]he Times once sort of was”). We, however, are not disturbed by the use of “Authority,” and refer to the
agency by its legal name.

                                                               4
of a certain class of subway cars. According to Faiveley, following the termination of the 1993

Agreement, Wabtec continued to use Faiveley’s proprietary information to produce BFC TBU for

its contract with the Transit Authority. In May 2007, Faiveley submitted a letter to the Transit

Authority protesting the Wabtec-Transit Authority contract but did not succeed in having itself

substituted for Wabtec.

        The 1993 Agreement provided that disputes arising under it would be settled in arbitration

proceedings in Stockholm, Sweden. On October 18, 2007, Faiveley filed for such arbitration with

the Secretariat of the International Court of Arbitration of the International Chamber of Commerce

(“ICC”) in Paris, alleging that Wabtec breached the 1993 Agreement by continuing to use plaintiff’s

trade secrets to manufacture BFC TBU after the 1993 Agreement terminated on December 31,

2005. In those arbitration proceedings, which are ongoing, Faiveley seeks, among other things,

damages for breach of the 1993 Agreement and an injunction that prevents Wabtec from producing

BFC TBU or the components thereof and prevents Wabtec from disclosing Faiveley’s proprietary

information to third parties. On the same day that it filed for arbitration, Faiveley filed suit in the

United States District Court for the Southern District of New York, seeking a preliminary injunction

to prevent Wabtec from manufacturing or marketing BCF TBU or disclosing to third parties any

trade secrets associated with BCF TBU pending the outcome of the arbitration.

        After a four-day evidentiary hearing, the United States District Court for the Southern

District of New York (Jed S. Rakoff, Judge) granted Faiveley’s application in part and denied it in

part. In an August 22, 2008 decision and order, the District Court granted the application insofar as

it enjoined Wabtec from (1) “providing [the Transit Authority] with [BFC TBU] manufacturing

drawings during the course of the [the Transit Authority] contract,” Faiveley Transp. Malmo AB v.

Wabtec Corp., 572 F. Supp. 2d 400, 409 (S.D.N.Y. 2008) (“Faiveley II”) (italics omitted), (2) “providing

                                                    5
to any third party in some other context those manufacturing drawings or any other materials that

contain Faiveley’s trade secrets,” id. at 410 (italics omitted), and (3) “entering into, or bidding for,

any new contracts to manufacture, supply, or sell any BFC TBUs, or BFC TBU parts, kits or

components until the Arbitral Tribunal renders a final determination on the parties’ dispute, and all

appeals therefrom have been exhausted or concluded,” id. (italics omitted). The District Court

denied Faiveley’s application to enjoin Wabtec from carrying out contracts entered into before the

expiration of the 1993 Agreement, id., and, although it enjoined Wabtec from disclosing Faiveley’s

proprietary information to the Transit Authority, the District Court expressly declined to enjoin

Wabtec from using BFC TBU to carry out the Transit Authority contract, id. at 409.

        Wabtec then filed this appeal.

                                             DISCUSSION

        On appeal, Wabtec contends that (1) Faiveley has not established its standing to assert trade

secret claims against Wabtec under the 1993 Agreement, (2) the 1993 Agreement barred Faiveley’s

resort to the District Court prior to the conclusion of the arbitral proceedings, and (3) the

preliminary injunction issued by the District Court is not supported by evidence in the record and, in

any event, is overbroad. Only Wabtec’s challenge to the contours of the preliminary injunction

merits more than brief consideration.

        The record provides ample evidence of Faiveley’s standing in light of the District Court’s

findings that (1) Faiveley owned the alleged trade secrets at issue, (2) Wabtec’s use or further

dissemination of those trade secrets constituted a concrete injury to Faiveley, and (3) any such injury

could be redressed by the relief sought by Faiveley. See Lujan v. Defenders of Wildlife, 504 U.S. 555,

560-61 (1992) (describing injury-in-fact, causation, and redressibility as the “irreducible

constitutional minimum” of Article III standing); Pullman Group, LLC v. Prudential Ins. Co., of Am.,

288 A.D.2d 2, 3 (1st Dep’t 2001) (noting that a plaintiff in a trade secret misappropriation case

                                                     6
cannot establish standing under New York law unless he can establish that he owned the trade

secret).

           We also agree with the District Court that the 1993 Agreement did not bar the plaintiff’s

application for a preliminary injunction. See Faiveley I, 522 F. Supp. 2d at 641.3 Paragraph 27.1 of the

1993 Agreement provides that disputes arising under the agreement are to be “finally settled” in

arbitration, but it does not prohibit resort to appropriate forums for preliminary relief in aid of

arbitration. In fact, the same paragraph of the 1993 Agreement provides that the Rules of

Conciliation and Arbitration of the International Chamber of Commerce (“ICC rules”) govern

disputes between the parties. In turn, the ICC rules expressly provide that, before the matter “is

transmitted to the Arbitral Tribunal, and in appropriate circumstances even thereafter, the parties may

apply to any competent judicial authority for interim or conservatory relief.” Rules of Arbitration art. 23(2)

(emphasis added). That is precisely what Faiveley did in this case. See Faiveley I, 522 F. Supp. 2d at

641-42.

           With respect to Wabtec’s challenge to the preliminary injunction, we review the District

Court’s grant of such relief for abuse of discretion. See, e.g., Somoza v. New York City Dep’t of Educ.,

538 F.3d 106, 112 (2d Cir. 2008); cf. In re Sims, 534 F.3d 117, 132 (2d Cir. 2008) (“A district court has

abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous

assessment of the evidence, or rendered a decision that cannot be located within the range of

permissible decisions.” (internal citations, alterations, and quotation marks omitted)). A party

seeking a preliminary injunction must demonstrate: (1) “either (a) a likelihood of success on the

           3
           Wabtec appealed the District Court’s order immediately after it was entered. However, we dismissed the
appeal for want of jurisdiction, as the District Court’s order—a denial of Wabtec’s motion to dismiss Faiveley’s petition
for preliminary relief— was not a final order within the meaning of 28 U.S.C. § 1291 and was therefore not immediately
appealable. See Wabtec Corp. v. Faiveley Transp. Malmo AB, 525 F.3d 135, 141 (2d Cir. 2008). We now have jurisdiction to
consider the order as part of the District Court’s final decision to grant preliminary injunctive relief to Faiveley. See
Coopers & Lybrand v. Livesay, 437 U.S. 463, 467 (1978) (noting that “[f]ederal appellate jurisdiction generally depends on
the existence of a decision by the District Court that ends the litigation on the merits and leaves nothing for the court to
do but execute the judgment” (internal quotation marks omitted)).
                                                             7
merits or (b) sufficiently serious questions going to the merits to make them a fair ground for

litigation and a balance of hardships tipping decidedly in the movant’s favor, ” County of Nassau, NY

v. Leavitt, 524 F.3d 408, 414 (2d Cir. 2008), and (2) “irreparable harm in the absence of the

injunction,” id.

A.      Likelihood of Success on the Merits

        Faiveley is not entitled to preliminary relief unless it has demonstrated that Wabtec likely

misappropriated a trade secret. Both parties agree that New York law governs that issue in this case.

“To succeed on a claim for the misappropriation of trade secrets under New York law, a party must

demonstrate: (1) that it possessed a trade secret, and (2) that the defendants used that trade secret in

breach of an agreement, confidential relationship or duty, or as a result of discovery by improper

means.” N. Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 43-44 (2d Cir. 1999) (applying New York law).

        “A trade secret is any formula, pattern, device or compilation of information which is used

in one’s business, and which gives the owner an opportunity to obtain an advantage over

competitors who do not know or use it.” Id. at 44 (internal quotation marks and brackets omitted).

In determining whether information constitutes a trade secret, New York courts have considered:

        (1) the extent to which the information is known outside of the business; (2) the extent to
        which it is known by employees and others involved in the business; (3) the extent of
        measures taken by the business to guard the secrecy of the information; (4) the value of the
        information to the business and its competitors; (5) the amount of effort or money
        expended by the business in developing the information; (6) the ease or difficulty with which
        the information could be properly acquired or duplicated by others.

Id. (quoting Ashland Mgmt., Inc. v. Janien, 82 N.Y.2d 395, 407 (1993)).

        We detect no error in the District Court’s conclusion that the BFC TBU manufacturing

drawings pertaining to “dimensions and tolerances, surface finishes, material selection and

treatments, lubrication specifications, and special instructions for manufacture, testing, and

assembly,” Faiveley II, 572 F. Supp. 2d at 404, contain trade secrets under New York law. That this

                                                    8
information is not widely known is evinced by the fact that no company other than Faiveley—and

Wabtec pursuant to the 1993 Agreement—has produced a complete BFC TBU. Faiveley has strictly

limited the access of its own employees to the information at issue, and does not permit customers

to view it. It is undisputed that SAB Wabco, Faiveley’s predecessor-in-interest, devoted substantial

resources to the development of the BFC TBU. As demonstrated in the testimony of those who

took part in Wabtec’s engineering process, BFC TBU and BFC TBU components are extremely

difficult to duplicate. The information contained in the manufacturing drawings provided Faiveley,

as the District Court found, with “far more tha[n] [a] ‘slight competitive edge.’” Id. at 405.

        Having established that Faiveley “possessed a trade secret,” N. Atl. Instruments, Inc., 188 F.3d

at 43, we now consider whether Wabtec likely used Faiveley’s trade secrets “in breach of an

agreement, confidential relationship or duty, or as a result of discovery by improper means,” id. at

44. Wabtec argues that it did not misappropriate Faiveley’s trade secrets because it independently

discovered the same information through a “reverse engineering” process. As the Supreme Court

has noted, “trade secret law . . . does not offer protection against discovery by fair and honest

means, such as by independent invention, accidental disclosure, or by so-called reverse engineering,

that is by starting with the known product and working backward to divine the process which aided

its development or manufacture.” Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1974).

        In this case, the record provides ample support for the District Court’s conclusion that

Wabtec’s reverse engineering process made “important use of Faiveley’s trade secrets,” Faiveley II,

572 F. Supp. 2d at 408, and was “[a]t a minimum . . . fatally tainted,” id. at 407, by the involvement

of Roland Moore, a Wabtec employee who had “frequent contact with Faiveley drawings during the

course of the [1993] Agreement,” id. at 406. Wabtec’s first effort to reverse engineer BFC TBU,

which did not involve Moore, produced no usable drawings. However, when Wabtec attempted for

a second time to reverse engineer the BFC TBU, Moore was selected to play a key role because “he

                                                   9
[was] knowledgeable about the product.” Tr. 617:9-10 (Testimony of Paul E. Jamieson, Chief

Engineer, Wabtec Corp.). Notwithstanding Moore’s “self-serving testimony that his role in the

reverse engineering process was minimal,” Faiveley II, 572 F. Supp. 2d at 407, the record indicates

that Moore made several specific recommendations to draftsmen. Wabtec has not presented us with

any compelling reason—nor are we aware of any—to question the District Court’s assessment that

Moore’s testimony was “self-serving.” See Joseph v. New York City Bd. of Educ., 171 F.3d 87, 93 (2d

Cir. 1999) (“Assessments of the credibility of witnesses are peculiarly within the province of the trier

of fact and are entitled to considerable deference.”).

        Accordingly, we hold that the District Court did not err in finding that Faiveley is likely to

succeed on the merits of its claim that Wabtec misappropriated Faiveley’s trade secrets.

B.      Irreparable Harm

        A showing of irreparable harm is “the single most important prerequisite for the issuance of

a preliminary injunction.” Rodriguez v. DeBuono, 175 F.3d 227, 234 (2d Cir. 1999) (internal quotation

marks omitted). We have explained that “[t]o satisfy the irreparable harm requirement, [p]laintiffs

must demonstrate that absent a preliminary injunction they will suffer an injury that is neither

remote nor speculative, but actual and imminent, and one that cannot be remedied if a court waits

until the end of trial to resolve the harm.” Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60,

66 (2d Cir. 2007) (internal quotation marks omitted). “Where there is an adequate remedy at law,

such as an award of money damages, injunctions are unavailable except in extraordinary

circumstances.” Moore v. Consol. Edison Co. of N.Y., 409 F.3d 506, 510 (2d Cir. 2005).

        We have previously observed that “the loss of trade secrets cannot be measured in money

damages” where that secret, once lost, is “lost forever.” FMC Corp. v. Taiwan Tainan Giant Indus. Co.,

730 F.2d 61, 63 (2d Cir. 1984) (per curiam). Some courts in this Circuit have read this passing

observation to mean that a presumption of irreparable harm automatically arises upon the

                                                    10
determination that a trade secret has been misappropriated. See, e.g., Ivy Mar Co. v. C.R. Seasons, Ltd.,

907 F. Supp. 547, 567 (E.D.N.Y. 1995) (“[I]rreparable harm is presumed where 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. Where a misappropriator seeks only to use those secrets—without further

dissemination or irreparable impairment of value—in pursuit of profit, no such presumption is

warranted because an award of damages will often provide a complete remedy for such an injury.

Indeed, once a trade secret is misappropriated, the misappropriator will often have the same

incentive as the originator to maintain the confidentiality of the secret in order to profit from the

proprietary knowledge. As Judge Conner has observed, where there is no danger that a

misappropriator will disseminate proprietary information, “the only possible injury that [the] plaintiff

may suffer is loss of sales to a competing product . . . [which] should be fully compensable by

money damages.” Geritrex Corp. v. Dermarite Indus., LLC, 910 F. Supp. 955, 966 (S.D.N.Y. 1996)

(Conner, J.).

        In cases where the presumption applies (and has not been rebutted) or where irreparable

injury has been demonstrated, a “narrowly drawn” preliminary injunction that protects the trade

secret from further disclosure or use may be appropriate. In all cases, the relief should be “narrowly

tailored to fit specific legal violations” and to avoid “unnecessary burdens on lawful commercial

activity.” Waldman Pub. Corp. v. Landoll, Inc., 43 F.3d 775, 785 (2d Cir. 1994).

        Here, the evidence showed that, for over twelve years, Wabtec used what is now Faiveley’s

proprietary information to manufacture and market BFC TBU and BFC TBU parts pursuant to the

1993 Agreement. Faiveley has not alleged that Wabtec unlawfully disseminated any trade secrets

associated with the BFC TBU during that period, nor did the District Court find that Wabtec

                                                   11
disclosed the trade secrets to any third party after the 1993 Agreement expired. The evidence also

indicated that Wabtec incurred considerable expense in developing BFC TBU so that it would gain a

competitive advantage in bidding for contracts like the Transit Authority’s subway car overhaul.

Disclosure of Faiveley’s trade secrets in connection with a contract to sell BFC TBU or BFC TBU

parts would only undermine the competitive advantage Wabtec has sought.

         Based on this and other evidence, the District Court found that

         Wabtec is not disseminating Faiveley’s manufacturing drawings or other know-how to any
         third parties; indeed, Wabtec appears to be treating them with the same confidentiality that
         they give to their own proprietary information, that they gave to Faiveley’s proprietary
         information during the course of the [1993] Agreement, and that they presumably are
         continuing to give to Faiveley’s proprietary information in the context of the so-called
         grandfathered contracts. . . . [T]here is no reason to conclude that Faiveley’s trade secrets will be “lost
         forever” absent injunctive relief.

Faiveley II, 572 F. Supp. 2d at 409 (emphasis added). It also concluded that “neither Faiveley nor

Wabtec, in the ordinary course of business, pass on manufacturing drawings (which Faiveley claimed

in this case were the documents memorializing its trade secrets) to customers like New York City

Transit.” Id. Accordingly, the facts found by the District Court indicate that there is little or no risk

that Wabtec will further disclose or otherwise irreparably impair Faiveley’s trade secrets.

         In light of Favieley’s failure to demonstrate, and the District Court’s failure to find, that

Faiveley would suffer irreparable harm unless Wabtec was enjoined from disseminating its trade

secrets, the District Court was without authority (1) to enjoin Wabtec from disclosing Faiveley’s

trade secrets to the Transit Authority or other third parties “as a precautionary measure,” id. at 409-

10; and (2) to enjoin Wabtec from entering into new contracts to sell BFC TBU or BFC TBU parts,

id. at 410.4 The District Court did not point to any evidence in the record, nor can we find any, to

         4
           We are also concerned that the District Court’s preliminary injunction against new sales contracts impinges on
lawful commercial activity. See Waldman Pub. Corp. v. Landoll, Inc., 43 F.3d 775, 785 (2d Cir. 1994) (“[A]n injunction
should not impose unnecessary burdens on lawful activity.”). Many of the parts that make up the BFC TBU are in no
way associated with Faiveley’s trade secrets; they are produced by other companies and are readily available on the
market. Although this concern is not the basis for our decision in this case, it may be relevant to any further exploration
of the matter on remand.
                                                            12
support the conclusion that Faiveley would suffer irreparable harm unless Wabtec was enjoined

from doing what the evidence indicated it was unlikely to do in the absence of an

injunction—disseminate or otherwise irreparably impair Faiveley’s trade secrets. In addition,

nothing in the record supports the District Court’s speculation that new sales contracts would result

in an “unacceptably high” risk of dissemination of Faively’s trade secrets. Id. at 410. In the absence

of evidentiary support of irreparable harm, there was no basis for the entry of a preliminary

injunction against Wabtec in this action.

                                            CONCLUSION

       For the reasons stated above, the August 22, 2008 order of the District Court is VACATED

and the cause is REMANDED for further proceedings consistent with this opinion.

       No costs.

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