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May 26, 2022

There Should Be No Secret about Scope of Trade Secret Injunction

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In the context of an interlocutory appeal, the US Court of Appeals for the Federal Circuit vacated a portion of a preliminary injunction in a case involving alleged misappropriation of trade secrets for failing to provide sufficient specificity as to what it prohibits. Carl Zeiss Meditec, Inc. v. Topcon Medical Systems, Inc. et al., Case No. 2021-1839 (Fed. Cir. May 16, 2022) (Hughes, Linn and Stoll, JJ.)

Topcon Medical filed an interlocutory appeal, seeking vacatur of a preliminary injunction granted by a district court in the Northern District of California. Topcon asserted that the injunction failed to satisfy Federal Rule of Civil Procedure 65(d) because it did not provide an adequate description of what specific acts are prohibited. Topcon argued that the injunction is ambiguous as to whether it applies to all of its platform or only to a certain module. Topcon further argued that the ambiguities are exacerbated by the district court's misunderstanding of evidence presented from a declaration and deposition in the case and the court's use of that evidence to draw conclusions about the misappropriation of trade secrets.

The Federal Circuit agreed with Topcon that the preliminary injunction failed to provide any notice required under Rule 65(d) as to whether—and to what extent—Topcon's continued use of the platform and modules is outlawed. As to the basis for the injunction, the Court noted that "the district court did not address whether all [the] information [asserted in the complaint] was confidential, or whether it was acquired, used, or disclosed improperly. Second, as Topcon convincingly argues, the scope of the asserted trade secrets captured under CZMI's argument is staggering, including unspecified software architecture, unnamed user interfaces, generically noted research, and other information simply identified as trade secrets." The Court explained that Rule 65(d) expressly requires that the injunction order must "describe in reasonable detail—and not by referring to the complaint or other document—the act or acts restrained or required." The Court further agreed with Topcon that the district court's reference to declaration evidence related to data that was not the data on which the misappropriation claim was based, which "exacerbate[d] the ambiguity of the injunction and in no way support[ed] extending the injunction to cover [other parts of the accused] platform or …decoder."

Because the grant of injunction did not identify the specific acts prohibited, the Federal Circuit vacated and remanded the injunction to the district court to clarify the scope of the injunction.

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