I’ve said it before: When it comes to protecting trade secrets, time is of the essence. A recent case out of the Middle District of Florida, Primo Broodstock, Inc. v. American Manufacture, Inc., shows what happens when a company that suspects trade-secrets theft sleeps on its rights. But this case has an interesting twist: The court suggests that the plaintiff should have moved quicker, even absent sufficient evidence of misappropriation. A copy of the order can be downloaded below.
This case involves shrimp. The plaintiff genetically engineered disease-resistant shrimp, called Primo Shrimp. It contracted to use the defendant’s shrimp-growing facility to study and breed Primo Shrimp for worldwide distribution. As often happens, the relationship fell apart. This led to an initial lawsuit, which the parties settled pursuant to an executed term sheet. Later, the plaintiff suspected that the defendant was going to sell live Primo Shrimp in China, in violation of the parties’ agreement and the plaintiff’s intellectual property rights in the shrimp.
Thus, the plaintiff filed this suit, which includes claims for violations of the Defend Trade Secrets Act and the Florida Uniform Trade Secrets Act. The plaintiff sought, twice, an ex parte temporary restraining order. The court denied both requests.
This opinion deals with the second request for a TRO. The court’s decision was, in large part, based on the plaintiff’s failure to move quickly:
More importantly, even if there is an emergency, it is one Plaintiff should have sought to prevent months ago. Plaintiff knew since at least as early as mid–September that Defendants believed the live Primo Shrimp were their property to sell after being left at AMI’s facility. Plaintiff also had evidence that Defendants had been actively looking (even if not yet “attempting”) to sell Primo Shrimp breeders to the market since at least as early as July 2016. Yet Plaintiff did not act to protect any continued legal rights in the animals. Having failed to do so, Plaintiff is not now entitled to ex parte injunctive relief.
But this case is more than just another illustration of the need to move quickly. In a footnote, the court suggests that the plaintiff should have done so even absent sufficient evidence:
Plaintiff’s failure to act is particularly inexplicable in light of the parties’ contentious relationship and prior litigation history. In his affidavit, Vice President Randall Aungst explains that Primo delayed seeking injunctive relief because, until recently, there was insufficient evidence showing that AMI was attempting to sell live Primo Shrimp. Maybe so, but that does not mean Primo could not have sought declaratory relief as to the parties’ rights and obligations under the Term Sheet, after receiving the letter from AMI’s attorney.
So according to the court, the plaintiff should have, at a minimum, brought a declaratory judgment action to resolve the dispute. Or filed for an ex parte TRO earlier, even though the plaintiff did not have sufficient evidence.
I disagree with the court’s analysis. Parties should not file for an ex parte TRO unless they can offer evidence justifying that extraordinary relief. And while a party is investigating, it should not have to file a declaratory judgment action, thus tipping the defendant off to its intentions. But this case suggests otherwise.
Investigating trade-secrets theft can create a strategic dilemma. Sue too early, without sufficient evidence, and the court could deny your request for an early injunction. Wait, and the court could say that you slept on your rights. These considerations require complex analysis that must be performed extremely quickly. That’s why it is critical to work with a trade-secrets attorney before you suspect misappropriation. That way, once you discover misconduct, you have access to an expert attorney who is familiar with your business and can offer informed advice as quickly as possible.
Primo Broodstock Inc. v. American Mariculture Inc.