When a company’s trade secrets are stolen, can it obtain preliminary injunctive relief while litigation is pending? The Massachusetts Supreme Judicial Court says not unless the company can make a showing of irreparable harm.
The SJC’s decision in Daikin Applied Americas Inc. v. Russo, decided October 14, 2026, has significant implications for companies seeking preliminary injunctions to protect their trade secrets and represents a departure from rulings by the U.S. District Court for the District of Massachusetts.
The Dispute:
Daikin provides and maintains HVAC systems for institutional clients. Two former employees started a competing company while employed by Daikin, allegedly using confidential company information forwarded to their private email accounts, including customer information, pricing and cost data, and other details.
Daikin sued, claiming misappropriation of trade secrets under Massachusetts law. It sought a preliminary injunction imposing four conditions, the last of which was an order requiring the defendants to refrain from soliciting Daikin’s customers. The trial court denied the requested nonsolicitation injunction and Daikin appealed.
No Presumption of Irreparable Harm:
In Massachusetts, a party seeking an injunction must ordinarily demonstrate that (1) it is likely to succeed on the merits; (2) it will suffer irreparable harm – i.e., harm that cannot be compensated by money damages – if the injunction is not issued while litigation is ongoing; and (3) the risk of irreparable harm to the party seeking the injunction outweighs the risk of irreparable harm to the nonmoving party if the injunction issues, taking into account the likelihood of success on the merits.
In seeking preliminary injunctive relief, Daikin argued that trade secret cases differ from the ordinary rule and that a party who demonstrates a likelihood of success on the merits of a trade secret claim is entitled to a presumption of irreparable harm. This argument was not without reason. There is a series of cases out of the U.S. District Court for the District of Massachusetts holding exactly that: moving parties in trade secret cases are entitled to a presumption of irreparable harm once likelihood of success has been established, most recently in DraftKings Inc. v. Hermalyn, on the basis of the belief that a trade secret, once lost, is lost forever.
The SJC rejected Daikin’s argument. The Court explained that traditional principles of equity require a case-by-case analysis of the presence or absence of irreparable harm, that a presumption would depart from the traditional analysis, and found no reason for such departure.
The SJC also rejected Daikin’s arguments that, even absent a presumption, it could establish irreparable harm on the basis of a loss of goodwill with its customer base, lost HVAC sales, and the lost value of any accompanying maintenance contracts. The Court found that such harms are compensable by monetary damages.
Interestingly, the SJC noted that the defendant employees had not signed any noncompetition or nonsolicitation agreements with Daikin and, accordingly, its requested preliminary injunction sought a benefit for which it had not bargained and not paid the employees. In light of Massachusetts’ rather stringent limitations on the enforceability of noncompetition provisions restricting employees, the SJC’s nod to this unbargained-for benefit should serve as a warning to companies seeking to impose restrictions against competition by former employees through preliminary injunctions when the companies failed to bargain for such rights contractually.
Irreparable Harm, MUTSA, Noncompetition, Nonsolicitation, Preliminary Injunction,