Protection of trade secrets and proprietary information from a business’ competitors can be a critical part of owning a company. An injunction may become necessary to stop a competing company from possessing or using those trade secrets for their own benefit. The injunction, however, must be specific enough for the enjoined party to understand what they are no longer allowed to do. Peter Mavrick is a Fort Lauderdale trade secret attorney who represents businesses in trade secret litigation and other business litigation.
In American Red Cross v. Palm Beach Blood Bank, Inc., 143 F. 3d 1407 (11th Cir. 1998), Palm Beach Blood Bank, Inc. (“Palm Beach”) opened a branch in Miami. Palm Beach hired a person for the Miami Branch, who previously worked for the American Red Cross (“Red Cross”). Palm Beach and Red Cross competed for sponsors and donors. The former employee took a donor list from Red Cross and provided it to Palm Beach. Palm Beach then contacted the persons on Red Cross’ list to recruit its blood donors.
Red Cross filed a lawsuit against Palm Beach and alleged that its donor lists were trade secrets that Palm Beach illegally misappropriated. The district court granted Red Cross’ motion for a temporary restraining order (“TRO”) against Palm Beach. The TRO prohibited Palm Beach from, among other things, “soliciting donations from any Red Cross donor” or “in any way adversely affecting Red Cross’s reputation or goodwill.” The district court held evidentiary hearings on Red Cross’s motion to convert the TRO into a preliminary injunction. Palm Beach moved to modify the TRO to allow Palm Beach to accept donations from persons whom it had not solicited from any Red Cross list. The district court denied the motion to modify the TRO, without explanation. The district court entered a broad preliminary injunction against Palm Beach.
The temporary injunction prohibited Palm Beach, among other things, from: (1) “contacting and/or soliciting donations from any donor whose name is contained on [Red Cross’] donor lists,” and (2) “possessing, copying, or making unauthorized use of [Red Cross’] lists or any other documents that contain trade secrets that are the proprietary property of Plaintiff” and Palm Beach moved for clarification as to this restriction. The district court denied the motion. Palm Beach immediately appealed.
Palm Beach contended that the temporary injunction’s prohibitions on (1) communication with Red Cross’ donors, and (2) possession of Red Cross’ trade secrets were too vague. The Eleventh Circuit Court of Appeals agreed. Rule 65(d) of the Federal Rules of Civil Procedure provides, in pertinent part, that “[e]very order granting an injunction … shall be specific in terms; [and] shall describe in reasonable detail … the act or acts sought to be restrained….” The appellate court held the injunction did not give Palm Beach sufficient notice as to what actions the district court means to prohibit. American Red Cross v. Palm Beach Blood Bank, Inc. found that Palm Beach had no way to determine whether a given member of the public might happen to appear on a Red Cross list not in Palm Beach’s possession.
The district court itself acknowledged “[t]he American Red Cross has been in existence for 50–odd years according to the testimony, or maybe longer, so it is very difficult, I presume, to go out and compete in the recruiting of donors without touching upon someone in this five percent of the donating population that is or has been at some point in time a Red Cross donor.” Because an ordinary person in Palm Beach’s position would not be able to figure out whether a member of the public was on a Red Cross’ donor list, the appellate court held that the injunction against contacting and/or soliciting people on a Red Cross donor list was too vague to be enforced.
Red Cross contended that the nonspecific injunction was proper because the specific information that was needed was known only to Palm Beach, the party to be enjoined. The appellate court, however, held that the district court’s findings did not provide a factual basis as to why Palm Beach should be thought to have knowledge of Red Cross’ alleged trade secrets. The appellate court held that “[w]hile we would not expect an injunction in a case such as the one at bar to describe with particularity each of the documents that Palm Beach might misappropriate, we do think that the district court’s injunction should put Palm Beach on notice as to the types of information, ‘other’ than ‘lists,’ to which it applies.”
Because the American Red Cross could not inform the Court of what trade secrets it had beyond donor lists, the appellate court held that the injunction was too vague to be enforced. For these reasons, the appellate court vacated the preliminary injunction and remanded the case to the district court for entry of more particularized findings of fact. If upon remand, the district court concluded that Red Cross showed a substantial likelihood of success on the merits of its claims, the district court could issue a narrower injunction to protect Red Cross’s trade secret rights.
Peter Mavrick is a Fort Lauderdale trade secret lawyer. This article does not serve as a substitute for legal advice tailored to a particular situation.