Opinion
CIVIL ACTION NO. 03-4419
October 21, 2003
ORDER AND REASONING
AND NOW, _21st_ this day of October, 2003, upon consideration of the Plaintiff s Motion for a Preliminary Injunction, the Defendants' Opposition, the evidence and arguments presented at the Preliminary Injunction Hearing, and the Parties' post-hearing submissions, it is hereby ORDERED that said Motion is DENIED. The reasons for the Court's decision are stated below.
I. Introduction
The Plaintiff brought this action alleging violations of a covenant not to compete, misappropriation of trade secrets, and Lanham act violations. The Plaintiff claims that Defendant Progressive hired Defendant Cameron, a former employee of the Plaintiff, to help Progressive enter into the direct marketing of labor law compliance posters. The Plaintiff now seeks to enjoin the Defendants from selling labor law posters which were developed as a result of the alleged trade secret misappropriation and from competing against the Plaintiff by soliciting its customers.
II. Standard for a Preliminary Injunction
Injunctive relief, like other equitable remedies, is extraordinary in nature and should only be used in limited circumstances. Frank's GMC Truck Ctr., Inc. v. General Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988). A plaintiff must demonstrate four elements in order to obtain a preliminary injunction: (1) plaintiff is reasonably likely to prevail on the merits of its claim; (2) plaintiff is likely to suffer irreparable injury without relief; if these first two threshold showings are made, the Court must then consider, to the extent relevant, (3) whether an injunction would harm the defendant more than denying relief would harm the plaintiff; and (4) whether granting relief would serve the public interest. ACLU v. Ashcroft, 322 F.3d 240, 250 (3d Cir. 2003);Tenafly Eruv Ass'n, Inc. v. Borough of Tenaflv, 309 F.3d 144, 157 (3d Cir. 2002).
Although the Court finds that the Plaintiff has failed to show that it is likely to succeed on the merits, the Court also notes that the balancing of harms in this case cautions against imposing an injunction. The Defendant is a new entrant into the labor poster market. The Plaintiff in contrast is the largest competitor. The proposed injunction sought by the Plaintiff would prevent Defendant from competing in the labor law poster market entirely, which would cause Progressive a massive waste of investment, loss of revenue, and interruption of any ongoing business relationships. To the contrary, the Plaintiff was unable to show that competition from Progressive has affected its business or that it will cause Plaintiff to fall short of yearly sales expectations. Accordingly, the harm caused to the Defendants in issuing this injunction would greatly outweigh any harm to the Plaintiff if it is not issued.
III. Likelihood of Success on the Merits A. Contractual Claims
This Court has doubts as to whether a valid covenant not to compete exists. The Defendants have shown evidence that the Plaintiff breached the employment contract by not providing Cameron the thirty-day notice of termination and six months severance pay. Accordingly, the doctrine of unclean hands, which provides that a party breaching a contract has no standing in equity, precludes the Plaintiff from obtaining an injunction based on its contract claims. See Bradley v. Health Coalition Inc., 687 So.2d 329 (Fla.Ct.App. 1997). B. Trade Secret Claims
The Court applies Florida law to the contractual claims in this case in accordance with a choice of law provision in Cameron's Employment agreement. Neither party has disputed the enforceability of this agreement.
The Plaintiff has failed to show this Court that there is a likihood that the Defendant used any trade secrets. It is established law that when information is publicly disclosed it can no longer be considered a trade secret. Van Products Co. v. General Welding Fabricating Co., 419 Pa. 248, 268 (1965). Further, generalized knowledge and know-how gained by an employee cannot be a trade secret. Id. at 261. It appears from the current record, that all of the allegedly misappropriated trade secrets cited by the Plaintiff were either publically disclosed or general know-how gained by Cameron during his employment. Fort example, the Plaintiff cannot claim that the look of Plaintiff's website, its publically sold products, or its publically disclosed prices are trade secrets. The evidence does not support the claim that confidential marketing research was taken by Cameron because no documents or computer data reflecting this research has been found. This is not to say that such evidence would be required to prove misappropriation, but it could help convince the Court that Cameron and Progressive have relied on something more than public disclosures and general knowledge in launching the labor law poster business. For the time being, however, the record fails to show that it is likely to succeed on these claims.
The claim that the Defendants copied its products is particularly difficult to comprehend, as the content of the labor law posters is mandated by the federal government.
C. Lanham Act Claims
The Plaintiff s do not seem likely to succeed on their Lanham Act claims because there has been no evidence that any customers were confused as to source offers to purchase posters. The Lanham act codifies the traditional law of unfair competition which prohibits competitors from causing confusion as to the source of products. Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 462 (3d Cir. 1983). To prove such confusion a plaintiffs must show that consumers would probably assume the product or service being offered are associated with the Plaintiff. See Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1229 (3d Cir. 1978). The Plaintiff's rely on two customers, who have stated that they were only confused by one of Progressive's advertisements as to whether there had been a change in labor law. This, however, is not the type of confusion prohibited by the Lanham Act. Not only has there been no actual proof of confusion, but it seems unlikely that there could be any confusion of customers. Upon evaluation of the marketing materials of both Progressive and Plaintiff, Progressive's name, which is unmistakably different from Plaintiff's, is clearly stated on all such materials and no reference is made to Plaintiff's name or products.
IV. Costs
Defendants seek costs and attorney's fees under a Florida law which authorizes such award to the prevailing party in any case involving the enforceability of a restrictive covenant. Fla. Stat. Ann. § 542.335(1)(k). Because this is merely a preliminary motion, the Court cannot conclude that the Defendants are "prevailing parties," and thus an award of costs would be premature.
V. Conclusion
Because the Court finds that the Plaintiff has failed to show that it is likely to succeed on the merits of its claims and that the balance of harms weighs in favor of not granting the injunction, the Plaintiff's Motion is denied.
AND IT IS SO ORDERED.