Does proving trade secret misappropriation create a presumption of harm? Innosys v. Mercer Explained

In a significant decision for Utah practitioners handling trade secret litigation, the Utah Supreme Court in Innosys v. Mercer clarified when a plaintiff can obtain injunctive relief for trade secret misappropriation without proving quantifiable damages.

Background and Facts

InnoSys hired Amanda Mercer as an engineer and required her to sign a non-disclosure agreement. After her termination, Mercer forwarded confidential emails to her personal Gmail account, copied a confidential business plan to a thumb drive, and disclosed protected information in an unemployment benefits hearing. Despite these admitted disclosures, the district court granted summary judgment for Mercer, finding InnoSys failed to show actual harm. The court also imposed rule 11 sanctions and awarded attorney fees against InnoSys.

Key Legal Issues

The central issue was whether InnoSys could survive summary judgment on its claims for trade secret misappropriation under the Uniform Trade Secrets Act (UTSA) and breach of contract without proving quantifiable economic harm. The court also addressed whether a presumption of irreparable harm applies when a plaintiff establishes a prima facie case of misappropriation.

Court’s Analysis and Holding

The Utah Supreme Court reversed, holding that InnoSys established a prima facie case of misappropriation under both unlawful disclosure and unlawful acquisition theories. Critically, the court ruled that such a showing creates a rebuttable presumption of irreparable harm based on the property-like nature of trade secrets and the difficulty of measuring their economic value. The court analogized trade secrets to real property, noting that trespass is actionable regardless of measurable damage because it violates the owner’s right to exclude others.

Practice Implications

This decision provides important guidance for Utah practitioners. Plaintiffs seeking injunctive relief for trade secret misappropriation need not prove quantifiable damages if they can establish the basic elements of misappropriation. However, defendants can still rebut the presumption by showing, for example, that the alleged trade secrets have become generally known. The court also clarified that voluntary cessation of wrongful conduct does not automatically defeat injunctive relief unless the defendant proves it is “absolutely clear” the conduct cannot reasonably recur.