Key Points

  • The Supreme Judicial Court held that a likelihood of success on a trade secret misappropriation claim under the Massachusetts Uniform Trade Secrets Act or the common law does not create a presumption of irreparable harm.
  • Ordinary equitable principles govern preliminary injunctions in trade secret cases, and the judge must consider the specific allegations, the type of irreparable harm likely to arise, and the form of relief most likely to mitigate it.
  • The court treated a presumption as inconsistent with the act's direction that misappropriation may be enjoined 'upon principles of equity' and relied on eBay Inc. v. MercExchange and Seventh and Tenth Circuit decisions.
  • Daikin's claimed lost HVAC sales and maintenance contracts were quantifiable, and it presented no evidence of lost goodwill, so the denial of a one-year customer-solicitation injunction was affirmed.
  • The defendants remain under an agreed order to return and not use Daikin's confidential information.

Massachusetts' highest court ruled Wednesday that a company suing former employees for misappropriating its trade secrets must prove it faces irreparable harm, meaning an injury that money damages at the end of the case could not repair, before a judge may order the former employees to stop competing for its customers.

The Supreme Judicial Court affirmed a Superior Court judge's refusal to bar two former employees of Daikin Applied Americas Inc., which provides and maintains heating, ventilation and air conditioning systems for institutional clients, and their new company, RPAC LLC, from soliciting 75 Daikin customers for one year. Chief Justice Budd wrote the opinion for the seven-member court, which had transferred the appeal from the Appeals Court on its own initiative.

The decision rejects a rule that Daikin drew from federal trial-court decisions in Massachusetts. Under that rule, a trade secret plaintiff that showed it would likely win its case was presumed to suffer irreparable harm. Under the state high court's ruling, a company seeking a preliminary injunction must instead show with evidence that it would suffer harm a final judgment could not fix.

According to the opinion, Joseph Russo worked at Daikin as a service supervisor who scheduled technicians and worked with salespeople on pitches, and Andrew Porter worked there as a technician. Daikin alleges that, beginning in 2024, the two men e-mailed Daikin information to their personal accounts, including work contacts, bids showing pricing and costs, internal service bulletins and equipment passwords. They formed RPAC in December 2024 while still employed at Daikin and left to work there in March 2025.

Daikin sued in May 2025 under the common law and the Massachusetts Uniform Trade Secrets Act. Except for one document relating to a nonpublic bid, the defendants denied that the information they took was confidential. Before the injunction hearing, however, they agreed to return any confidential information and not to use it, and Superior Court Judge John Pappas entered an order reflecting that agreement.

The hearing went forward on the one demand the defendants refused: a one-year ban on soliciting Daikin's customers. Judge Pappas found "genuine disputes as to whether some of the information that was taken was, in fact, confidential and/or trade secrets." He applied the ordinary requirement of specific proof of irreparable harm and denied the motion because Daikin "[did] not allege that the monetary loss it would suffer as a result of the defendants' alleged wrongful use of information is enough to threaten the very existence of its business."

The judge also noted that Daikin had no nonsolicitation or noncompetition agreements with the two men. The Supreme Judicial Court called that observation "a tacit reference to the fact that Daikin sought a benefit for which it had not bargained and for which it had not compensated Russo or Porter."

On appeal, Chief Justice Budd wrote that economic harm generally can be remedied by a money judgment unless it threatens "the very existence of the movant's business." Daikin argued it would lose goodwill with its customers, but the court held that Daikin "failed to present any evidence to that effect." Its asserted losses, lost HVAC sales and the maintenance contracts that accompany them, "are quantifiable losses," the court held.

The court accepted for argument's sake Daikin's claim that a maintenance contract's precise value is unknown in advance, but held that the loss could still be measured. "Certainly a robust approximate value can be derived using economic models based on historic information," Chief Justice Budd wrote. The court added that the only affidavit Daikin filed, from its district manager, did not claim the losses were immeasurable or that the defendants' outreach threatened Daikin's goodwill.

Daikin's principal argument was that a likely win on its trade secret claim entitled it to a presumption of harm. It relied on DraftKings Inc. v. Hermalyn, a 2024 federal district court decision in Massachusetts, affirmed by the First Circuit, which stated that "irreparable harm is presumed at the preliminary injunction stage when the plaintiff shows a likelihood of success on its claims for misappropriation of trade secrets." The state court noted that in nearly all the reported cases Daikin cited, the courts found the plaintiff had demonstrated irreparable harm regardless of any presumption.

"Were we to adopt Daikin's theory, as long as parties seeking a preliminary injunction on a trade secrets claim could demonstrate a likelihood of success on the merits, no irreparable harm analysis would be required," the chief justice wrote. The court held that result inconsistent with the trade secrets act, which provides that misappropriation "may be enjoined upon principles of equity," and with the common-law tradition of deciding each injunction request case by case.

The court found support in eBay Inc. v. MercExchange, LLC, the 2006 decision in which the U.S. Supreme Court rejected presumptions of irreparable harm in patent cases, and in New York Times Co. v. Tasini, a 2001 copyright decision. It also cited decisions of the Seventh Circuit in 2021 and the Tenth Circuit in 2017 refusing to presume irreparable harm in trade secret cases.

"Applying the same principles to this case, we reject the presumption Daikin proposes and instead hold that ordinary equitable principles should apply," the court held. In a trade secret case, the court wrote, a judge "should consider the specific allegations, the type of irreparable harm likely to arise, and the form of injunctive relief most likely to mitigate any such harm."

Applying that standard, the court held that Judge Pappas did not abuse his discretion. The defendants have agreed, and been ordered, to return Daikin's confidential information and to refrain from using it, including the alleged customer list. The court also denied Daikin's request for appellate costs.

Stephen T. Melnick represented Daikin. Ronald W. Dunbar, Jr. represented Russo, Porter and RPAC.

The ruling resolves only Daikin's interlocutory appeal from the denial of preliminary relief.