Your employees quit and went to work for a competitor.

You’re pissed.

And you want to sue your competitor for stealing your trade secrets. As well as get a preliminary injunction stopping use of those trade secrets.

Or you’re on the opposite side of all that.

Regardless. The law’s the same either way.

Getting a preliminary injunction requires showing irreparable harm. That’s hard.

And a new case out of northern California, Swarmify v. Cloudflare, shows just how hard it is.

The Allegedly Stolen Tech

Swarmify’s sole business is creating a better method of streaming video on the Internet. Cloudflare’s business involves cloud-based tech generally.

Cloudflare met with Swarmify about maybe buying them out. But that didn't happen. And Cloudflare ended up hiring several of Swarmify's employees instead.

Then later Cloudflare launched its own streaming service. Which was based on a similar concept as Swarmify’s.

The Preliminary Injunction

Swarmify sought to preliminary enjoin the operations of Cloudflare’s entire streaming video service.

This requires real evidence of irreparable harm. Swarmify provided none. 

Instead it just provided conclusory statements. Blanket statements like it will be deprived of “years of research and millions of dollars spent developing the Technology.” And that it “will suffer injury” and be prevented “from effectively marketing its own initiative Technology.”

Those are broad-sweeping claims. But evidence must be rooted in fact. And none of these were.

Except one. 

Swarmify provided an email supposedly showing that it lost an investor due to Cloudflare.

Yet the email didn't show that. Instead, the email showed that Swarmify lost the investor because “competing against Cloudflare and all the other video incumbents is a challenging position, especially when the Bigs . . . all build their streaming in-house.”

So Swarmify lost the investor because of heavy competition in the market generally, not because of an alleged theft of trade secrets.

There’s more. The claim of lost business is “textbook reparable harm.” Whatever profit Cloudfare improperly generates could be compensated with a damages award.

Nascent Industries

If you're in a young industry, getting a preliminary injunction will be easier. 

Take driverless cars. Nobody has commercialized the technology, though lots are trying. So calculating damage from the loss of a competitive position could be incredibly hard to qualify.

But the video streaming industry isn't a nascent industry. YouTube's been there for more than a decade. Netflix too. 

Narrow claims

Part of Swarmify’s problem was that it was seeking a preliminary injunction against the entire streaming service. If it instead staked its claim on same narrow part of that streaming service, it might have actually won.

Overbroad Trade Secret Disclosures

The court also chastised Swarmify for the items it was claiming to be trade secrets in its CCP § 2019.210 disclosure.

The disclosure “purport[ed] to lay wholesale claim to such nebulous, sweeping categories as ‘research and information,’ ‘methods for implementing,’ and ‘vendors,’ does not even come close to identifying plausible trade secrets with ‘reasonable particularity’ as required by Section 2019.210.”

Even worse. Swarmify kept shifting how it describes its trade secrets. The court's description of this bears repeating in full:

Throughout briefing and during the hearing on this motion, Swarmify’s counsel has toggled between claiming broad, sweeping concepts about streaming in general to counter arguments that Cloudflare never used the supposed trade secrets and claiming narrow, specific implementations of a particular streaming method to dodge arguments that the supposed trade secrets do not qualify as such because they remain generally known in the field. . . . It nevertheless bears mentioning that Swarmify’s attempts to set up its purported trade secrets as elusive moving targets do not bode well for the merits of its claims.