Last week, the Federal Circuit issued an opinion in Insulet Corp. v. EOFlow, Co., 2024-1137 (June 17, 2024), reversing and remanding a district court’s grant of a preliminary injunction in a trade secrets case. Insulet, a maker of insulin pump patches, sought a preliminary injunction against competitor EOFlow, alleging misappropriation of trade secrets under the Defend Trade Secrets Act (DTSA). The district court granted the preliminary injunction, broadly enjoining EOFlow from manufacturing, marketing, or selling any product designed, developed, or manufactured using Insulet’s alleged trade secrets. EOFlow appealed.
The Federal Circuit reversed, holding the district court abused its discretion in granting the “extraordinary remedy” of a preliminary injunction. Writing for the panel, Judge Lourie explained that “establishing entitlement to such injunctive relief still requires a showing of the existence of a trade secret and misappropriation, as well as the satisfaction of the usual, established factors justifying the grant of a preliminary injunction.” The Court held the district court failed to properly analyze several key factors.
First, the Court determined that the district court ignored the DTSA’s 3-year statute of limitations in assessing Insulet’s likelihood of success on the merits. The Court noted that “if the statute of limitations for filing a DTSA claim had expired, Insulet’s claims would be time-barred and therefore would have no chance for success.”
Second, the Court determined that the district court failed to identify the trade secret with specificity, explaining that the district court “advanced a hazy grouping of information that the court did not probe with particularity to determine what, if anything, was deserving of trade secret protection.” Further, the district court did not assess whether the alleged trade secrets were ascertainable through public means like reverse engineering or patent disclosures. In addition, the district court failed to evaluate the independent economic value of the purported trade secrets.
Third, the Court found error in the irreparable harm analysis, rejecting the district court’s reliance on a potential acquisition of EOFlow by Medtronic as grounds for irreparable injury. The Court emphasized that generalized fears of larger competitors or theoretical sales remediable by damages do not constitute irreparable harm. While not foreclosing Insulet's ability to ultimately succeed on its claims, the Court concluded Insulet had not shown a likelihood of success warranting a preliminary injunction.
Coauthored by Jeffrey Blake & Alara Kucukseyhan.
