Abrasic 90 Inc. v. Weldcote Metals, Inc.
364 F. Supp. 3d 888
E.D. Ill.2019Background
- CGW (Camel Grinding Wheels) alleges that long‑time president Joseph O’Mera and two former employees copied company files (pricing, supplier/distributor lists, sales spreadsheets including an “All Items File”) and used them after joining competitor Weldcote; a TRO was entered and remains in place pending this ruling.
- The contested materials were stored on an unprotected shared drive accessible to ~39 of 108 employees; files were unencrypted, not password‑restricted, not marked confidential, and CGW did not require NDAs for most employees, suppliers, or distributors.
- O’Mera left CGW for Weldcote in January 2018 and retained a flash drive with the All Items File; other sales employees took thumb drives and later joined Weldcote; CGW never demanded deletion or return of files upon departure.
- Forensicon performed a forensic review after departures; Weldcote devices accessed numerous CGW files and some data were uploaded to cloud storage. CGW spent >$20,000 on the forensic assessment.
- CGW seeks a preliminary injunction barring Weldcote from entering the abrasives business, from dealing with CGW’s suppliers/distributors, and from using the information; the court held a hearing and denied the preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants misappropriated trade secrets under DTSA/ITSA | CGW: files (esp. All Items File) are trade secrets and were taken and used; injunction needed to prevent irreparable harm | Defs: information was not adequately secret or protectable; defendants had industry knowledge and could obtain similar data | Held: CGW unlikely to succeed — some data compilations could be protectable, but CGW failed to take reasonable measures to keep them secret; trade secret claim weak |
| Whether CGW will suffer irreparable harm absent injunction | CGW: use of the data will cause future, incalculable harm and lost profits; damages may be hard to quantify | Defs: information is stale, of marginal incremental value; customers/suppliers/market factors limit injury; monetary damages are adequate | Held: No demonstration of likely irreparable harm; damages would be quantifiable and information value appears limited |
| Whether state law claims (breach fiduciary duty, unfair competition, unjust enrichment) can support injunction or are preempted | CGW: state claims supplement trade secret theory and justify injunctive relief | Defs: claims are premised on misappropriation and therefore preempted by ITSA/DUTSA; any non‑preempted claims don’t show ongoing harm | Held: Most state claims preempted because they rest on misappropriation; non‑preempted theories do not allege ongoing irreparable harm |
| Whether CFAA supports injunctive relief | CGW: CFAA violation (unauthorized access/copying) caused loss and justifies injunction | Defs: CFAA requires damage or loss (not mere copying); CGW’s costs already incurred and no ongoing threat | Held: CFAA claim cannot support injunction—no ongoing damage/loss to computer systems alleged beyond past forensic costs |
Key Cases Cited
- Valencia v. City of Springfield, 883 F.3d 959 (7th Cir. 2018) (sets Seventh Circuit two‑phase standard for preliminary injunctions)
- Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263 (7th Cir. 1992) (elements of trade secret misappropriation)
- Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714 (7th Cir. 2003) (trade secret requires secrecy and reasonable protective measures)
- Fail‑Safe, LLC v. A.O. Smith Corp., 674 F.3d 889 (7th Cir. 2012) (plaintiff failed trade secret protection where security measures were inadequate)
- Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008) (plaintiff seeking a preliminary injunction must show likely irreparable injury)
- Hecny Transp., Inc. v. Chu, 430 F.3d 402 (7th Cir. 2005) (trade secret characterization does not necessarily preclude claims for theft/fraud/breach of loyalty when independent wrongs exist)