Mallet and Company Inc v. Ada Lacayo
16 F.4th 364
| 3rd Cir. | 2021Background
- Mallet, an 80+-year baking release-agent manufacturer, alleges Synova (a Bundy subsidiary) launched competing release agents using misappropriated Mallet information.
- Two former Mallet employees, Ada Lacayo and William Bowers, were hired by Synova; evidence showed bulk copying of Mallet files, emails to personal accounts, and use of Mallet documents on Synova systems.
- Mallet sued for trade-secret misappropriation (DTSA and PUTSA), breach of contract, unfair competition, and sought a preliminary injunction that broadly barred Defendants from using Mallet information and from producing or selling competing release agents.
- The District Court granted a sweeping preliminary injunction (including a near-total production ban and employee restraints) and set a $500,000 bond; it identified 13 broad categories of "protected materials" but did not specify particular trade secrets.
- The Third Circuit vacated the injunction and remanded, holding the District Court failed to (1) identify trade secrets with sufficient particularity under Rule 65(d) and DTSA standards, (2) narrowly tailor the injunction (production ban and sweeping employment restriction were overbroad), and (3) justify the $500,000 bond with case-specific analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trade secrets were sufficiently identified to support a preliminary injunction | Mallet: broad categories and incorporated exhibits (patents, docs, testimony) adequately specify trade secrets and show misappropriation | Defendants: descriptions are generic; injunction lacks the particularity required by Rule 65(d) and DTSA | Held: Vacated — plaintiff must identify specific trade secrets with reasonable particularity before injunction may issue |
| Whether the record supports misappropriation / irreparable harm | Mallet: copying, concealment, and rapid product launch show misappropriation and likely irreparable harm | Defendants: access/industry knowledge and public sources undercut claim; injunction too speculative | Held: Remand — possible circumstantial evidence exists, but appellate review impossible without specific trade-secret identification |
| Whether injunction scope (production ban and employment restraints) was permissible | Mallet: broad relief needed to prevent use of misappropriated know‑how and protect customers/goodwill | Defendants: ban prevents lawful competition and is not tied to particular misappropriated secrets; Bowers had no noncompete | Held: Overbroad — injunction must be narrowly tailored and avoid restraining lawful conduct beyond what is necessary to protect identified secrets |
| Whether the bond ($500,000) was appropriate | Mallet: relatively low risk of wrongful enjoinment given record; $500k consistent with similar cases | Defendants: proposed much larger bond based on economic harm; $500k unsupported | Held: Abuse of discretion — bond must be tied to injunction scope and case-specific harms; District Court did not adequately justify amount |
Key Cases Cited
- Schmidt v. Lessard, 414 U.S. 473 (1974) (injunctions must state reasons and terms specifically under Rule 65(d))
- Oakwood Labs. LLC v. Thanoo, 999 F.3d 892 (3d Cir. 2021) (trade secrets must be identified with sufficient particularity)
- Reilly v. City of Harrisburg, 858 F.3d 173 (3d Cir. 2017) (four‑part preliminary injunction test and standards for likelihood of success and irreparable harm)
- Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010) (standard of review for preliminary injunctions)
- SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244 (3d Cir. 1985) (distinguishing public/market‑disclosed information and reverse‑engineering issues in trade‑secret law)
- Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) (patent disclosures vs. trade‑secret protection)
- Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700 (3d Cir. 2004) (appellate reversal required when district court proceeds from erroneous legal view)
- Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797 (3d Cir. 1989) (purpose and deterrent effect of Rule 65(c) bond)
- Sprint Commc'ns Co. L.P. v. CAT Commc'ns Int'l, Inc., 335 F.3d 235 (3d Cir. 2003) (appellate review of injunction bond amount)