Labor & Employment Law Daily Wrap Up, TORT CLAIMS—D. Mass.: Preliminary injunction sought by software company against former employee denied, (Sep 28, 2026)

By Brian Craig, J.D.

The software company failed to show likelihood of success on the merits of its claims for copyright infringement and misappropriation of trade secrets for source code.

Concluding that a software company in the medical imaging sector, PaxeraHealth Corp., failed to show that it is likely to prevail on the merits of its claims against a former employee for copyright infringement and misappropriation of trade secrets, the federal district court in Boston, Massachusetts has denied a request for a preliminary injunction. The court concluded that PaxeraHealth failed to show likelihood of success on the copyright infringement claim because the software company failed to show substantial similarity in the copyrighted source code and alleged infringing software. The court also concluded that substantial delay of more than three years shows a lack of irreparable harm to warrant a preliminary injunction (PaxeraHealth Corp. v. Mhanna, No. 1:26-cv-11771-MJJ (D. Mass. Sept. 22, 2026)).

PaxeraHealth Corp. is a software company in the medical imaging sector. PaxeraHealth alleges that a former employee stole PaxeraHealth’s source code as well as other confidential business information, used that stolen intellectual property to start his competitor business, HealthTom, LLC, and tortiously interfered with PaxeraHealth’s business by convincing PaxeraHealth’s clients to stop using their services and instead use HealthTom’s services. PaxeraHealth filed suit in the federal district court in Massachusetts against the former employee, and the former employee’s competing business, HealthTom. The complaint alleges claims for copyright infringement, misappropriation of trade secrets, tortious interference with business relations, and related actions. PaxeraHealth moved for a preliminary injunction.

Copyright infringement. The court first found that PaxeraHealth failed to show likelihood of success on the merits of the copyright infringement claim. The evidence in support of copying is speculative and conclusory at best. The complaint fails to allege substantial similarity with the copyrighted source code and the alleged infringing software. Allegations that because the employee accessed and downloaded the source code, without showing substantial similarity, are conclusory. Additionally, PaxeraHealth’s argument that the infringing software was developed in only three months because it was registered only three months after the employee left PaxeraHealth is contradicted by PaxeraHealth’s own complaint.

Trade secrets. The court also concluded that PaxeraHealth failed to show likelihood of success on the merits of the misappropriation of trade secrets claims. PaxeraHealth failed to show the former employee actually used the alleged trade secret information. Mere possession or acquisition, without non-speculative allegations of actual use, is insufficient. Even assuming, however, that the former employee’s acquisition of the information was improper, the complaint fails to allege non-speculative facts showing that the former employee actually used the confidential business information.

Tortious interference. Next, the court found that the software company failed to show that it is likely to prevail on the merits of its tortious interference claim. A tortious interference claim requires actual malice, a spiteful, malignant purpose, unrelated to the legitimate corporate interest. PaxeraHealth failed to sufficiently allege that the former employee acted with the requisite improper motive or employed improper means. The former employee’s knowledge that a medical provider was a PaxeraHealth client, standing alone, is insufficient to establish improper interference.

Irreparable harm. Finally, the court found that the software company failed to show irreparable harm. PaxeraHealth waited three years after the employee left the software company before filing the complaint. This substantial delay of more than three years shows a lack of irreparable harm. Furthermore, PaxeraHealth failed to identify specific facts demonstrating actual or imminent reputational injury, but instead relied on its broader, conclusory assertion that it cannot compete on price because of the allegedly copied software. Because PaxeraHealth failed to show a likelihood of success on the merits of the claims, or irreparable harm, the court denied the motion for a preliminary injunction.

The Case is No. 1:26-cv-11771-MJJ.

Judge: Joun, M.

Attorneys: Nathaniel J. Lichtin (Parker Key Law LLC) for PaxeraHealth Corp. Hozaifa Cassubhai (Bailey Duquette PC) for Omar Mhanna.

Companies: PaxeraHealth Corp.

Cases: TortClaims Procedure RemediesDamages MassachusettsNews