IP Law Daily, TRADE SECRETS—5th Cir.: Denial of injunction vacated due to failure to comply with procedural rules, (Nov 6, 2014)

By Jody Coultas, J.D.

The U.S. Court of Appeals in New Orleans has vacated and remanded the judgment of a district court denying a request by Software Development Technologies (SDT) for a preliminary injunction because the district court failed to enter findings of fact and conclusions of law, as required by procedural rules (Software Development Technologies v. TriZetto Corporation, November 5, 2014, Per Curiam).

SDT provided software testing services to TriZetto Corporation. However, a dispute arose over the use and licensing of the SDT’s “Software Testing in the Real World” (STRW) methodology and courseware, and SDT filed claims for misappropriation of trade secrets and sought an injunction.

The district court held a telephone conference with both parties’ counsel, without telling either party what the conference call would cover. There was no presentation of evidence. The district court denied TriZetto’s motion to transfer, denied SDT’s motion for preliminary injunction, denied the motions for expedited discovery, and granted TriZetto’s motion to compel arbitration.

SDT argued that the district court erred in failing to enter findings of fact and conclusions of law in violation of the FRCP 52(a), failed to hold an evidentiary hearing in compliance with FRCP 65, and improperly denied its motion for preliminary injunction.

The district court failed to enter findings of fact and conclusions of law in compliance with FRCP 52(a), according to the Fifth Circuit. The appellate court was only able to review the district court’s comments on the matter during the telephone conference. In the comments, the district court began as if it was considering factors regarding the likelihood of succeeding on the merits, but then noted, as an example, the availability of damages as a remedy, which is not a factor for deciding whether the contract was likely breached. The comments related more to TriZetto’s ability to respond to a judgment in damages, which did not relate to whether damages would be an adequate remedy. The memorialization of the telephone conference in a written order failed to elaborate on any specific findings and was, therefore, insufficient.

The case is No. 13-10829.

Attorneys: Joseph F. DePumpo (Shore Chan DePumpo, LLP) for Software Development Technologies. William Russell Jenkins, Jr. (Jackson Walker, LLP) for TriZetto Corp.

Companies: Software Development Technologies; TriZetto Corporation

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