IP Law Daily, TRADE SECRETS—W.D. Wash.: Dental practice denied TRO against former employee who left for competitor, (Apr 7, 2023)

By Kevin M. Finson, J.D.

The allegedly misappropriated trade secrets were not sufficiently defined to make success likely on the misappropriation claims, and there was no showing of irreparable harm.

A dental services company was not entitled to a temporary restraining order against its former employee, the U.S. District Court in Seattle has held. The company did not define its claimed secrets with enough particularity to show a likelihood of success on the merits. Furthermore, the dental practice failed to establish that it would sustain irreparable harm without emergency injunctive relief (Dental Health Services, Inc. v. Miller, April 6, 2023, King, L.).

Dental Health Services, Inc. and its related entities (DHS) was a health care service plan in Washington, Oregon, and California that contracted with dental service providers in those states. Josh Nace and Toby Miller were employees of DHS who signed confidentiality agreements promising not to disclose DHS’s confidential information during or after their employment. Nace and Miller both left DHS to work at competing companies. DHS brought suit for trade secret misappropriation and related claims against Nace, Miller, and 50 John Does, claiming that Nace and Miller had copied files and brought them to their new employers. DHS sought a temporary restraining order (TRO) prohibiting them from using or disclosing the information. DHS originally alleged that Nace and Miller were conspiring to unfairly compete, but by the time of filing its reply DHS had clarified its theory to allege that Nace was attempting to unfairly compete for a contract with United Domestic Workers in California, a trade union. DHS withdrew the application for TRO as to Miller.

Likelihood of success on the merits. The parties contested whether DHS had described its alleged trade secrets with sufficient detail. DHS alleged that Pace had “used DHS’s customer lists, customer contact information, pricing, bid strategies, and insurance product plans and network development to win the business of at least one of DHS’s incumbent and long-standing customers.” The court held that this was not sufficient particularity. While customer identities could conceivably constitute a trade secret, the particular customer identities in this case were two large customers whose identities were already public. DHS’s breach of contract claims also failed for being vague and speculative.

Irreparable harm. The court gave little weight to the clause in the parties’ nondisclosure agreement specifying that disclosure would constitute irreparable harm and found that DHS had presented no evidence of specific irreparable harm it would suffer.

Need for immediate relief. The court found that DHS did not show a need for immediate relief because it did not show that Nace was continuing to disclose confidential information.

Balance of equities. DHS argued that the balance of equities favored keeping trade secrets confidential, but the court held that this did not apply because DHS had not shown a likelihood of success on the merits for its trade secrets claims.

The court thus denied the motion for a TRO. A motion for expedited discovery directed at injunctive relief was denied as overbroad, but the court indicated it could reconsider a narrower motion for discovery directed to the needs of a preliminary injunction analysis.

The case is No. 2:23-cv-00383-LK.

Attorneys: Justo Gonzalez (Stokes Lawrence PS) for Dental Health Services Inc., Dental Health Services and Dental Health Services of America. Christopher James Lindemeier (Savitt Bruce & Willey LLP) for Toby Miller and Josh Nace.

Companies: Dental Health Services Inc.; Dental Health Services; Dental Health Services of America

Cases: TradeSecrets WashingtonNews