InnoSys, Inc. v Mercer

InnoSys sued Mercer for violation of Utah’s trade secrets Act and reach of the nondisclosure agreement between the parties. The district court ultimately granted summary judgment to Mercer ruling there was no proof of harm or threatened harm. It also sanctioned InnoSys and awarded attorney fees to mercer The Court, after reargument, 3-2, reversed and remanded. The majority held that Mercers emailing of InnoSys documents including a business plan arguably violated Utah’s trade secrets act, that the violation triggered presumption of irreparable harm as trade secrets are property and trespass to property creates a resumption of harm for injunctive relief purposes, that Mercer failed to rebut this presumption as merely deleting the emails did not prove that future violations of the act would not occur. The majority held that similar analysis precluded judgment for Mercer on the nondisclosure agreement with the additional reason that Google retains deleted emails and thus has access to the documents, the emails are part of an administrative record in case that can be reopened and thus further disclosures could occur and Mercer gave conflicting and shifting explanations for how she had the documents in her email and on a flash drive and thus her assurances of no further disclosure can be doubted. The majority also reversed on similar grounds judgment for Mercer on a breach of fiduciary duty claim. The majority reversed the sanctions and attorney fee ward holding that with the reversal of summary judgment Mercer is not a prevailing party and a good faith complaint cannot serve as the basis of a sanctions order. The dissent argued that actual damages are an element of trade secret and nondisclosure breach cases and InnoSys failed to prove any damages and judgment was thus properly awarded to Mercer. It further argued that the presumption of harm only goes to whether harm is irreparable not whether there in actuality is going to be harm in the future. It argued that because the emails are deleted and physical documents returned, there is no basis to believe there will be any further disclosures and thus no basis for an injunction. It also argued that the inconsistent statements of Mercer were either innocent or irrelevant given the deletion of the email. It finally argued that fiduciary duty claims are replace by trade secret claims under the act.