Preliminary Injunction Challenge: Showing Irreparable Harm Even When the Defendant Proactively Takes Steps to Remediate

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A preliminary injunction motion recently filed in the Eastern District of Virginia paints a fascinating story of alleged trade secret theft by a direct competitor in the ultra-competitive field of gas turbines, and the fallout that ensued.  The plaintiff, General Electric Company (“GE”), asks the federal district court to issue a preliminary injunction against the defendant, Siemens Energy, Inc. (“Siemens”).  GE and Siemens are direct competitors in the turbine manufacturing marketplace, where bids for business involve vigorous negotiations on technology and price.  The bidding process is highly confidential – customers routinely enter into an NDA with each bidding manufacturer.

According to GE’s motion, in May 2019, GE and Siemens each submitted a big package to Dominion Energy (“Dominion”) for a gas turbine project in Virginia.  GE submitted its bid package under an NDA and included confidential information it contends are trade secrets, including confidential pricing and technical information about its gas turbine models and about its maintenance services for those turbines.  Between May and June 2019, on at least six occasions, a (now former) Dominion employee emailed GE’s alleged trade secrets to a Siemens employee who was involved in Siemens’ bid for the Dominion project.  According to GE’s motion, the Siemens employee subsequently disseminated GE’s trade secrets to other Siemens employees, ultimately reaching more than 25 Siemens employees, including key personnel directly involved with Siemens’ gas turbine bids.

In September 2020, after Siemens and Dominion completed a joint investigation, Siemens notified GE of what transpired.  GE contends, however, that during the prior 16 months, Siemens used GE’s trade secrets in connection with various bid submissions in 2019 and 2020, providing Siemens with an unfair competitive advantage.  GE claims it lost at least eight additional gas turbine projects to Siemens, representing a potential revenue loss of more than $1 billion.

According to GE’s motion and correspondence between the parties that was appended to the pleadings in this case, Siemens engaged directly with GE prior to litigation and agreed to take certain remedial measures.  It deleted electronic and hard copies of documents containing GE’s information.  It conducted group training.  It disciplined the involved employees.  And it walled off employees with knowledge of GE’s alleged trade secrets from certain aspects of bids on certain projects for a 5-month period.

GE contends that Siemens’ remedial measures are not adequate.  In its motion, GE argues that the scope of the trade secrets extend beyond the “narrow band of projects” Siemens prohibited certain employees from working on. GE also argues that the 5-month wall-off period is too short because GE will continue to bid against Siemens on projects well into the future.  Citing those shortcomings, GE seeks an extended period of injunctive relief requiring Siemens to wall off all exposed employees from working on bids, proposals, and other work for any gas turbine projects that compete with GE’s gas turbines relevant to the misappropriated trade secrets.

The key issue for GE’s motion is whether GE can prove it has suffered the “irreparable harm” necessary to obtain a preliminary injunction.  Indeed, in a case filed by Mitsubishi (another direct competitor of Siemens and GE) against Siemens on substantially identical facts (the aforementioned Dominion employee’s six emails to a Siemen employee also contained Mitsubishi’s alleged trade secrets), Mitsubishi lost its motion for preliminary injunction because it could not show irreparable harm.  The court found there that Mitsubishi did not show sufficient evidence that Siemens had not fully removed Mitsubishi’s trade secrets from its systems, and further found there was no evidence that Siemens was competing with Mitsubishi on any other pending or anticipated projects.

Likely anticipating similar arguments by Siemens in this motion, GE cites to this Mitsubishi ruling in its motion and contends that a preliminary injunction is warranted here because Siemens “cannot make its employees forget what they already know” and GE’s trade secrets “remain in the minds of dozens of Siemens employees . . . who continue to participate in Siemens’ gas turbine bids.”  GE also identifies at least three specific anticipated projects involving gas turbines relevant to the misappropriated trade secrets.

Siemens’ opposition, which will be filed by March 1, will almost certainly address GE’s arguments on irreparable harm.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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