Tuesday, May 02, 2006, 5/02/2006 11:54:00 AM

Seventh Circuit Crafts Another Great Opinion

By Todd
We love the Seventh Circuit. The opinions that court crafts are always a pleasure to review - well-written, well-reasoned, and well - er, interesting. The opinion in Lakeview Technology, Inc. v. Robinson, 2006 WL 1133147 (7th Cir., May 1, 2006) is no exception.

Robinson was Lakeview Technology's vice president of sales. Like departing employees often do when going to work with direct competitors, Robinson lied about where he was going. By lying about where he was going, not only did Robinson continue to receive compensation from Lakeview Technology but he also obtained some competitively sensitive information that he would take with him to his competitive employer. Robinson had executed a two year nonsolicitation covenant and NDA/trade secrets agreement with Lakeview Technology - the latter having no durational limit.

After Lakeview Technology found out that Robinson was not pursuing non-competitive "real estate interests" after his departure but instead was working for Vision Solutions (the direct competitor of Lakeview Technology), Lakeview Technology sued him and sought injunctive relief. The district court denied injunctive relief on three grounds: (a) absence of proof that Robinson had solicited Lakeview Technology's customers or disclosed its trade secrets; (b) Robinson's pledge not to do so in the future; and (c) the propect of hefty damages if Robinson did act otherwise. Circuit Judge Easterbrook from the Seventh Circuit did not agree with the district court's reasoning and the appellate court reversed the lower court decision and essentially ordered the lower court to issue the injunction it previously refused to issue.

The Seventh Circuit's rationales for doing so are persuasive: (a) injunctions issue to "curtail palpable risks of future injury," not to remedy established violations only; (b) Robinson's promise of no future legal violations is hollow and weak when viewed against the established fact he is an admitted liar; and (c) the limits on Robinson's wealth make Lakeview Technology's security all the more tenuous due to the fact that they could probably not collect a major judgment against their former employee for misappropriation of trade secrets.

All of that said, the most interesting portion of this decision is contained in dicta - Judge Easterbrook considers the possibility of forcing Robinson to post a "non-injunction bond." As most of you know, to get an injunction in court under Rule 65, the non-enjoined party must post a bond to secure the enjoined party from suffering damages due to the decision coming so early in the case and the facts or law later showing that an injunction shouldn't have issued. While Judge Easterbrook ultimately acknowledges a "non-injunction bond" is not part of the law of injunctions, it is a fascinating risk-shifting analysis nonetheless.

Bravo Seventh Circuit!


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