Daikin Applied Americas v. Russo — Massachusetts SJC Rejects Presumption of Irreparable Harm in Trade Secret Injunction Cases

Background

Daikin Applied Americas Inc. provides and maintains heating, ventilation and air conditioning (HVAC) systems for institutional clients. Two former employees, Joseph Russo (a service supervisor) and Andrew Porter (a technician), had access to customer data and project pricing and margins. Daikin alleged that starting in 2024 they sent Daikin confidential information, including bid pricing and costs, to personal email accounts, formed a competing HVAC company called RPAC in December 2024 while still employed, and left in March 2025 to work there, using the information to compete for Daikin’s customers.

Daikin sued in May 2025 for misappropriation of trade secrets under common law and the Massachusetts Uniform Trade Secrets Act (MUTSA) and moved for a preliminary injunction. At the hearing the defendants agreed (and the judge ordered) that they would not use and would return any Daikin confidential information, and they were willing to negotiate a narrower forensic search. The remaining dispute was Daikin’s request that the defendants be barred for a year from soliciting 75 customers, including withdrawing pending bids. Daikin argued that, assuming it was likely to succeed on its trade secret claim, irreparable harm should be presumed, and alternatively that it had shown irreparable harm. The Superior Court judge denied the injunction, noting genuine disputes over whether the information was confidential and whether Daikin protected it, applying the usual standard requiring proof of irreparable harm, and observing that Daikin had not alleged losses threatening the very existence of its business. The Supreme Judicial Court transferred the appeal on its own initiative.

The Court’s Holding

In an opinion by Chief Justice Budd for the full court, the SJC affirmed the denial of the injunction and held that no presumption of irreparable harm applies in a trade secret case.

Traditional test. A preliminary injunction requires a likelihood of success, irreparable harm without relief, and a balance of harms favoring the movant. Harm is irreparable if it cannot be remedied by a final judgment. Economic harm is generally remediable by money damages, and may be irreparable only if it threatens the existence of the movant’s business. The court found that Daikin offered no evidence of lost goodwill; its asserted lost HVAC sales and the value of maintenance contracts were quantifiable, even if the precise value of a maintenance contract is not known in advance, since a robust approximation can be derived from historical data. Counsel’s argument at the hearing, and statements in an appellate brief that were not backed by the single affidavit in the record, were not evidence.

No presumption. The court declined to adopt a rule that whenever a plaintiff shows a likelihood of success on a misappropriation claim, irreparable harm is presumed. It said such a rule would be inconsistent with MUTSA, which authorizes injunctions “upon principles of equity,” and with the long-standing equitable requirement of case-by-case consideration. It noted that U.S. District Court decisions in Massachusetts had endorsed a presumption but that nearly all of them also found irreparable harm independently, and to the extent any rely solely on a presumption the court was unpersuaded. The court drew support from eBay v. MercExchange, in which the U.S. Supreme Court rejected categorical presumptions in patent injunction cases, and noted that the Seventh and Tenth Circuits have declined to apply a presumption in the trade secret context. Going forward, a judge deciding a trade secret injunction motion should consider the specific allegations, the type of irreparable harm likely to arise and the form of relief most likely to mitigate it.

Because the defendants had already agreed to stop using and to return the confidential information, including the alleged customer list, the judge did not abuse his discretion in declining to bar solicitation of the 75 customers without a showing of irreparable harm. Daikin’s request for appellate costs was denied.

Key Takeaways

• In Massachusetts state courts, a showing of likely success on a trade secret claim does not by itself establish irreparable harm for a preliminary injunction.
• Plaintiffs must present evidence of harm that money damages cannot fix, such as threatened loss of goodwill or the business’s existence; lost sales that can be calculated usually will not qualify.
• Lawyer argument, or statements first made on appeal, does not substitute for affidavits or other evidence at the injunction hearing.
• Courts should tailor the remedy to the specific harm; here, agreed orders on use and return of the information left only an additional customer non-solicitation request.

Why It Matters

Employers frequently seek quick injunctions when employees leave for competitors. This decision makes clear that, in Massachusetts state court, they must build an evidentiary record of irreparable harm rather than rely on an automatic presumption. It also highlights the value of contractual protections: the superior court judge had noted that Daikin had no non-solicitation or non-compete agreements with the former employees, so it was seeking a benefit it had not bargained for.

The ruling aligns Massachusetts with federal appellate courts that have rejected presumptions after eBay, but it departs from some federal district court decisions applying Massachusetts law. The decision addresses only the standard for preliminary relief; it did not decide whether any trade secret was misappropriated.