Mallet and Company Inc v. Ada Lacayo

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 20-3584, 21-1028, and 21-1029

_____________

MALLET AND COMPANY INC.

v.

ADA LACAYO; RUSSELL T. BUNDY ASSOCIATES,

INC. d/b/a Bundy Baking Solutions; SYNOVA LLC;

WILLIAM CHICK BOWERS

Russell T. Bundy Associates, Inc. d/b/a Bundy Baking

Solutions; Synova LLC,

Appellants in No. 20-3584

William Chick Bowers,

Appellant in No. 21-1028

Ada Lacayo,

Appellant in No. 21-1029

_______________

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. No. 2-19-cv-1409)

District Judge: Hon. Cathy Bissoon

_______________

Argued

April 16, 2021

Before: JORDAN, GREENAWAY, JR., and SCIRICA,

Circuit Judges.

(Filed: September 24, 2021)

_______________

Laura C. Bunting

Marla N. Presley [ARGUED]

Jackson Lewis

1001 Liberty Avenue – Suite 1000

Pittsburgh, PA 15222

Allison G. Folk

Jackson Lewis

6100 Oak Tree Boulevard, Suite 400

Cleveland, OH 44131

Counsel for Mallet and Company Inc.

Ada Lacayo

328 Michigan Avenue

Lower Burrell, PA 15068

Pro Se

2

Ronald L. Hicks, Jr. [ARGUED]

Carolyn B. McGee

Porter Wright Morris & Arthur

6 PPG Place – Third Floor

Pittsburgh, PA 15222

Counsel for Russell T. Bundy Associates, Inc.,

d/b/a Bundy Baking Solutions; Synova LLC

Nicholas J. Bell

Kathleen J. Goldman

Buchanan Ingersoll & Rooney

501 Grant Street – Suite 200

Pittsburgh, PA 15219

Counsel for William Chick Bowers

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OPINION OF THE COURT

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JORDAN, Circuit Judge.

Behind the breads, cakes, and other treats on our

grocery store shelves, there is a ferociously competitive market

for baking supplies, and that is the setting for this trade secret

and unfair competition case.

In 2019, Mallet and Company Inc. (“Mallet”) learned

that Russell T. Bundy Associates, Inc., doing business as

Bundy Baking Solutions (“Bundy”), was becoming its newest

competitor in the sale of baking release agents. Release agents

are lubricants that allow baked goods to readily separate from

the containers in which they are made. Bundy was already

well-known for other products it offered to the commercial

3

baking industry when it decided to launch a new subsidiary,

Synova LLC (“Synova”), to sell baking release agents. Synova

hired two of Mallet’s employees, both of whom had substantial

access to Mallet’s proprietary information. Taking some of

that information with them from Mallet to Synova, they helped

Synova rapidly develop, market, and sell release agents to

Mallet’s customers. Mallet sued, saying such progress would

have taken years to accomplish but for the misappropriation of

its trade secrets. Agreeing with Mallet, the District Court

issued the preliminary injunction now challenged on appeal,

restraining Bundy, Synova, and those employees (collectively,

“the Defendants”) from competing with Mallet.

While we appreciate the challenges inherent in disputes

involving trade secrets and requests for preliminary relief, the

injunction at issue is flawed and must be vacated. For the

reasons that follow, we will remand for further consideration

of what, if any, equitable relief is warranted and what sum

Mallet should be required to post in a bond as

“security … proper to pay the costs and damages sustained by

any party found to have been wrongfully enjoined or

restrained.” Fed. R. Civ. P. 65(c).

I. BACKGROUND

A. Factual Background

1. Mallet and the Defendant Employees

For over eighty years, Mallet has been in the business

of developing, manufacturing, and selling baking release

4

agents as well as the equipment used to apply such agents.1

Release agents are applied to commercial baking pans to

ensure the consistent release of baked goods over hundreds of

uses. They thus play a crucial role in large-scale baking

operations. While the ingredients used to create them –

mineral oils, vegetable oils, and lecithin – are commonly

known, developing a successful release agent is not as simple

as knowing a few of its components. There are “a wide range

of factors that have to be considered when formulating a

release agent,” including product performance, stability,

application, cost, availability, and packaging. (J.A. at 10984-

85 (Mallet2 Depo.).) And the efficacy of a release agent can

greatly depend on the customer’s product, pan condition,

storage conditions, and machinery used to apply the agent. As

a result, there are different kinds of release agents, each with

unique properties that may be further tailored to maximize

performance when used in the production of certain goods.

Still, competitors in the release agent market often manufacture

and sell identical or similar products.

Mallet proclaims itself “a service business delivering

value through the combination of high quality, consistent

products and the equipment to apply them.” (J.A. at 2232

(Mallet Website).) Prior to 2018, it manufactured about fifty

1

Mallet was acquired in 2016 by Vantage Specialty

Chemicals, Inc. and, though the record is not clear on this, now

appears to be a subsidiary operating under Vantage’s food

division.

2

We refer to Mallet’s Federal Rule of Civil Procedure

30(b)(6) Deposition as “Mallet Depo.”

5

different release agents, including its “Vegalube Super P”

(“Super P”), which it calls “the premier and best-performing

baking release agent product in the market.” (J.A. at 2008

(Porzio3 Decl.), 11006 (Mallet Depo.).) Mallet contends that

it has “take[n] substantial time, research, and effort” to

formulate and perfect its release agents, including Super P.

(J.A. at 4332 (Ergun4 Decl.); see also J.A. at 2008 (Porzio

Decl.).) After developing a product in the laboratory,

additional work is needed to bring that product to scale and

optimize its performance at a customer’s facility. Mallet says

that its “competitive advantage … derive[s] from a unique

ability to solve customer problems by cohesively integrating

research and development, technical service, custom

packaging and manufacturing, and efficient distribution.”

(J.A. at 2220 (Mallet Website).) To safeguard that competitive

advantage, Mallet has put in place several measures to protect

its information, including nondisclosure and noncompetition

agreements with its employees, restricted access to its lab and

formulas, and password protection for its computer network.

Along with its release agent “formulas and [the]

processes used to make them[,]” Mallet considers the

3

Robert Porzio is the Senior Vice President of Sales and

Marketing for Vantage. In his role, he manages sales and

marketing and he is responsible for overseeing the profits,

losses, and overall performance for Vantage’s food business,

including Mallet.

4

Roja Ergun is the Food Technology Director for

Mallet.

6

following information to be its “confidential, proprietary, trade

secret information”:

specific products sold to customers or purchased

from suppliers; all information pertaining to

Mallet’s business with its customers and its

suppliers; Mallet’s sales data and cost data; the

body of knowledge about the development,

production, and application of Mallet’s release

agents and equipment, including the tailoring of

release agents and equipment for specific

customer challenges; information about the

internal business affairs of any customers,

suppliers, distributors, agents and contractors

doing business with Mallet; pricing information;

strategies; marketing information; and exclusive

relationships with certain suppliers of release

agent ingredients.

(J.A. at 1638 (Mallet’s Proposed Findings of Fact), 1937-38

(Topercer5 Decl.).) According to Mallet, “the trade secret in

question here is the overall body of knowledge that

connects … the development, production, application and

implementation of the release agent … coupled with Mallet’s

proprietary equipment, which go hand in hand with [a]

formulated solution.” (J.A. at 11000-01 (Mallet Depo.).)

5

Benjamin Topercer is the Chief Human Resources

Officer at Vantage and, in his role, supports human resources

functions for Mallet.

7

As sweeping as that statement is, Mallet does recognize

some limits on what it can claim as a trade secret. For example,

it does not consider its “product data sheets” to be trade secret

information, since those specification sheets are “produced and

provided to consumers of its products[.]”6 (J.A. at 10993

(Mallet Depo.).) It also agrees that some ingredients in baking

release agents – again, mineral oils, vegetable oils, and lecithin

– have been common knowledge in the industry for more than

thirty years, and that the components for release agents are

published in product data sheets, articles, and company

websites, and are therefore public knowledge, though the

precise ratios and processes for combining them are not. In

addition, Mallet acknowledges that “there are numerous

patents … that have been published … since at least the early

1900s that talk about the manufacturing and processes and

formulations that can be used to create bakery release

agents[.]” (J.A. at 10982 (Mallet Depo.).) It thus admits that

the contents of patents and other information generally known

in the industry about “various ingredients for use in bak[ing]

release agents” cannot be considered proprietary. (J.A. at

10990, 11000-01 (Mallet Depo.).)

Mallet further recognizes that its own patents disclose

“various formulas for the creation of the lubricants[,]”

“examples of blends and blend ratios[,]” and a “series of

different formulated release agents[.]” (J.A. at 10995-96,

6

Product data sheets are public product descriptions

that identify the “ingredients as well as the origins of those

ingredients for each of the baking release agents.” Mallet

distributes product data sheets to customers and utilizes them

as marketing materials at trade shows.

8

10999-11000 (Mallet Depo.).) Those patents publicize some

properties of each formulated release agent “based on various

tests that Mallet … had conducted,” including “viscosity,

stability, texture and other releasing characteristics.” (J.A. at

10999-11000 (Mallet Depo.).) While seeming to concede that

information in patents cannot – at least by itself – constitute

trade secrets, Mallet contends that even formulas in its patents

can be part of its trade secrets. It says that such formulas may

“form a part of the examples of the patent” and still be “part of

a trade secret.”7 (J.A. at 11001-02 (Mallet Depo.).) In

addition, it distinguishes the “particular formulation[s]” that its

patents cover from the “know-how” that Mallet has developed

over its eighty-year presence in the marketplace and that it

continues to utilize on an ongoing basis for the “formulation,

application[,] and implementation of [its] release agents for

customers.” (J.A. at 10974, 10999 (Mallet Depo.).) According

to Mallet, that know-how is a trade secret. And two of its

former employees, Ada Lacayo and William Bowers, had

substantial access to it.

a. Lacayo’s Employment with Mallet

Lacayo first worked for Mallet from 1997 to 2001 as a

Technical Services Manager. While in that role, she “managed

Quality Control laboratory employees, created specifications

7

At oral argument, for the first time, Mallet drew our

attention to a set of documents that it said are specific examples

of formulas it treats as proprietary. Having reviewed those

pages, and without the aid of any clarifying testimony in the

record, we remain at a loss to know whether they contain trade

secrets.

9

and qualified new vendors, and developed nutritional

information for products, among other things.” (J.A. at 2423

(Lacayo Decl.).) After a few years away from the company –

during which she did not work with baking release agents –

Lacayo returned to Mallet in 2006 to work as the Director of

Lab Services until 2014, when she became the Director of

Technical Services in the Sales and Marketing group.

Lacayo’s job responsibilities spanned all aspects of

Mallet’s release agent business, from product development and

quality control to customer-specific applications and technical

support. Through her director positions, she obtained

extensive access to Mallet’s technical information. That

information allowed her to analyze ingredient interactions,

create over two dozen new product formulas and processing

methods, and perform “economic justifications and case

studies to substantiate improvements.” (J.A. at 4737 (Lacayo

Resume).) In addition, Lacayo played a key role in quality

control, running onsite tests for customers, troubleshooting

issues, and recommending changes to improve product

performance. Along with educating individual customers,

Lacayo promoted Mallet’s products, solutions, and machinery

more generally. She “wrote and designed manuals,

instructional programs, marketing materials, [and]

presentations,” which she “delivered … to diverse audiences in

English and Spanish.” (J.A. at 4737 (Lacayo Resume).) She

also participated in trade shows, “[m]anaged the Latin

American machinery and product introduction program,” and

“[c]onducted seminars on product lines.” (J.A. at 4737

(Lacayo Resume).) Lacayo was, as she describes herself, a

“product portfolio and applications expert” for Mallet. (J.A. at

4737 (Lacayo Resume).) And as a result of her extensive

exposure to all sides of Mallet’s business and the “know-how

10

[she] gleaned from Mallet over decades[,]” she was widely

known by “the customer base of the baking industry[.]” (J.A.

at 2004 (Porzio Decl.).)

Given the extent to which she was engaged in Mallet’s

business, the company insisted that, as a condition of her

employment, Lacayo execute a nondisclosure and

noncompetition agreement. According to that agreement,

Lacayo could “not disclose any information regarding

[Mallet’s] affairs” during or after her employment.8 (J.A. at

8

The scope and validity of that agreement is not before

us now. To the extent Mallet seeks relief for disclosure or use

of non-trade secret information that it contends is contractually

protected under the nondisclosure agreement, that is an inquiry

for the District Court to resolve in the first instance. In

deciding to impose the injunction now at issue, the District

Court tied the reasonableness of Lacayo’s noncompetition

agreement and the irreparable harm deriving from her breaches

of that agreement to Mallet’s trade secrets. (See J.A. at 19 ¶ 8

(“Lacayo’s three-year restrictive covenant was reasonably

tailored to protect trade secrets given her work with Mallet’s

formulas, its most secret information.”); J.A. at 35 ¶ 82 (“The

irreparable harm Mallet would suffer without injunctive relief

is varied and evident. Lacayo … [is] actively working for a

direct competitor in [a] high-level position[] in which [she]

ha[s] used and disclosed Mallet’s trade secrets in violation of

[her] covenant[].”).) Since consideration of Lacayo’s alleged

nondisclosure agreement breaches was limited to her alleged

disclosure and use of Mallet’s trade secrets, we limit our

discussion to trade secrets and do not separately consider

Lacayo’s contractual obligations.

11

1950.) She also agreed not to “directly or indirectly” work for,

“engage in, or be connected with, any business competitive

with [Mallet’s] business” in any capacity for three years after

her employment with Mallet ended. (J.A. at 1950.)

b. Bowers’s Employment with Mallet

Bowers began working for Mallet in 1978. Except for

two brief stints away from the company, he was employed by

Mallet until January 2019. Over that forty-year period, Bowers

worked in sales and ultimately became Mallet’s Director of

National Accounts. Throughout his long tenure with Mallet,

Bowers gained access to its trade secrets and worked with some

of its most valued customers. He understood how to provide

service to Mallet’s customers and was privy to information

about Mallet’s sales strategies and the “types of [product

application equipment] Mallet might use for some

customers[.]” (J.A. at 5668-70 (Bowers Depo.).) Bowers also

worked closely with Mallet’s research lab to improve product

performance and with its customers to test products and resolve

complaints.

As a condition of his employment, Bowers entered into

a nondisclosure agreement prohibiting him from disclosing or

using Mallet’s trade secrets except in furtherance of Mallet’s

interests.9

9

Although Bowers did enter into a noncompetition

agreement with Mallet when he initially joined the company in

1978, he did not have one in place at the time of his departure

in 2018, and Mallet has not pleaded the existence of such an

agreement in its complaint. As with Lacayo’s nondisclosure

and noncompetition agreement, see supra note 8, Bowers’s

12

2. Bundy, Synova, and the Baking Release

Agent Industry

Founded in 1964, Bundy is a privately-held company

with twenty-six facilities worldwide and a large customer base.

It operates under several brands and is “dedicated to offering

products and services in the industrial baking business[.]”

(J.A. at 2409-10 (R. Bundy10 Decl.).) Bundy manufactures and

sells baking pans and coatings, offers commercial food

services, provides pan cleaning and recoating services, buys

and resells pre-owned bakery equipment, and offers mixers and

processing equipment for sale. Touching off the present battle,

Bundy has added baking release agents to its list of product

offerings. According to the Defendants, several of Bundy’s

customers wanted “to see some alternatives brought to the

[release agent] marketplace” and requested that Bundy enter

the market. (J.A. at 13331 (R. Bundy Hearing Testimony); see

also J.A. at 2411 (R. Bundy Decl.).) That led to the creation

of the most recent Bundy brand, Synova.

nondisclosure agreement is relevant now only to the degree

that it overlaps with his obligation not to misappropriate

Mallet’s trade secrets, so it is not treated separately. (See J.A.

at 35 ¶ 82 (“The irreparable harm Mallet would suffer without

injunctive relief is varied and evident. … Bowers [is] actively

working for a direct competitor in [a] high-level position[] in

which [he] ha[s] used and disclosed Mallet’s trade secrets in

violation of [his] covenant[].”).)

10

Robert Bundy is the president of Synova.

13

Synova was formally “created on April 27, 2017 and

launched on May 15, 2019 to manufacture and distribute

external baking release agents and oils.” (J.A. at 2410

(R. Bundy Decl.).) Between its creation and its launch,

Synova’s President, Robert A. Bundy, was “engaged in

business development[,] … looking for as much information

on as many topics as [he] could get” on the baking release agent

industry. (J.A. at 3628-29 (Bundy/Synova Depo.).) Along the

way, he sought information from and recruited Lacayo and

Bowers.

But first, Mr. Bundy approached Shane Zhou, a former

Mallet employee. He wanted Zhou to help design Synova’s

production facility. He asked Zhou for “the type and general

formula” for ten products – and more specifically, whether

those products “are pan oils, greases, etc. and some

information about the quantities of the different base

ingredients” – to “help [him] size some of the bulk tanks and

piping.” (J.A. at 1894 (R. Bundy Email).) On January 4, 2018,

Mr. Bundy offered Zhou a position as Synova’s Lab Director

and agreed to indemnify Zhou “for any non-compete and/or

legal action that may result from [his] becoming an employee

of Synova.” (J.A. at 4283-84 (Offer Letter).) Synova

withdrew its offer when Zhou sought only to become a

consultant but still wanted the same indemnification. Shortly

thereafter, on January 22, 2018, Mr. Bundy interviewed and

hired Lacayo as Synova’s Lab Director, while she was still

employed with Mallet. Around the same time, he reached out

to Bowers, who was also then with Mallet, asking him if he

“would be comfortable … helping [Synova] gather some

information about the oils that [its] future customer base will

require.” (J.A. at 2023 (R. Bundy Email).) Specifically,

Mr. Bundy sent Bowers a questionnaire that Synova had put

14

together to use as “a data collection form” that would help

Synova understand “what the customer order patterns will look

like[,]” since it was new to the business. (J.A. at 2023-24

(R. Bundy Email).) “That data would be very helpful” while

Synova was “still designing the process[,]” and Mr. Bundy

“wanted to see if [Bowers] thought [the questionnaire] was the

right idea[.]” (J.A. at 2023-24 (R. Bundy Email).)

a. Lacayo’s Employment with Synova

Although Lacayo secretly interviewed and accepted a

position with Synova on January 22, 2018, she remained

employed with Mallet until February 12, 2018. When she did

finally announce that she was leaving Mallet, Lacayo

concealed her employment with Synova and informed Mallet

that she was instead leaving to take care of her mother.

Just three days before her interview with Synova, on

January 19, 2018, Lacayo copied 1,748 files onto a USB drive.

Those “bulk copied files were stored across four main (root)

folders” titled: “Mallet Lab Methods, MRO Project, Supplier

Approval Program, and Supplier Information.” (J.A. at 6105

(Price11 Decl.).) She also emailed information, including

screenshots of two formulas, from Mallet’s files to her private

Gmail account. On February 28, 2018, when she was no longer

employed with Mallet, Lacayo emailed to herself a spreadsheet

with technical data from Mallet’s research.

11

Paul Price is a digital forensic expert for Mallet, who

was asked to determine if any of Mallet’s data had been

transferred to Lacayo’s devices, including those she used while

working for Synova.

15

Around that time, Mallet discovered that Lacayo had

sent emails containing Mallet’s formulas from her Mallet email

account to her personal Gmail account just before she resigned.

It consequently sent Lacayo a cease-and-desist letter,

demanding that she honor her obligation not to work for a

competitor, immediately return all of Mallet’s data, and stop

using or disclosing Mallet’s confidential information. Lacayo

responded that she had not shared Mallet’s information and

that she would destroy all Mallet information in her possession.

She continued to conceal that she was working for Synova,

saying that she was “taking some time off.” (J.A. at 4571

(Lacayo Depo.); see also J.A. at 1941-42 (Topercer Decl.).)

During discovery in this case, “over 1,000 documents”

containing “metadata associated with Mallet” were found on

Lacayo’s Synova computer, with 649 of those documents

having “a Mallet logo … [branded] on the face of the

document.” (J.A. at 6109-10 (Price Decl.).) Another “108 files

that are an exact match for documents on” Lacayo’s Mallet

computer were found on her Synova computer. (J.A. at 6106

(Price Decl.).) Digital forensic evidence indicates that Lacayo

not only copied those documents but also used them,12

12

Price explained that “use” of a Mallet document

involved copying the document from Lacayo’s USB drive – on

which she had originally copied documents from her Mallet

computer – to her Synova computer and then editing that

document “some time later. What that means is the document

was opened, changes were made, and those changes were

saved on the date shown as ‘File System Last Modified Date.’”

(J.A. at 6110 (Price Decl.).)

16

including a Mallet release agent formula and associated pricing

information, while working for Synova.

The purloined documents, however, are not the whole

of the problem Mallet has with Lacayo. It says that “the value

she brings [to a competitor] goes far beyond any particular

formula she may have provided” or any documents she may

have stolen. (J.A. at 10988 (Mallet Depo.).) “It’s really the

know-how that she brings” to Synova that Mallet says it is

worried about. (J.A. at 10988 (Mallet Depo.).) After

“work[ing] for Mallet for” so long, Lacayo “has quite a lot of

know-how that went with her to the Bundy organization[,]”

including information about “the formulation, application and

implementation of release agent” products that Mallet had

“developed over the course of its 80 years.” (J.A. at 10972-74

(Mallet Depo.).) And that know-how, it says, “would be

impossible to erase from her mind.” (J.A. at 10973 (Mallet

Depo.).)

In January 2018, Synova was in the earliest stages of its

existence, and while “[t]he development of the release agents

had already begun,” it had not completed a final product. (J.A.

at 3578, 3626 (Bundy/Synova Depo.).) Synova had “identified

the archetypes of ingredients that would be required and

broadly [knew] the ratios of those ingredients.” (J.A. at 3581

(Bundy/Synova Depo.).) But it was still in the research and

development process and had not yet conducted “any internal

product testing on a release agent[.]” (J.A. at 3578

(Bundy/Synova Depo.).) As Mr. Bundy explained, “that was

part of the reason to hire someone with a good science

background[,]” like Lacayo. (J.A. at 3578 (Bundy/Synova

Depo.).) Less than ten months after joining Synova, Lacayo

had formulated a lineup of release agents, which Synova

17

marketed as direct replacements for Mallet’s release agents.

Indeed, in internal correspondence it explicitly described its

new formulas as “Synova=Mallet.” (J.A. at 6032-34 (Lacayo

Email).) Lacayo provided oil blend recipes to Synova, built

Synova’s processes and programs, and touted her ability to

match a Mallet product for a customer.

b. Bowers’s Employment with Synova

Bowers was not burdened with a sense of loyalty either.

After learning that Bundy was considering entry into the

baking release agent marketplace, and while he was still

employed with Mallet, Bowers began sharing information with

Mr. Bundy about the release agent business generally and

about Mallet’s business specifically. He forwarded to

Mr. Bundy internal emails about Mallet’s customers, its

pricing, its overall performance, and problems that customers

were experiencing with Mallet. He later said he did so to “save

[Mr. Bundy and Synova] some legwork.” (J.A. at 5714

(Bowers Depo.).)

When he resigned from Mallet, Bowers forwarded

Mallet’s customer and product information to his wife’s

email account and wiped clean all of his Mallet electronic

devices. He admitted that if Mallet had the opportunity to

search his personal email account, it could find emails about

Mallet’s business dealings with customers, tech sheets, and

pricing.

On January 23, 2019, Synova hired Bowers as its

Business Development Manager. His position with Synova,

similar to his previous position with Mallet, centered on selling

release agents. But he joined Synova in a more limited

18

capacity. His role was to “com[e] in, mak[e] the introductions,

and [the Bundy reps] took it from there.” (J.A. at 5715-16

(Bowers Depo.).) Bowers “was just [t]here to help things get

off the ground.” (J.A. at 5716 (Bowers Depo.).)

At that point, Synova’s facility was still under

construction but it was already testing with a prospective

customer an early version of its new Supra 130 product, a

release agent Synova marketed as a direct competitor of

Mallet’s Super P. Over the next couple of months, Synova

completed five successful product test runs with several of

Mallet’s top customers, placing Synova in a position to gain

immediate market penetration. And that gain was realized

when those test runs in fact led to business for Synova. As a

result of Lacayo’s success in bringing several products to

market, along with Bowers’s concentrated efforts to sell to

companies whose accounts he had serviced at Mallet, Synova

was able to make its competitive debut before the construction

of its baking release agent production facility was fully

completed.

B. Procedural Background

After discovering that Lacayo was working for Synova

in violation of her noncompetition agreement, Mallet filed this

lawsuit. It brought claims for trade secret misappropriation

under both federal and state law, inevitable disclosure,

conversion, and unfair competition against the Defendants;

breach of contract and breach of fiduciary duty against Lacayo

and Bowers; and tortious interference with contractual

relations and aiding and abetting breach of fiduciary duty

against Bundy and Synova. Based on those claims, Mallet

19

sought to preliminarily enjoin the Defendants from engaging

in any competition against it.

The District Court promptly acted upon Mallet’s

application for emergency relief, denying a motion for a

temporary restraining order, granting limited discovery, and

entering an order governing the preliminary injunction

proceedings. It twice granted extensions of the expedited

proceedings, first in response to a joint motion and then for the

benefit of Bowers, who was only informed nine days before

discovery ended, during his deposition, that Mallet intended to

amend its motion for preliminary injunction to seek injunctive

relief against him.13 After dealing with multiple discovery

disputes, the District Court presided over a preliminary

injunction hearing where it took testimony, admitted 181

exhibits, and ultimately considered more than 10,000 pages of

evidence. It then decided that Mallet was entitled to injunctive

relief on most of its claims.14

Adopting many of Mallet’s proposed findings of fact,

with the injunction order in turn incorporating certain factual

findings by broad reference to the ranges of paragraph numbers

listed in Mallet’s proposed order, the Court determined that

Mallet had demonstrated a likelihood of success on the merits

13

Mallet initially sought to preliminary enjoin Bundy,

Synova, and Lacayo. Bowers was not added as a defendant

until January 29, 2020.

14

The District Court concluded that it was unnecessary

to address Mallet’s claims for inevitable disclosure and

conversion.

20

for several of its claims, including its trade secret

misappropriation claims. Specifically, the District Court found

that “[a]t least some of the Mallet information in question,

possessed by Defendants, satisfies the trade secret

definition(s),” including, “among other things, highly sensitive

details about how Mallet produces, markets and sells its release

agents[.]” (J.A. at 25.) The Court listed thirteen categories of

Mallet information it deemed “protected materials,” as

follows:

Mallet’s formulas; customer purchase orders

demonstrating Mallet’s pricing; identification of

customers experiencing difficulty with Mallet’s

products; internal discussions of “actual major

problems” at customer locations; internal

discussions of how Mallet would address issues

with its products; internal discussions of

customers’ preferences and complaints; Mallet’s

completed organic certifications; identification

of Mallet’s supply source for product

ingredients; Mallet’s internal manuals and

procedures showing how Mallet’s lab is

operated; pricing and volume data; information

about Mallet’s equipment; Mallet’s training

materials showing how Mallet markets and sells

its products; and a compilation of Mallet’s

product specification sheets.

(J.A. at 25-26.) The Court then held there had been “a

misappropriation of Mallet’s trade secrets[,]” based on “[t]he

timing of Bowers’s and Lacayo’s sending Mallet information

to themselves – around the time they agreed to work for

Bundy/Synova[.]” (J.A. at 28.) It also concluded that Bundy

21

and Synova had “acquired a substantial volume of Mallet’s

confidential and trade secret information and [had] done

nothing to stop use of this data, even after litigation

commenced.” (J.A. at 29.) And it found that “[a]ctively

concealing plans to form a competing company; using

employee status to copy documents onto external storage

drives; the existence of information taken close to or

immediately following resignations on the new company’s

computers; and failure to return devices used during former

employment are all factors showing the substantial threat of a

defendant disclosing trade secrets.” (J.A. at 30.)

The District Court determined that such actual and

threatened misappropriation would irreparably harm Mallet,

absent an injunction. The Court reasoned that “Lacayo and

Bowers are actively working for a direct competitor in high-

level positions in which they have used and disclosed Mallet’s

trade secrets in violation of their covenants.” (J.A. at 35.) And

“[e]ven without Lacayo and Bowers, Bundy/Synova would

continue to have access to and use Mallet’s information.” (J.A.

at 35.) So, according to the District Court, “[t]he harm

Bundy/Synova will visit on Mallet if it is not enjoined will be

long-term given that Bundy/Synova is targeting Mallet’s

customers.” (J.A. at 35.) And that “harm to Mallet is

magnified” since Synova’s “portfolio of release agents to

replace Mallet products” is “expanding[.]” (J.A. at 35.)

Additionally, the District Court concluded that, “[w]ithout

injunctive relief, [the] Defendants’ actions will disrupt

Mallet’s business, harm its relationship with customers and

cause loss of market position, reputation and customer

goodwill.” (J.A. at 35.)

22

Balancing Mallet’s irreparable harm against the harm

that the Defendants would suffer from an injunction, the

District Court found that “[t]he nature of the relief Mallet

requests is proportionate to the severity of [the] Defendants’

wrongful acts and the potential harm[,]” particularly where

“[i]t took Mallet years to develop some of its key products,”

“Synova has made comparable products within a few months

of Lacayo joining the Company[,]” and Mallet has

demonstrated “that th[o]se comparable products benefited

from Mallet’s trade secrets” that “Bundy/Synova purposefully

sought out from Mallet’s current and former employees.” (J.A.

at 36.)

After concluding that a preliminary injunction was

warranted, the District Court ordered the Defendants enjoined

from the following activities (among others):

• “using Mallet’s confidential, proprietary and/or trade

secret information in any respect” (J.A. at 42);

• “directly or indirectly formulating, manufacturing,

distributing or selling products competitive to Mallet

products, including any release agents and related

equipment[,]” “working in the industry of release agents

and associated equipment (in any capacity including,

but not limited to, working as a marketer, agent,

consultant, contractor or distributor) using Mallet’s

protectable information[,]” and “directly or indirectly

soliciting any Mallet customers for marketing, testing or

the sale of release agents, oils or equipment in any

regard” (collectively, a “production ban”) (J.A. at 44);

23

• “soliciting and/or unlawfully interfering with the

business, employment or contractual relationship

between Mallet and its agents, employees and/or

independent contractors who have access to Mallet’s

confidential, proprietary and/or trade secret

information” (J.A. at 44);

• “directly or indirectly disseminating any marketing

materials, client communications (written or verbal), or

other documents comparing Bundy and/or Synova

products to any Mallet products.” (J.A. at 45.)

It also prohibited Lacayo and Bowers from engaging in the

following activities:

• “working, directly or indirectly, in any capacity

(including, but not limited to, working as an employee,

independent contractor, marketer, agent, or consultant),

for Bundy, Synova or any person or entity that is

competitive with Mallet” (J.A. at 40);

• “contacting Bundy’s and/or Synova’s employees,

officers, directors, leadership, consultants or any other

persons in a fiduciary relationship with Bundy and/or

Synova or any parent, subsidiary or affiliate of Bundy

and/or Synova” (J.A. at 40-41);

• “directly or indirectly contacting or soliciting Mallet’s

customers.” (J.A. at 45.)

24

The injunction order did not elaborate on what information

constitutes trade secrets.15

In setting the amount of the bond that Mallet would have

to post to secure the preliminary injunction, the District Court

found the “Defendants’ proposal, in excess of $20 million, [to

be] astronomical by comparison” to Mallet’s proposal of

providing a $500,000 bond. (J.A. at 45 n.2.) And it reminded

the parties that it had “expressly advise[d] that it would

‘summarily … adopt the [bond proposal] it believe[d to be]

most reasonable, appropriate and consistent with’” its ruling.

(J.A. at 45 n.2 (third alteration in original).) The District Court

subsequently set the bond amount at $500,000. The injunction

order went into effect immediately after Mallet posted the bond

and was to “remain in full force and effect until the [District]

Court’s ruling on permanent injunctive relief.” (J.A. at 45.)

Bundy and Synova asked the District Court to stay the

injunction, pending an appeal. The following day, they also

moved for clarification on the scope of the injunction order’s

production ban since its terms “do not specify” whether the

production ban “appl[ies] only to the commercial baking

industry[.]” (J.A. at 1856.) Although the commercial baking

industry is the sole industry that Mallet services, Bundy and

15

The District Court issued two orders associated with

the preliminary injunction, one being the decision to grant

Mallet’s request for injunction relief and the other consisting

of the terms of the injunction and the bond amount. For

purposes of simplicity, we refer to those orders in the singular

as one injunction order. December 15, 2020 is when the

second order issued.

25

Synova sought assurance “that they [were] permitted to operate

outside of” that business. (J.A. at 1858.) They did so, they

said, “out of an abundance of caution to avoid” contempt

violations and “in an effort to maintain their compliance with”

the injunction order. (J.A. at 1857.)

That same day, the District Court denied the motion for

clarification. (J.A. at 56.) But, in the order of denial, the Court

did in fact clarify that producing release agents for “other

industries, such as processed meats, pharmaceuticals,

construction and other industrial applications” would violate

the injunction. (J.A. at 56.) It explained that the “Defendants’

potential use of [Mallet’s] trade-secret and/or confidential

information to pursue other industrial applications would be

inconsistent with the terms, spirit and intent of the detailed

factual findings and legal conclusions reflected in the merits-

ruling.” (J.A. at 56.) The District Court also denied the motion

to stay, but we stayed the injunction in part,16 while considering

this appeal.

16

Specifically, we immediately stayed paragraphs one

through four, ten through eleven, and fourteen of the

preliminary injunction, which enjoined Lacayo and Bowers

“from working, directly or indirectly, in any capacity … for

Bundy, Synova or any person or entity that is competitive with

Mallet”; contacting anyone in a fiduciary relationship with

Bundy, Synova, or any parent, subsidiary, or affiliate of them;

and accessing any Bundy or Synova electronic systems; and

which enforced a production ban against the Defendants; and

prohibited the Defendants from “directly or indirectly

disseminating any marketing materials, client

communications … , or other documents comparing” Bundy

26

II. DISCUSSION17

Federal Rule of Civil Procedure 65(d) mandates that

“[e]very order granting an injunction” set forth the reasons why

an injunction is warranted, “state its terms specifically[,]” and

and Synova products with Mallet products. (J.A. at 40-41 ¶¶ 1-

4, 44 ¶¶ 10-11, 45 ¶ 14.)

17

The District Court had original jurisdiction over

Mallet’s federal trade secret misappropriation claim pursuant

to 18 U.S.C. § 1836(c) and 28 U.S.C. § 1331. The District

Court had supplemental jurisdiction over Mallet’s state law

claims under 28 U.S.C. § 1367. The Defendants have

contended that the District Court lacked jurisdiction because

Mallet failed to prove that the Defendants misappropriated a

protectable trade secret. But that is a merits argument, not a

jurisdictional one, and we reject it.

We have jurisdiction over the Defendants’ interlocutory

appeal under 28 U.S.C. § 1292(a)(1). “When reviewing a

district court’s grant of a preliminary injunction, we review the

court’s findings of fact for clear error, its conclusions of law de

novo, and the ultimate decision granting the preliminary

injunction for an abuse of discretion.” Bimbo Bakeries USA,

Inc. v. Botticella, 613 F.3d 102, 109 (3d Cir. 2010). “Despite

oft repeated statements that the issuance of a preliminary

injunction rests in the discretion of the trial judge[,] whose

decisions will be reversed only for ‘abuse,’ a court of appeals

must reverse if the district court has proceeded on the basis of

an erroneous view of the applicable law.” Kos Pharms., Inc.

v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004) (alteration in

original) (quoting Apple Comput., Inc. v. Franklin Comput.

Corp., 714 F.2d 1240 (3d Cir. 1983)).

27

articulate “in reasonable detail” the conduct it enjoins. While

“[t]he degree of particularity required” to satisfy the Rule’s

specificity provisions will “depend[] on the nature of the

subject matter[,]” Ideal Toy Corp. v. Plawner Toy Mfg. Corp.,

685 F.2d 78, 83 (3d Cir. 1982), those provisions are not mere

technicalities. Schmidt v. Lessard, 414 U.S. 473, 476 (1974).

They are designed to serve two vital functions: first, “to

prevent uncertainty and confusion on the part of those faced

with injunctive orders, and [thus] to avoid the possible

founding of a contempt citation on a decree too vague to be

understood”; and second, to ensure that sufficient information

is placed on the record so that “an appellate tribunal [will]

know precisely what it is reviewing.” Id. at 476-77. Failure to

“satisfy the important requirements of Rule 65(d)” will

typically result in an injunction’s vacatur. Id. at 477; see also

Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 712 (3d Cir.

2004) (“When reviewing an order that does not adequately

support the resolution of a motion for preliminary injunction,

we may vacate and remand for additional findings[.]”).

That is the result required here. We fully appreciate the

challenges inherent in expedited proceedings. Nevertheless,

when an injunction lacks sufficient specificity to permit

meaningful appellate review, there needs to be another effort

at crafting the contours of the order. Because the District Court

did not identify with specificity the information it found to be

Mallet’s trade secrets, we are not in a position to make an

informed decision as to whether Mallet is likely to prevail on

its trade secret misappropriation claims. And, notwithstanding

the existence of other claims that the District Court concluded

Mallet was likely to prevail on, there is no remaining basis to

uphold the Court’s decision to grant injunctive relief since its

28

irreparable harm determination appears to depend entirely on

the Defendants’ misappropriation of Mallet’s trade secrets.18

We will accordingly vacate the injunction order and

remand for reconsideration. In doing so, we outline a few

matters to be considered when identifying allegedly

misappropriated trade secrets. We also discuss the permissible

scope of an injunction and the limits of a district court’s

discretion when determining the associated amount of a bond.

A. A preliminary injunction predicated on trade

secret misappropriation must adequately

identify the allegedly misappropriated trade

secrets.

To prove eligibility for a preliminary injunction, there

is a well-established four-part test. The moving party must

demonstrate, first, a likelihood of success on the merits, and

second, that “it is more likely than not to suffer irreparable

harm in the absence of preliminary relief.” Reilly v. City of

Harrisburg, 858 F.3d 173, 179 (3d Cir. 2017) (footnote

omitted). Absent either of those threshold factors, “[w]e

cannot sustain a preliminary injunction ordered by the district

court[.]” Hoxworth v. Blinder, Robinson & Co., Inc., 903 F.2d

18

The facts preliminarily found concerning Lacayo’s

extensive knowledge of Mallet’s business and her work for

Bundy and Synova, see supra Sections I.A.1.a & 2.a, may be

enough to demonstrate irreparable harm for breaching her

noncompetition agreement with Mallet – even without trade

secret misappropriation. But we leave that to the District Court

to decide in the first instance.

29

186, 197 (3d Cir. 1990) (quoting In re Arthur Treacher’s

Franchisee Litig., 689 F.2d 1137, 1143 (3d Cir. 1982)). If both

factors are established, however, the district court considers the

two remaining factors – whether granting relief will result in

even greater harm to the nonmoving party or other interested

persons and whether the public interest favors such relief. The

court then “determines in its sound discretion” whether the

balance of all four factors warrants granting preliminary relief.

Reilly, 858 F.3d at 179.

To establish a likelihood of success, a plaintiff must

show that “there is ‘a reasonable chance, or probability, of

winning.’” In re Revel AC, 802 F.3d 558, 568 (3d Cir. 2015)

(quoting Singer, 650 F.3d at 229)). That does not require a

“more-likely-than-not showing of success on the merits.” Id.

at 179 & n.3. But it does require the plaintiff to “demonstrate

that it can win on the merits,” which involves a showing that

its chances of establishing each of the elements of the claim are

“significantly better than negligible.” Id.

For a federal trade secret misappropriation claim, those

elements are: “(1) the existence of a trade secret … (2) that ‘is

related to a product or service used in, or intended for use in,

interstate or foreign commerce[,]’ and (3) the misappropriation

of that trade secret[.]” Oakwood Labs. LLC v. Thanoo, 999

F.3d 892, 905 (3d Cir. 2021) (second alteration in original)

(citations omitted). And, of course, each of those elements is

predicated on an adequate identification of what the plaintiff

contends to be its trade secret. See id. (“To plead the existence

of a trade secret in a misappropriation claim …, [a plaintiff]

must sufficiently identify the information it claims as a trade

secret[.]”).

30

The Defend Trade Secrets Act (“DTSA”)19 defines a

trade secret as information that “the owner thereof has taken

reasonable measures to keep … secret” and that “derives

independent economic value, actual or potential, from not

being generally known to, and not being readily ascertainable

through proper means by, another person who can obtain

economic value from the disclosure or use of the

19

Mallet has asserted claims for misappropriation under

the DTSA and the Pennsylvania Uniform Trade Secrets Act

(“PUTSA”). (J.A. at 409-10 (claiming “actual and continuing

misappropriation in violation of the DTSA”), 411-12 (claiming

“actual or threatened misappropriation of trade secrets … in

violation of the [PUTSA]”).) The DTSA and the PUTSA are

substantially similar, as both are closely related to the Uniform

Trade Secrets Act (“UTSA”). Heraeus Med. GmbH v.

Esschem, Inc., 927 F.3d 727, 736 (3d Cir. 2019) (“The

Pennsylvania General Assembly based the PUTSA on the

provisions of the [UTSA].”); Oakwood Labs. LLC v. Thanoo,

999 F.3d 892, 910 (3d Cir. 2021) (“[Congress] recognized the

DTSA and the UTSA as similar.” (quotation marks and citation

omitted)). Indeed, the definitions of “trade secret” under the

DTSA and the PUTSA are almost identical. Compare 18

U.S.C. § 1839(3), with 12 Pa. Cons. Stat. § 5302. Thus,

although our discussion focuses on the DTSA, we conclude

that the same analysis applies to Mallet’s claims under the

PUTSA and the same outcome results. See, e.g., Teva Pharms.

USA, Inc. v. Sandhu, 291 F. Supp. 3d 659, 675 (E.D. Pa. 2018)

(consolidating the analysis of claims under the DTSA and the

PUTSA); Jazz Pharms., Inc. v. Synchrony Grp., LLC, 343 F.

Supp. 3d 434, 445 (E.D. Pa. 2018) (same).

31

information[.]”20 18 U.S.C. § 1839(3). We cannot evaluate

whether a plaintiff is likely to succeed on any element of a trade

secret misappropriation claim until the plaintiff has sufficiently

described those trade secrets. See Porous Media Corp. v.

Midland Brake Inc., 187 F.R.D. 598, 600 (D. Minn. 1999)

(“Failure to identify the trade secrets with sufficient specificity

renders the Court powerless to enforce any trade secret

claim.”). It follows that a district court’s injunction order must

first adequately identify the information to which it accords

trade secret status. Otherwise, the injunction order lacks the

foundation necessary for holding a plaintiff likely to prevail on

its misappropriation claim. Without that information, the

injunction order fails to comply with Rule 65(d), and it must

be vacated. Cf. PMC, Inc. v. Sherwin-Williams Co., 151 F.3d

610, 620 (7th Cir. 1998) (“Legal rules committing decisions to

judicial discretion suppose that the court will have, and give,

sound reasons for proceeding one way rather than the other.”

(citation omitted)).

20

That information includes “all forms and types of

financial, business, scientific, technical, economic, or

engineering information, including patterns, plans,

compilations, program devices, formulas, designs, prototypes,

methods, techniques, processes, procedures, programs, or

codes, whether tangible or intangible, and whether or how

stored, compiled, or memorialized physically, electronically,

graphically, photographically, or in writing[,]” 18 U.S.C.

§ 1839(3), so long as it is “information with independent

economic value that the owner has taken reasonable measures

to keep secret,” consistent with the DTSA. Oakwood, 999 F.3d

at 905.

32

The District Court determined that “[a]t least some of

the Mallet information in question” constitutes protectable

trade secrets, “includ[ing], among other things, highly

sensitive details about how Mallet produces, markets and sells

its release agents[.]” (J.A. at 25.) Absent from the District

Court’s high-level description, however, are any specifics of

what those “highly sensitive details” are. Rather, we are left

with a list of thirteen broad categories of Mallet information

which the District Court deemed “protected materials”:21

Mallet’s formulas; customer purchase orders

demonstrating Mallet’s pricing; identification of

customers experiencing difficulty with Mallet’s

products; internal discussions of “actual major

problems” at customer locations; internal

discussions of how Mallet would address issues

with its products; internal discussions of

customers’ preferences and complaints; Mallet’s

completed organic certifications; identification

of Mallet’s supply source for product

ingredients; Mallet’s internal manuals and

procedures showing how Mallet’s lab is

operated; pricing and volume data; information

about Mallet’s equipment; Mallet’s training

materials showing how Mallet markets and sells

21

It is not clear whether the term “protected materials”

was intended to be synonymous with trade secrets, but we

assume it was. (J.A. at 25.) Information can be contractually

protected from use or disclosure and not be a trade secret.

33

its products; and a compilation of Mallet’s

product specification sheets.

(J.A. at 25-26.) While some information falling within those

categories may very well include trade secrets, there is a fair

probability that many of the categories – and perhaps all of

them – also include information that does not qualify for trade

secret protection.

The injunction order’s statement of protected material

is better characterized as a list of general categories of business

and technical information, a list that could be used to describe

documents found in any number of corporations. See A&P

Tech., Inc. v. Lariviere, No. 1:17-cv-534, 2017 WL 6606961,

at *10 (S.D. Ohio Dec. 27, 2017) (“Terms such as

‘engineering,’ ‘research and development procedures and

materials,’ and ‘marketing materials’ could be applied to

almost any corporation in existence, and do not in any way

allow Defendants to properly craft a defense around the alleged

misappropriation of trade secrets.”). The generic list thus

falters against the standard for specifying a trade secret. See

id. At a minimum, “the subject matter of the trade secret must

be described ‘with sufficient particularity to separate it from

matters of general knowledge in the trade or of special

knowledge of those persons who are skilled in the trade, and to

permit the defendant to ascertain at least the boundaries within

which the secret lies.’”22 Oakwood, 999 F.3d at 906 (quoting

22

In Oakwood, we noted that “deciding whether a

plaintiff has sufficiently disclosed its trade secrets is a fact-

specific question to be decided on a case-by-case basis.” See

999 F.3d at 906 (internal quotation marks omitted) (quoting

Vesta Corp. v. Amdocs Mgmt. Ltd., 147 F. Supp. 3d 1147, 1155

34

Diodes, Inc. v. Franzen, 67 Cal. Rptr. 19, 24 (Cal. Ct. App.

1968) (describing the minimum specificity threshold to survive

a motion to dismiss). That is especially the case where, as here,

the record suggests that those boundaries may not be

particularly clear.23

(D. Or. 2015). District courts must therefore engage with the

specific facts of the case and consider the degree of specificity

necessary in light of the particular industry-based context and

the stage of litigation – whether that be a motion to dismiss, a

discovery dispute, a motion to preliminarily enjoin a defendant

from competing with the trade secret plaintiff, or a summary

judgment motion. See id. at 1153 (“[T]he Court recognizes the

‘growing consensus’ of courts from around the country who

have applied the ‘reasonable particularity’ standard to

determine whether a party alleging a claim for

misappropriation of trade secrets has sufficiently identified its

trade secrets before it may compel discovery of its adversary’s

trade secrets. … [T]he ‘reasonable particularity’ standard

reflects the Court’s authority, pursuant to the Federal Rule of

Civil Procedure 26 requirements of early disclosure of

evidence, and the Court’s authority to control the timing and

sequencing of discovery in the interests of justice.” (citation

omitted)); DeRubeis v. Witten Techs., Inc., 244 F.R.D. 676,

680-82 (N.D. Ga. 2007) (“Unfortunately, there is no talismanic

procedure the Court may apply in order to obtain the best result

in any given case. The approach taken in [one dispute] may

have been perfectly appropriate in that case but may be

inappropriate in this one. In other words, ‘the “proper”

approach is clearly fact-dependent.’” (citation omitted)).

23

Mallet contends that its trade secrets are adequately

identified because of the following series of steps: (1) the

35

District Court’s order granting an injunction was based on the

Court’s Findings of Fact, Conclusions of Law & Order

deciding a preliminary injunction was warranted; (2) the

Court’s Finding of Fact ¶ 8 – stating that “Lacayo had access

to, and was intimately familiar with, Mallet’s protectable

information” – incorporated by reference the contents and

record citations in Mallet’s Proposed Findings of Fact ¶¶ 44-

60 (J.A. at 14); (3) those seventeen paragraphs in Mallet’s

Proposed Findings of Fact – the contents of which summarized

broadly that Lacayo had access to and knowledge of trade

secret information – incorporated by reference the contents and

record citations of numerous exhibits from the hearing; (4) all

of those exhibits are declarations and excerpts of deposition

testimony that themselves attach exhibits, cited by another

exhibit number or bates number, and that further refer to the

content therein; and (5) somewhere in there are trade secrets.

At oral argument, Mallet cited a range of bates-numbered

documents as proof that it had specified its trade secrets.

Circumstances such as access to trade secrets, unusually

accelerated or low-cost development of a competing product,

and relative lack of prior expertise, may, in combination,

establish a likelihood of success on the element of

misappropriation, see Oakwood, 999 F.3d at 908, 911-12. But

they do not establish that likelihood for the element on which

we focus here: the existence of a trade secret that has been

identified “with sufficient particularity.” Id. at 906. And

whatever else the foregoing order of operations might be, it is

not consistent with Rule 65(d)(1), which requires that every

injunction “(A) state the reasons why it issued; (B) state its

terms specifically; and (C) describe in reasonable detail – and

not by referring to the complaint or other document – the act

36

For example, Mallet recognizes that its own patents

publicly disclose some of its formulas, but it appears to contend

that even formulas thus publicly disclosed are part of its trade

secrets. (See J.A. at 11001-02 (Mallet Depo.) (“What I am

saying is while these formulations were developed here, it

doesn’t necessarily mean that the exact formula in one of these

[patent] tables is at question as a trade secret. These are

examples only. They form a part of the examples of the

patent. … They are part of a trade secret.”) (emphasis added).)

If that is really its position – and it is hard for us to tell – then

it is hard to take entirely seriously. A formula disclosed in a

patent is, by definition, not a secret. Nevertheless, “[w]hile the

precise information provided within or directly ascertainable

from a patent cannot constitute a trade secret, patent holders

are not necessarily precluded from cultivating trade secrets that

go beyond the corpus of the patent or that refine the patent’s

process in some proprietary way.” AutoTrakk, LLC v. Auto.

Leasing Specialists, Inc., No. 4:16-cv-1981, 2017 WL

2936730, at *5 (M.D. Pa. July 10, 2017). Problematically,

though, Mallet fails to explain how we or anyone else is to

distinguish between what is generally known or available

information and what it contends to be protectable trade

secrets. With a wave of the hand, it declares everything to be

secret know-how. (See J.A. at 10986 (Mallet Depo.) (“The

issue at hand is not so much that the formula might be the same

or different. What is at hand is that the know-how that Ms.

or acts restrained or required.” Fed. R. Civ. P. 65(d)(1)

(emphasis added).

37

Lacayo took from Mallet, and is applying within Bundy, is all

about delivering the performance, the quality, and those other

factors I mentioned to the customer to provide them the

solution. That know-how was developed by Mallet over 80

years.”).)

When the breadth of a trade secret description is so far-

reaching that it includes publicly available information (like

patent disclosures) and admitted industry knowledge, that

information is not specific enough to be accorded trade secret

status.24 DeRubeis v. Witten Techs., Inc., 244 F.R.D. 676, 689

24

See, e.g., Radiant Glob. Logistics, Inc. v. Furstenau,

368 F. Supp. 3d 1112, 1125 (E.D. Mich. 2019) (“The

identification of alleged trade secrets is important because ‘the

general knowledge of an employee does not constitute a trade

secret[.]’ … [T]o establish a trade secrets claim, the party

‘must establish more than the existence of generalized trade

secrets and a competitor’s employment of the party’s former

employee who has knowledge of trade secrets.’” (citations

omitted)); Broker Genius, Inc. v. Zalta, 280 F. Supp. 3d 495,

515 (S.D.N.Y. 2017) (“While neither the New York Court of

Appeals nor the United States Court of Appeals for the Second

Circuit has expressly required trade secrets to be identified

with any particular degree of specificity, it is evident that a

‘vague and indefinite’ piece of information cannot be protected

as a trade secret.” (quoting Big Vision Private Ltd. v. E.I.

DuPont De Nemours & Co., 1 F. Supp. 3d 224, 258 (S.D.N.Y.

2014))); L-3 Commc’ns Corp. v. Jaxon Eng’g & Maint., Inc.,

No. 10-cv-2868, 2011 WL 10858409, at *2 (D. Colo. Oct. 12,

2011 (“[W]hat is clear is that generic allegations and general

references to products or information are insufficient to satisfy

the reasonable particularity standard.” (citation omitted));

38

(N.D. Ga. 2007) (“If the list is too general, it will encompass

material that the defendant will be able to show cannot be trade

secret.” (citation omitted)). While we recognize the difficulty

inherent in articulating what trade secrets Lacayo and Bowers

may have misappropriated – and it certainly appears they took

things that may qualify as trade secrets – “care must [still] be

taken to not allow a plaintiff in a trade secret misappropriation

case to make generalized claims that leave a defendant

wondering what the secrets at issue might be[.]” Oakwood,

999 F.3d at 907; see also Patriot Homes, Inc. v. Forest River

Housing, Inc., 512 F.3d 412, 415 (7th Cir. 2008).

The District Court, in effect, recapitulated Mallet’s own

broadly stated categories of information. For example, the

Court said that “Mallet’s formulas” were trade secrets. (J.A. at

25.) But, like Mallet, it did not identify which formulas it

UTStarcom, Inc. v. Starent Networks, Corp., 675 F. Supp. 2d

854, 875 (N.D. Ill. 2009) (“It is simply not enough for a

plaintiff to ‘point to broad areas of technology and assert that

something there must have been secret and misappropriated.

The plaintiff must show concrete secrets.’” (quoting

Composite Marine Propellers, Inc. v. Van Der Woude, 962

F.2d 1263, 1266 (7th Cir. 1992)); Dura Glob. Techs., Inc. v.

Magna Donnelly, Corp., No. 7-cv-10945, 2007 WL 4303294,

at *4 (E.D. Mich. Dec. 6, 2007) (“[A] list of general categories

and types of information they allege comprise their trade

secrets” is not enough to “identify the trade secrets at issue with

the particularity necessary for Defendant to identify the

information which Plaintiffs claim was misappropriated”

because they “are too general to specify the trade secrets at

issue.”).

39

referred to, nor did it describe any characteristics or properties

contributing specific competitive value to Mallet that could

serve as a marker for separating Mallet’s formulas from

publicly available information or generally known formulas in

the industry.25 The District Court also concluded that “pricing

25

Though our decision relies on the District Court’s

findings of fact, we note that on remand the Court is not bound

by its initial findings and should again carefully assess the

evidentiary record, weighing all conflicting evidence. We

offer two examples of findings that give us pause, at least as

presently explained. First, extensive evidence was introduced

showing that many of both Mallet’s and Synova’s products

were single ingredient oils, some of which were simply

repackaged for sale. Given that, we hesitate to agree with the

District Court that the testimony relating to unformulated pure

oils is a “red herring” and immaterial to Mallet’s right to relief.

(J.A. at 14.) As of December 7, 2020, repackaged mineral oils

constituted approximately half of Synova’s Supra and Primo

series. Further, we wonder whether a single naturally

occurring ingredient can be repackaged as a product and then

be considered a formula warranting trade secret protection, but

we leave that for consideration in the first instance on remand.

Second, the Court found that “Mallet’s evidence

establishes that the formulation of its relevant products takes

substantial time, sometime years” and that “Lacayo’s

testimony, to the effect that formulating such products is ‘very

easy,’ was not credible.” (J.A. at 14.) But those findings make

no mention of other evidence that supported Lacayo’s claim

about the ease of developing some formulas. Two other

witnesses – including Mallet’s own witness, Roja Ergun –

acknowledged that some basic release agents were in fact easy

to make. Ronald Wilson, the senior director of engineering at

40

and volume data” and “Mallet’s training materials showing

how [it] markets and sells its products” are trade secrets. (J.A.

at 26.) But those trade secret descriptions fare no better than

Mallet’s assertion that “pricing information[,] strategies[, and]

marketing information” are trade secrets. (J.A. at 1638

(Mallet’s Proposed Findings of Fact.) Specific examples are

needed and, if provided, could very well suffice to support

injunctive relief.

Because the District Court did not articulate with

particularity the information to which it accorded trade secret

status, we are unable to conduct an informed appellate review,

assessing the alleged trade secret information against other

information that the record may reveal is publicly available,

easily generated, or widely applicable to or learned in the

industry. SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244,

1258 (3d Cir. 1985). In other words, meaningful review

requires enough factual detail to permit us to draw a connection

between the alleged trade secret and its value as a “particular

secret[] of the complaining employer” and not general know-

how of the trade. Id. at 1256 (quoting Capital Bakers v.

Townsend, 231 A.2d 292, 294 (Pa. 1967)).

We appreciate the burden this places on district courts

and “that with the advantage of hindsight it is much easier for

[us] to find a deficiency in a decree than it would be to write a

Hostess Brands, stated that Hostess Brands has created its own

baking pan oils in-house at numerous points in the company’s

history. According to Wilson, the process was “[v]ery, very

simple,” with “nothing to it.” (J.A. at 4117.) Further insight

into the District Court’s weighing of such conflicting evidence

will assist us in providing meaningful appellate review.

41

specific decree that does not offend the law when dealing with

the somewhat nebulous field of trade secrets.” Id. at 1266.

Importantly, however, while it is a district court’s

responsibility to adequately describe the trade secrets at issue

in a case like this, it is first and foremost the plaintiff’s burden

to specifically identify what it contends to be its trade secrets

and to demonstrate with record evidence a “significantly better

than negligible” chance, Reilly, 858 F.3d at 179, of establishing

the existence of those trade secrets. If a plaintiff fails to meet

that burden, the district court faces the same problem we now

have on appeal, and a preliminary injunction for trade secret

misappropriation ought not issue.26

While we are persuaded that some of Mallet’s

information – such as that contained in its patents – cannot

legitimately have the protected status that it may have been

afforded by the District Court,27 we lack the information

26

That does not mean there may not be other bases for

injunctive relief, only that a failure to adequately make a record

identifying trade secrets with sufficient specificity means no

injunction on the claim of trade secret misappropriation can

issue.

27

Compare BIEC Int’l, Inc. v. Glob. Steel Servs., Ltd.,

791 F. Supp. 489, 541 (E.D. Pa. 1992) (“While it is quite

possible that BIEC may have an extraordinary and massive

body of technical trade secrets and confidential

information, … the law requires that BIEC separate those

interrelated processes before it has satisfied its heavy burden

of proving specific trade secrets.” (internal quotation marks

and citation omitted)), with Smith v. BIC Corp., 869 F.2d 194,

201 (3d Cir. 1989) (“To extrapolate from this [i.e., the

42

necessary to decide anything more about what allegedly does

have that protected status and Mallet’s likelihood of success in

establishing misappropriation of that specific information. So,

instead, we share two observations for consideration on

remand.

First, information will not necessarily be deprived of

protection as a trade secret because parts of it are publicly

available. A confidential compilation and organization of

public information can amount to a trade secret. “Courts have

long recognized that ‘a trade secret can exist in a combination

of characteristics and components, each of which, by itself, is

in the public domain, but the unified process, design and

operation of which, in unique combination, affords a

competitive advantage and is a protectable secret.’” AirFacts,

Inc. v. de Amezaga, 909 F.3d 84, 96 (4th Cir. 2018) (quoting

Imperial Chem. Indus. v. Nat’l Distillers & Chem. Corp., 342

F.2d 737, 742 (2d Cir. 1965)).28 Similarly, “[w]hile the precise

plaintiff’s concession that some design information was within

the public domain] to say that all design information is not a

trade secret because it is in the public domain is erroneous

indeed.”).

28

See also Compulife Software Inc. v. Newman, 959

F.3d 1288, 1314 (11th Cir. 2020) (While “scraped quotes [are]

not individually protectable trade secrets because each is

readily available to the public … that doesn’t in and of itself

resolve the question whether, in effect, the database as a whole

was misappropriated. Even if quotes aren’t trade secrets,

taking enough of them must amount to misappropriation of the

underlying secret at some point. Otherwise, there would be no

substance to trade-secret protections for ‘compilations,’ which

43

information provided within or directly ascertainable from a

patent [or other published document] cannot constitute a trade

secret,” that does not, as noted earlier, mean that a patentee is

“precluded from cultivating trade secrets that go beyond the

corpus of the patent or that refine the patent’s process in some

proprietary way.” AutoTrakk, LLC, 2017 WL 2936730, at *5.

Second, an employee’s general know-how should be

distinguished from the particular secrets held by an employer.

SI Handling Sys., 753 F.2d at 1256.29 In other words, while an

the law clearly provides.”); Radiant Glob. Logistics, Inc., 368

F. Supp. 3d at 1127 (“[I]t is widely accepted that a trade secret

can exist in a combination of characteristics each of which, by

itself, is in the public domain.” (alteration in original) (quoting

Mike’s Train House, Inc. v. Lionel, L.L.C., 472 F.3d 398, 411

(6th Cir. 2006))); Fishkin v. Susquehanna Partners, G.P., 563

F. Supp. 2d 547, 582 (E.D. Pa. 2008) (“A trade secret may be

based on publicly available information if it consists of a secret

advance over common knowledge and practice or if it

combines publicly available information in a new and secret

way.” ).

29

See also Cap. Bakers, Inc. v. Townsend, 231 A.2d

292, 294 (Pa. 1967) (“It is true that true ‘trade secrets’ of an

employer are a valuable asset, the disclosure and use of which

by a former employee will be enjoined[.] … However, ‘trade

secrets’ which will be so protected must be [p]articular secrets

of the complaining employer and not general secrets of the

trade in which he is engaged. The ‘trade secrets’ asserted

herein are nothing more than those of the general bakery

business.” (citation omitted)).

44

employee’s general know-how does not constitute trade secret

information, employers remain free to identify and protect their

particular proprietary information. Admittedly, the line

distinguishing between the two – an employee’s general

knowledge or skill and an employer’s protectable trade secrets

– may often be difficult to draw. Thus, in exercising its

equitable discretion, a district court need not draw the line with

precision, but the plaintiff has to provide something better than

sweeping generalities for the court to work with. See Van

Prods. Co. v. Gen. Welding & Fabricating Co., 213 A.2d 769,

777 (Pa. 1965) (“[T]he concept of ‘know-how’ is … a very

fuzzily defined area, used primarily as a short-hand device for

stating the conclusion that a process is protect[a]ble. It covers

a multitude of matters, however, which in the broad sense are

not protect[a]ble, e.g., an employee’s general knowledge and

skill.”). It is the trade secret owner that bears the burden of

demonstrating its claimed secrets are protectable and are not

general industry knowledge. Just how much specificity a court

should require of the plaintiff-owner is again a context-specific

matter. We cannot provide a bright-line rule. The best we can

do is say that Mallet’s very general description of categories

does not “sufficiently identify the information it claims as a

trade secret,” Oakwood, 999 F.3d at 905, and thus does not

suffice to justify the sweeping injunction the District Court

issued.

The bottom line is this: without knowing what particular

information Mallett claims as trade secrets, we cannot assess

its likelihood of success in establishing that the information the

Defendants acquired, disclosed, or used is trade secret

information or that misappropriation of a trade secret has

45

occurred.30 By its very definition under the DTSA, the term

“misappropriation” presumes that the Defendants’ misconduct

30

For example, the District Court found that Bundy and

Synova were “solicit[ing] confidential information regarding

[Mallet’s] product formulations from former Mallet employee,

Shane Zhou.” (J.A. at 15.) Those findings derived from an

email from Mr. Bundy to Zhou asking for “the type and general

formula” for ten products to “help [Mr. Bundy] size some of

the bulk tanks and piping” for Synova’s production facility.

(J.A. at 1894.) Those products were identified by item

numbers, all of which began with “FG[,]” and the email makes

no mention of Mallet. (J.A. at 1894.) Thus, there is a

disconnect between Mr. Bundy’s request for information on

those ten products and the District Court’s finding that, more

likely than not, those ten products are linked to Mallet and the

information requested on those products was confidential.

There could be evidence in the record to support the Court’s

finding, such as a declaration from Mallet’s Food Technology

Director saying something like, “Mallet’s products are

identified by FG (‘finished good[’]) and a numerical code”

(J.A. at 4329), as well as record evidence suggesting that

Mallet considers the requested information confidential or a

trade secret. We are not insisting that the record evidence be

tied tightly to every factual finding, but we cannot be left to

guess at the ties. They should be made explicit. See

Proofpoint, Inc. v. Vade Secure, Inc., No. 19-cv-04238, 2020

WL 836724, at *2 (N.D. Cal. Feb. 20, 2020) (“To succeed on

a claim for misappropriation of trade secrets, the plaintiff must,

inter alia, offer evidence that ‘specifically identif[ies] [its]

trade secrets’ and ‘show[] that they exist.’” (alterations in

46

– its acquisition, disclosure, or use of information – involves a

trade secret.31 18 U.S.C. § 1839(5) (defining the term

original) (quoting MAI Sys. Corp. v. Peak Comput., Inc., 991

F.2d 511, 522 (9th Cir. 1993))).

31

The Defendants would also have us insulate trade

secret thieves from liability as long as reverse engineering of a

secret was hypothetically an available alternative to access the

trade secret information. We decline to do so. The DTSA

expressly addresses the relationship between reverse

engineering and trade secret misappropriation. And it excludes

reverse engineering from the type of conduct it defines as

misappropriation. 18 U.S.C. § 1839(6). But while “reverse

engineering is a defense to misappropriation of [a] trade secrets

claim, the possibility that a trade secret might be reverse

engineered is not a defense.” Bal Seal Eng’g, Inc. v. Nelson

Prods., Inc., No. 8:13-cv-1880, 2018 WL 4697255, at *4 (C.D.

Cal. Aug. 3, 2018) (internal quotation marks and citation

omitted); see also Imperial Chem. Indus. Ltd. v. Nat’l Distillers

& Chem. Corp., 342 F.2d 737, 743 (2d Cir. 1965) (“It is no

defense in an action of this kind that the process in question

could have been developed independently, without resort to

information gleaned from a confidential relationship.”). To

hold otherwise would fly in the face of commonsense and

allow a defendant to escape liability for unlawfully stealing

trade secrets as long as someone might – hypothetically and at

unknown cost in time, effort, and money – figure out some

means to discover them through reverse engineering. There

may be situations in which reverse engineering is so

straightforward that the distribution of a product is itself akin

to a disclosure. That kind of situation is, we believe, addressed

in our comment in SI Handling Sys., Inc. v. Heisley, that

47

“misappropriation” as “acquisition of a trade secret of another

by a person who knows or has reason to know that the trade

secret was acquired by improper means” or “disclosure or use

of a trade secret of another without express or implied

consent” (emphases added)). So, while the Defendants’

conduct appears deceitful, it will not support preliminary

injunctive relief on a misappropriation claim under the DTSA

unless the supposed trade secrets are adequately identified and

there is some evidence tying the Defendants’ conduct to the

taking of those trade secrets. A plaintiff need not have direct

evidence tying each trade secret to a defendant’s acquisitive

conduct. The Defendants’ actions here, plus their access to

what may be trade secret information, plus the accelerated

launch of Synova products may easily be sufficient

circumstantial evidence to support a likelihood of success on

the merits of Mallet’s misappropriation claim. See Oakwood,

999 F.3d at 912-13. The record, even as it stands now, may

establish the requisite likelihood that the Defendants engaged

in conduct that would be considered misappropriation of trade

secrets, if the relevant information is identified with sufficient

specificity. See supra Section I.A.2. But that identification

has not yet occurred.

“[m]atters which are fully disclosed by a marketed product and

are susceptible to ‘reverse engineering’—i.e., ‘starting with the

known product and working backward to divine the process

which aided in its manufacture,’—cannot be protected as trade

secrets.” 753 F.2d 1244, 1255 (3d Cir. 1985) (quoting

Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1974)).

But short of that factual scenario, the mere potential for reverse

engineering with unlimited resources does not foreclose the

existence of a trade secret.

48

B. Should the District Court decide on remand

that preliminary injunctive relief is

warranted, the injunction must be sufficiently

specific in its terms and narrowly tailored in

its scope.

Just as the lack of specificity regarding the claimed

trade secrets deprives us of a meaningful opportunity to review

the decision to grant injunctive relief, see supra Section II.A,

the injunction order’s absence of specific terms likewise

inhibits our review of the order itself. “Unless the trial court

carefully frames its orders of injunctive relief, it is impossible

for an appellate tribunal to know precisely what it is

reviewing.” Schmidt, 414 U.S. at 477.

“Since an injunctive order prohibits conduct under

threat of judicial punishment, basic fairness requires that those

enjoined receive explicit notice of precisely what conduct is

outlawed.” Id. at 476. A complication here is, of course, the

need to maintain the secrecy of the plaintiff’s trade secrets.32

32

That complication, however, is not unique to

injunction proceedings. It is one courts commonly resolve in

cases involving trade secrets and other highly sensitive

information, utilizing confidentiality orders that restrict access

to such information to trial counsel and other persons on a

need-to-know basis. See Fed. R. Civ. P. 26(c); DeRubeis, 244

F.R.D. at 682 (“[A] protective order is in effect in this case

which allows the parties to limit confidential information to

attorneys’ eyes only. Therefore, [the party’s] identification of

its trade secrets should not risk the information’s

confidentiality.”); Bailey v. Dart Container Corp. of Mich.,

980 F. Supp. 560, 583 (D. Mass. 1997) (weighing a defendant’s

49

Nevertheless, an injunction ought not leave too much

“guesswork” for the Defendants “to determine if [they are]

engaging in activities that violate the injunction”; it cannot be

“little more than a recitation of the law.” Patriot Homes, 512

F.3d at 415; see also Corning Inc. v. PicVue Elecs., Ltd., 365

F.3d 156, 157-58 (2d Cir. 2004). Such vagueness “places an

unduly harsh burden on the defendants … and is not in accord

with the mandate of Rule 65 that a preliminary injunction shall

be in specific terms.” E.W. Bliss Co. v. Struthers-Dunn, Inc.,

408 F.2d 1108, 1114 (8th Cir. 1969) (internal quotation marks

and citations omitted). “Rule 65(d) reflects Congress’[s]

concern with the dangers inherent in the threat of a contempt

citation for violation of an order so vague that an enjoined party

may unwittingly and unintentionally transcend its bounds.”

Sanders v. Air Line Pilots Ass’n, Int’l, 473 F.2d 244, 247 (2d

Cir. 1972) (citing Int’l Longshoremen’s Ass’n, Local 1291 v.

Phila. Marine Trade Ass’n, 389 U.S. 64, 76 (1967)).

The description of the conduct enjoined should be

narrowly tailored to reach only those acts that closely relate to

right “to examine relevant evidence against the right of [the

plaintiff] to protect his confidential information” and

concluding that “[a] protective order with [a] provision

requiring in house counsel and experts to sign an affidavit

agreeing to be bound by the terms of the order sufficiently

protects [the plaintiff’s] interest while allowing [the defendant]

access to relevant information”). We have confidence that the

District Court and the parties can craft an order that strikes an

acceptable balance between specifying forbidden action and

protecting trade secrets.

50

the unlawful conduct giving rise to an entitlement to injunctive

relief.

We must protect that which is protectable, but, in

doing so, we must limit the use of injunctive

relief to situations where it is necessary to

prevent immediate and irreparable injury. The

dramatic and drastic power of injunctive force

may be unleashed only against conditions

generating a presently existing actual threat[.]

Holiday Inns of Am., Inc. v. B & B Corp., 409 F.2d 614, 618

(3d Cir. 1969).

The injunction order here is problematic because it

extends the scope of the injunction to reach what appears to be

lawful conduct. For example, a total production ban against

the Defendants is not supported on the present record. “A

‘production injunction’ … completely bars [a] defendant from

manufacturing the type of product in which the trade secret is

utilized” and should only be imposed “when a trade secret is

‘inextricably connected’ to the defendant’s manufacture of the

product[.]” Christopher M’s Hand Poured Fudge, Inc. v.

Hennon, 699 A.2d 1272, 1277 (Pa. Super. Ct. 1997) (citations

omitted). The record here shows that several formulas for

baking release agents are the subject of patents and other

publications, so it is unclear how the Defendants’ manufacture

of a baking release agent will, of necessity, be inextricably

entwined with Mallet’s trade secrets, since there are publicly

available alternatives that the Defendant can utilize to

manufacture such a product.

51

In addition, the production ban was not limited to just

manufacturing but also restrained the Defendants from

“directly or indirectly formulating, manufacturing, distributing

or selling products competitive to Mallet products[.]” (J.A. at

44.) It would take a truly extraordinary showing – one not

made here – to justify an order ejecting a competitor from the

marketplace altogether.33 Injunction orders should not restrain

competitors from engaging in lawful business activities.34 See

33

And here, the breadth of the injunction restrains

Defendants from producing or selling release agents not only

in the commercial baking industry, the only industry in which

Mallet competes, but in any industry involving release agents.

(See J.A. at 56.)

34

See Bhd. of R.R. Carmen of Am., Local No. 429 v. Chi.

& N.W. Ry. Co., 354 F.2d 786, 800 (8th Cir. 1965) (“By its

terms the injunction goes far beyond enjoining just the conduct

of the minor dispute giving rise to it and thus is in violation of

traditional concepts of judicial restraint in equity matters.”);

Feathercombs, Inc. v. Solo Prods. Corp., 306 F.2d 251, 258

(2d Cir. 1962) (“We believe that although the use of such

material by Solo was an indication of its intention to engage in

unfair competition, Feathercombs’ grievance could be

remedied by an injunctive provision which is less drastic and

which would not deprive Solo of the right to legitimately

market its own hair appliance. Since Solo infringes no patent

by manufacturing its expandable comb, it is essential that it not

be unduly curtailed from marketing it by being denied the usual

promotional accoutrements of the modern market place.”);

Corica v. Ragen, 140 F.2d 496, 499 (7th Cir. 1944) (“Without

indicating what defendants may do in carrying on their normal

business operations, the injunction prohibits them from doing

52

N.L.R.B. v. Express Publ’g Co., 312 U.S. 426, 435-36 (1941)

(“This Court will strike from an injunction decree restraints

upon the commission of unlawful acts which are thus

[disassociated] from those [acts] which a defendant has

committed.”); E.W. Bliss Co., 408 F.2d at 1114 (noting that we

will find an injunction order “excessively broad and

consequently invalid [if] it goes far beyond restraining

unlawful conduct on the part of the defendants”).

Another example of problematic language in the

injunction is the prohibition on Bowers “working, directly or

indirectly, in any capacity … for … any person or entity that is

competitive with Mallet.” (J.A. at 40.) Bowers was not under

a noncompetition agreement, nor can we discern any other

basis for saying he cannot work anywhere for anyone who

might compete with Mallet in some way.

C. The bond amount must be tied to the scope of

the preliminary injunction and account for

the factual circumstances of the case.35

The Defendants also contend that the District Court

abused its discretion when it set a $500,000 bond – less than

three percent of the bond amount that they say is needed. They

assert that the District Court improperly relied upon bond

acts which are usual and necessary in the business of gathering,

editing, and distributing news.”).

35

“We … review district court judgments fixing the

amount of an injunction bond for abuse of discretion.” Sprint

Commc’ns Co. L.P. v. CAT Commc’ns Int’l, Inc., 335 F.3d 235,

239 (3d Cir. 2003).

53

amounts set in other cases without considering or evaluating

the evidence the Defendants set forth in support of their bond

assessment. We agree that the amount of the bond is not

adequately supported by the Court’s explanation.

Before a preliminary injunction can issue, the moving

party must provide “security in an amount that the court

considers proper to pay the costs and damages sustained by any

party found to have been wrongfully enjoined or restrained.”

Fed. R. Civ. P. 65(c). Rule 65(c)’s bond requirement balances

the competing interests of the adverse parties: preliminarily

enjoining a defendant’s conduct prevents a plaintiff from

incurring further irreparable harm, while the bond ensures at

least some protection for the defendant in the event its conduct

was wrongfully enjoined. The injunction bond serves as a

deterrent to “rash applications for interlocutory orders; the

bond premium and the chance of liability on it causes plaintiff

to think carefully beforehand.” Instant Air Freight Co. v. C.F.

Air Freight, Inc., 882 F.2d 797, 804 (3d Cir. 1989) (citation

omitted). It is also the only recourse for a wrongfully enjoined

party. Sprint Commc’ns Co. L.P. v. CAT Commc’ns Int’l, Inc.,

335 F.3d 235, 240 (3d Cir. 2003); see also W.R. Grace & Co.

v. Local Union 759, Int’l Union of United Rubber Cork,

Linoleum & Plastic Workers of Am., 461 U.S. 757, 770 n.14

(1983) (“A party injured by the issuance of an injunction later

determined to be erroneous has no action for damages in the

absence of a bond.”). The bond “limits the liability of the

applicant” and sets “the price [it] can expect to pay if the

injunction was wrongfully issued[,]” Sprint Commc’ns, 335

F.3d at 240 (quoting Instant Air Freight, 882 F.2d at 805),

since there is no other “legal or equitable means to recover

against the applicant for a wrongful grant of the injunction (i.e.,

where the applicant does not prevail in the main action), other

54

than the bond.” Frank’s GMC Truck Ctr., Inc. v. Gen. Motors

Corp., 847 F.2d 100, 103 n.5 (3d Cir. 1988).

Realistically, that means the consequences of

wrongfully enjoining a defendant could be dire if a district

court were to significantly underestimate the economic impact

of an injunction it issues. While that risk is offset to a degree

by the high burden placed on the moving party to establish that

an injunction is warranted, id. at 102 (recognizing that the grant

of injunctive relief is an “extraordinary remedy, which should

be granted only in limited circumstances” (citation omitted)),

the risk remains, especially if the scope of the injunction is far-

reaching.36 District courts are therefore tasked with the

36

Mallet contends that the risk of an errant ruling is a

factor courts may use in setting the bond amount, explaining

that “[t]he lower the risk of an injunction being wrongfully

enjoined, the more appropriate a lower bond amount.”

(Answering Br. at 73-74 (citing Ark. Best Corp. v. Carolina

Freight Corp., 60 F. Supp. 2d 517, 518 (W.D.N.C. 1999)).

Mallet then points to the time spent litigating this case, as well

as the volume of briefing and testimony leading up to the

issuance of the injunction to support its assertion that there was

a “limited risk” that the injunction was wrongfully issued and,

therefore, that the $500,000 bond correctly accounted for that

limited risk. (Answering. Br. at. 74.) We disagree. While it is

true that the preliminary injunction standard’s heavy burden

reduces the risk of wrongful enjoinment, the purpose of the

bond is still to build in protections for the enjoined, given the

risks that inherently arise from the expedited and preliminary

nature of the proceedings. See Kos Pharms., Inc., 369 F.3d at

710 (recognizing that “district courts must exercise their

discretion on an expedited basis in deciding whether to grant

55

responsibility of accounting for the factual circumstances of

the parties and tying the scope of the injunction to the bond

amount it decides to set. Because setting the bond amount –

like the preceding decision to order injunctive relief – “is

almost always based on an abbreviated set of facts” that

“requir[e] a delicate balancing” of the adverse parties’

competing interests, the decision rests within the district

court’s sound discretion. See U.S. Steel Corp. v. Fraternal

Ass’n of Steelhaulers, 431 F.2d 1046, 1048 (3d Cir. 1970).

The deference we accord a district court to “mold its

decree to meet the exigencies of the particular case” is not,

however, unlimited. Trump v. Int’l Refugee Assistance

preliminary relief”); U.S. Steel Corp. v. Fraternal Ass’n of

Steelhaulers, 431 F.2d 1046, 1048 (3d Cir. 1970) (“[T]he grant

or denial of a preliminary injunction is almost always based on

an abbreviated set of facts[.]”). To strip those built-in

protections from the Defendants at this early stage of the

litigation negates the very reason for requiring a bond and

stands in tension with the standard for setting the bond amount

– which measures compensable harm based on the

presumption of wrongful enjoinment, not the likelihood of

wrongful enjoinment. See Kos Pharm., Inc., 369 F.3d at 732

n.28. Moreover, the size of the preliminary injunction record

does not negate the preliminary nature of the proceedings. We

cannot assume that the size of the record indicates the extent of

remaining evidence that may be uncovered during discovery,

nor do we see a basis for assuming there is an inverse

relationship between the size of a preliminary injunction record

and the level of risk that a defendant will be wrongfully

enjoined.

56

Project, 137 S. Ct. 2080, 2087 (2017) (quoting 11A C. Wright,

A. Miller, & M. Kane, Federal Practice and Procedure

§ 2947, at 115 (3d ed. 2013)). District courts should engage in

a case-specific analysis that accounts for the factual

circumstances of the parties, the nature of the case and

competing harms, and the scope and potential impact of the

injunction, and they should place on the record their reasons

for setting a bond amount, so as to provide a meaningful basis

for appellate review. Cf. Coyne-Delany Co., Inc. v. Cap. Dev.

Bd., 717 F.2d 385, 392 (7th Cir. 1983) (“[T]he ingredients of a

proper decision are objective factors—such as the resources of

the parties, the defendant’s efforts or lack thereof to mitigate

his damages, and the outcome of the underlying suit—

accessible to the judgment of a reviewing court. … [T]he

district court’s decision cannot stand” when “it fails to consider

and evaluate the full range of factors … that would be relevant

under the proper standard[.]”).

Here, the District Court’s stated reason that a $500,000

bond was “reasonable, proper[,] and sufficient” was that

$500,000 was “toward the high-end of those [bonds] to have

been imposed” in similar cases.37 (J.A. at 45 n.2.) And it

37

The District Court “surveyed federal court decisions

in like cases, from across the country,” but there is nothing in

the record or the Court’s decision indicating the number of

cases surveyed, any case names or citations, or how the Court

determined which decisions to include in its set of purportedly

similar cases. (J.A. at 45 n.2.) So assuming that a survey of

“like cases” might inform a court’s exercise of discretion in

setting a bond amount, the absence of any information about

the content of that survey in this case remains a problem. And

in the absence of that information, we cannot conclude that the

57

rejected the Defendants request for a bond exceeding $21.5

million since that amount “seem[ed] astronomical by

comparison.” (J.A. at 45 n.2.) The Court further alluded to a

warning it had previously given, advising the parties “that it

would ‘summarily … adopt the [proposals] it believe[d to be]

most reasonable, appropriate and consistent with the Court’s

[preliminary injunction] rulings.’” (J.A. at 45 n.2 (alterations

in original) (quoting ECF No. 109 at 27).) And after

contemplating that “a splitting-of-the-baby” strategy may have

influenced the Defendants’ bond proposal, it faulted the

Defendants for not heeding its warning. (J.A. at 45 n.2.) But

frustration with a party, even if it may be justified, does not

relieve a district court of the obligation to engage in a case-

specific analysis, looking at potential harm from the injunction.

Considering comparable cases – if they are truly comparable –

is not inappropriate, but there still must be an analysis of the

particular facts at hand. See Kos Pharms., Inc., 369 F.3d at 732

n.28. If the District Court decides to again grant a preliminary

injunction on remand in this case, it should consider anew the

appropriate bond amount.

III. CONCLUSION

For the foregoing reasons, we will vacate the

preliminary injunction and remand for further proceedings.

enormous gap between the Defendants’ bond proposal and

bond amounts in other cases means that what the Defendants

proposed was unreasonable.

58