## Facts

- Faiveley Transport Malmo AB, a Swedish company, acquired SAB Wabco AB and its intellectual property, including engineering drawings and manufacturing know-how for a subway brake system (BFC TBU) treated as trade secrets.
- In 1993, SAB Wabco authorized a related Wabco entity (later succeeded by Wabtec) to use BFC TBU technical information free of charge for ten years, renewable annually thereafter.
- After acquiring SAB Wabco’s assets in 2004, Faiveley notified Wabtec that the authorization would expire at the end of 2005.
- Following notice of expiration, Wabtec attempted to reverse engineer the BFC TBU system; the effort succeeded after Wabtec assigned an engineer with extensive prior exposure to the licensed information to lead the project.
- Faiveley alleged Wabtec used confidential drawings and know-how to produce a compatible BFC TBU unit and to compete for transit authority contracts, including in New York.
- Faiveley sued under New York law for trade-secret misappropriation and sought preliminary injunctive relief.
- The district court found Faiveley likely to succeed and entered a preliminary injunction broadly restraining Wabtec from (a) entering contracts whose performance would require use of the alleged trade secrets and (b) further dissemination of the trade secrets.
- Wabtec appealed, challenging the irreparable-harm finding and the breadth of the injunction.

## Issues

1. Whether likely misappropriation of trade secrets creates an automatic (or effectively automatic) presumption of irreparable harm for purposes of a preliminary injunction.
2. Whether an injunction barring a defendant from entering contracts requiring use of the alleged trade secrets is impermissibly overbroad absent a concrete showing of irreparable harm, as distinct from an order preventing disclosure.

## Decision

- The Second Circuit held that trade-secret misappropriation does not create a per se presumption of irreparable harm; the plaintiff generally must show why money damages would be inadequate.
- The court distinguished harm from disclosure (which can destroy secrecy and often supports irreparable harm) from harm from internal use without dissemination (often compensable by damages).
- The court affirmed, for preliminary-injunction purposes, the district court’s conclusion that Faiveley showed a likelihood of success on its trade-secret claim.
- The court vacated the injunction in part and remanded, directing the district court to narrow relief that broadly restricted Wabtec’s ability to compete and enter contracts.
- The court left room for injunctive relief focused on preventing further disclosure of Faiveley’s trade secrets.

## Legal Principles

- A preliminary injunction requires a showing of likely irreparable harm; trade-secret cases do not categorically exempt plaintiffs from that requirement.
- Irreparable harm is most strongly supported where misappropriation threatens disclosure that would eliminate secrecy; once secrecy is lost, it cannot be restored.
- Where the defendant’s conduct is limited to use without disclosure, resulting competitive injury may be measurable (e.g., lost profits or unjust enrichment) and therefore remediable through monetary damages.
- Injunctive relief must be narrowly tailored to the demonstrated harm and should not function as a broad restraint on competition absent a sufficient showing of irreparable injury.

## Conclusion

The Second Circuit required a concrete showing of irreparable harm in trade-secret preliminary-injunction practice, emphasizing the use-versus-disclosure distinction, and remanded to narrow an injunction that broadly barred contract competition while permitting targeted protection against further disclosure.


Faiveley Transport Malmo AB v. Wabtec Corp., 559 F.3d 110 (2d Cir. 2009)