## Facts

- Jeff Merkey and Darren Major worked for Novell Inc. as scientists/engineers.
- During their Novell employment, Merkey and Major were bound by contracts restricting the use or disclosure of Novell confidential information and trade secrets after leaving the company, and they also agreed not to compete with Novell for a period after departure.
- While employed at Novell, Merkey and Major developed a new computer-software architecture involving “clustering.”
- When Merkey and Major concluded Novell would not use the architecture in the way they expected, Novell permitted them to form a spinoff company, Timpanogos Research Group Inc. (TRG), subject to an understanding that TRG would respect Novell’s intellectual property.
- While still employed at Novell, Merkey sent Microsoft a document that was essentially a copy of a Novell document describing the clustering architecture he had created at Novell.
- Merkey and Major met with Microsoft and presented the document as if the technology belonged solely to TRG.
- After resigning from Novell, Merkey and Major continued discussions with Microsoft and marketed the architecture for Microsoft’s use.
- Novell sued Merkey, Major, and TRG for misappropriation of trade secrets and sought a preliminary injunction to stop use and disclosure of the disputed architecture pending the case.

## Issues

1. Whether Novell showed a substantial likelihood that the clustering architecture and related documentation qualified as Novell trade secrets and that defendants had misappropriated them.
2. Whether Novell met the requirements for a preliminary injunction, including irreparable harm absent immediate relief.

## Decision

- The court granted Novell’s motion for a preliminary injunction.
- The court restrained defendants from using or disclosing Novell’s alleged trade-secret information and from further exploitation of the architecture in a manner tied to the challenged materials while the litigation proceeded.
- The court concluded that Novell made the showing required at the preliminary-injunction stage, including a strong likelihood of success on its trade-secret claim and a sufficient showing of irreparable harm if disclosure or use continued.

## Legal Principles

- Technical information developed by employees in the course of employment can be protected as an employer’s trade secret when it derives economic value from not being generally known and the employer takes reasonable steps to keep it secret (including confidentiality obligations).
- Misappropriation may be shown by evidence of unauthorized copying, disclosure, or use of confidential technical materials, including presenting an employer-developed document to a third party as the former employee’s or new company’s work.
- A preliminary injunction may issue when the movant shows likelihood of success on the merits, irreparable harm without the injunction, that the balance of harms favors relief, and that the injunction is consistent with the public interest.
- In trade-secret cases, loss of secrecy and the resulting competitive harm can constitute irreparable harm because the secrecy, once lost, cannot be fully restored through money damages.

## Conclusion

In Novell Inc. v. Timpanogos Research Group Inc., the District of Utah granted preliminary injunctive relief after Novell showed that former employees likely took and presented a Novell-created clustering architecture document to Microsoft as TRG’s own and that continued use or disclosure threatened immediate, noncompensable harm from loss of secrecy and competitive disadvantage.


Novell Inc. v. Timpanogos Research Group Inc., 1998 WL 177721, 46 U.S.P.Q.2d 1197 (1998)