Massachusetts High Court Rejects Presumed Harm in Trade Secret Injunction Cases

In a recent decision, the Massachusetts Supreme Judicial Court (SJC) provided a key clarification on the proper standard for obtaining a preliminary injunction on a trade secrets claim. On October 14, 2026, the SJC affirmed the denial of a preliminary injunction sought by Daikin Applied Americas Inc. against two of its former employees and their new heating, ventilation and air conditioning (HVAC) company related to alleged trade secret misappropriation.

Daikin alleged that the employees had taken its confidential business information – including customer lists, bid data, and pricing and cost information – and used it to set up a competitive business. Daikin filed a trade secrets lawsuit against the former employees and sought a preliminary injunction seeking, among other things, to bar them for one year from soliciting 75 customers, even in the absence of non-solicitation agreements between Daikin and the employees.

Preliminary Injunction Standard

Under Massachusetts' preliminary injunction standard, Daikin had to show 1) a likelihood that it would succeed on its trade secrets claim, 2) it would suffer irreparable harm if it did not receive an injunction and 3) that the risk of irreparable harm to it outweighed the potential harm to the former employees if the injunction was granted.

Relying on cases decided by the U.S. District Court for the District of Massachusetts, Daikin argued that if it could demonstrate a likelihood of success on its trade secret claims, there should be a presumption that it would irreparably harmed. In other words, Daikin asserted that if it could meet the first prong of the preliminary injunction test, it should automatically meet the second prong.

No Presumption of Irreparable Harm

The SJC squarely rejected this argument. The SJC reasoned that preliminary injunctions under the Massachusetts Uniform Trade Secrets Act are governed by the customary preliminary injunction test. The court further reasoned that presuming irreparable harm would impermissibly collapse the preliminary injunction inquiry into a merits analysis.

The SJC emphasized that the preliminary injunction standard must be case-specific: Judges should consider the alleged misconduct, type of irreparable harm likely to occur and form of injunction best suited to that harm. The court further relied on U.S. Supreme Court decisions rejecting presumptions of irreparable harm in patent and copyright cases, as well as federal appellate decisions applying the same reasoning to trade secret claims. The SJC also found the federal district court cases cited by Daikin unpersuasive as irreparable harm was shown in each of those cases notwithstanding a presumption.

Applying the customary irreparable harm standard, the SJC found Daikin's evidence insufficient to warrant a preliminary injunction. Specifically, the court held that Daikin's asserted losses from HVAC sales and related maintenance contracts were quantifiable and thus not the type of harm that may be remedied through a preliminary injunction. Ultimately, the SJC held that because the defendants already were prohibited from using Daikin's confidential information, the trial judge acted within his discretion in denying the preliminary injunction and refusing to impose Daikin's requested non-solicitation order.

Implications for Massachusetts Employers

The Daikin case highlights the need for businesses filing Massachusetts trade secret lawsuits to carefully compile evidence of irreparable harm from the outset. Supporting declarations should identify specific threatened injuries – such as imminent disclosure of confidential information, unquantifiable damage to customer relationships or competitive harm that damages cannot restore – and explain why existing protections are inadequate. This is consistent with recent findings in other jurisdictions.

Massachusetts employers also should not assume that a trade secret claim can substitute for contractual protections they did not obtain through bargaining with the employee. Carefully drafted confidentiality, non-solicitation and restrictive covenant agreements are oftentimes essential to protecting a business' trade secrets. It is important to note that success in trade secret lawsuits will depend on each jurisdiction's application of the relevant uniform trade secrets act.

Key Takeaways and Next Steps

• No Automatic Presumption of Irreparable Harm. A plaintiff that shows a likelihood of success on a trade secret misappropriation claim must still establish irreparable harm with evidence tied to the requested relief.
• Economic Losses Generally Are Not Enough for Preliminary Injunction. Lost sales, service revenue or customer business ordinarily can be quantified and remedied through damages and thus do not support a request for preliminary injunction.
• The Evidentiary Record Matters. Affidavits should explain concretely why threatened trade secret misappropriation will cause harm that cannot be repaired by money damages.

For more information or questions, please contact the author.