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Injunctions: What Are they and When Should You Use Them?

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Injunctions: What Are they and When Should You Use Them?

An injunction is an order granted by the court that requires the parties to not do a particular thing. Business contracts often refer to “injunctive relief” (or obtaining an injunction from a court to stop someone from doing something) or the related “specific performance” (requiring someone to do the specific things they agreed to do in a contract) as an option when economic damages are not sufficient to cover a problem. Examples of such situations include prohibiting contractors from sharing information they were given under a non-disclosure agreement and forcing a seller of a unique good to actually deliver the good. If a party violates a court order containing an injunction or a requirement for specific performance, the penalties can include fines and even arrest, depending on the situation.

The courts have a number of types of injunctions they can use to address various concerns. These can be temporary in nature, which are designed to stop a certain behavior quickly in the time before a full hearing can be held, or permanent, which generally require a full and proper hearing. Once issued, an injunction is enforceable, even across state lines.

Businesses seeking injunctive relief will have to demonstrate that the underlying issue depends, in whole or in part, on stopping or restraining an act that would cause irreparable injury to the business. Publicly sharing pricing information, for example, would cause a business to have to re-think its pricing algorithm. In other situations, when considering a variety of locations to place a new facility, publicly sharing incentive proposals or facility plans could cause expansion plans to fail.

When Does a Business Use Injunctions?

As was hinted at above, injunctions can be useful in a large variety of business situations. For instance, injunctions can be used to help prevent fraudulent conveyance (when a debtor tries to hide their property by giving it to someone else) or to stop a competitor from using a name that’s misleadingly similar to your own. Injunctions can also be helpful in certain breach of contract actions, in labor disputes, and when dealing with a limited resource such as natural gas or water.

Perhaps the most common use of injunctions is to protect trade secrets. Businesses are generally very concerned about protecting their core intellectual property, which can include internal formulas, recipes, processes, and more. This information is usually a large part of what gives a particular business its competitive advantage. Because this information is so important, prudent businesses often use both non-disclosure agreements and physical safeguards to prevent the information from leaking. However, even the most stringent agreements and safeguards can sometimes not prevent former employees or contractors from attempting to leak these trade secrets to competitors or the public.

This is precisely the sort of situation that injunctions were designed to handle. A business that is having its trade secrets leaked can work with its attorney to get an injunction telling its competitors to stop using the trade secrets, telling websites to remove any secret information, telling these former employees to stop sharing the information, and more. And, even better, injunctions generally don’t prevent you from also seeking monetary damages. This means that you can work with your attorney to be made whole from any economic damages the sharing of your trade secrets has caused.

Understanding when to use injunctions and what other remedies may be available is part of what we do at Chase Law Group, P.C. Our experienced business attorneys will look at your specific situation and give you advice on how to protect your trade secrets or how to proceed to stop a business partner from sharing your information. Schedule a consultation today by calling (310) 545-7700.