SEEKING IMMEDIATE RELIEF: PRELIMINARY INJUNCTIONS AND TEMPORARY RESTRAINING ORDERS September 1, 2010 Presented by C. Marshall Lindsay Smith Moore Leatherwood LLP Charlotte, NC T: 704.384.2648 F: 704.384.2924 marshall.lindsay@smithmoorelaw.com Patti Ramseur Smith Moore Leatherwood LLP Charlotte, Greensboro, NC T: 704.384.2654 T: 336.378.5304 F: 336.378.5400 patti.ramseur@smithmoorelaw.com Rick Coughlin Smith Moore Leatherwood LLP Greensboro, NC T: 336.378.5471 F: 336.378.5400 rick.coughlin@smithmoorelaw.com

FEDERAL RULES OF CIVIL PROCEDURE RULE 65 FEDERAL RULES OF CIVIL PROCEDURE RULE 65. INJUNCTIONS AND RESTRAINING ORDERS PRELIMINARY INJUNCTION May be issued only on notice to the adverse party TEMPORARY RESTRAINING ORDER May be issued without notice only if verified facts show that immediate and irreparable injury, loss, or damage will result before notice can be given Movant’s attorney certifies the need to have the hearing without notice Duration of TRO cannot exceed fourteen days Hearing on the motion for preliminary injunction will be expedited

FEDERAL RULES OF CIVIL PROCEDURE RULE 65 FEDERAL RULES OF CIVIL PROCEDURE RULE 65. INJUNCTIONS AND RESTRAINING ORDERS ORDERS Require particularity TRO’s are required to state the reason notice was not given. MOTION TO DISSOLVE On two days notice, the adverse party may move to dissolve the order. SECURITY The Court will issue an order ONLY if proper security is given.

STANDARDS FOR ISSUANCE OF INJUNCTIONS AND RESTRAINING ORDERS FEDERAL Shift from the Blackwelder (1977) standard to the Winter standard in the 4th Circuit (2009) All Federal courts now have the same standard as set forth by the Supreme Court

STANDARDS FOR ISSUANCE OF INJUNCTIONS AND RESTRAINING ORDERS FEDERAL (Cont.) Requires that plaintiff establish Clear showing that it is likely to succeed on the merits Clear showing that it is likely to suffer irreparable harm in the absence of relief Balance of equities tips in its favor AND The injunction is in the public interest The balancing test of Blackwelder is no longer applicable.

STANDARDS FOR ISSUANCE OF INJUNCTIONS AND RESTRAINING ORDERS NORTH CAROLINA Requires that plaintiff establish likelihood of success on the merits; and likelihood of irreparable harm absent the relief Some distinctions still remain between the two standards. During the Blackwelder era, the choice of court was extremely important.

GENERAL CONSIDERATIONS RELATED TO INJUNCTIONS Mandatory vs. prohibitive Extent of the need for continued Court supervision Personal services contracts

AREAS IN WHICH INJUNCTIONS MAY BE USEFUL Commercial contracts Requirements contracts Distributor contracts Real estate contracts

Questions?

Intellectual Property Litigation Patents eBay, Inc. v. MercExchange LLC, 547 U.S. 388 (2006) Trademarks and Trade Dress Copyrights Trade Secrets

Protecting Your Business When Employees Leave Presented by Patti Ramseur Smith Moore Leatherwood LLP 300 N. Greene Street, Suite 1400 Greensboro, NC 27401 (336) 378-5304 patti.ramseur@smithmoorelaw.com www.smithmoorelaw.com

Remember…… Protecting your business when employees leave means . . . Protecting your business before employees leave.

Overview Contracts What can you restrict What must the contracts say What should you do to improve enforceability Recent “Dings” from the Courts Legal duties when there is no contract

Contracts Non-competition Non-solicitation Confidentiality

Non-compete agreements Elements: In writing Made as part of an employment contract Based upon valuable consideration Reasonable as to time and territory (and scope) Designed to protect a legitimate business need

Recent Examples Medical Staffing Network, Inc. v. Ridgway (2009) MJM Investigations, Inc. v. Sjostedt (2010) Hejl v. Hood, Hargett & Associates, Inc. (2009)

Medical Staffing Network, Inc. v. Ridgway Upon commencement of employment, Ridgway signed: “This Agreement is made by and between Thomas Dean Ridgway and Medical Staffing Network, Inc., including any parent, division, subsidiary, affiliate, predecessor, successor or assignee hereof (“MSN”).”

Medical Staffing Network, Inc. v. Ridgway Non-disclosure of confidential information Non-solicitation of employees and clients Non-competition within 60-mile radius of Raleigh Time limit of one year

Medical Staffing Network, Inc. v. Ridgway MSN and Trinity competed placing nurses in Raleigh Ridgway was a star Trinity hires former MSN employee who recruits Ridgway Ridgway suddenly interested in computer records The Angus Barn Dinner Ridgway quits and soon recruits other employees MSN sees revenue drops; Trinity’s increases WakeMed shifts its business

MJM Investigations, Inc. v. Sjostedt Non-Compete Clause: From the date of the execution of this Agreement, and for a period of two years from the last date services are performed under this Agreement or any other agreement with MJM, [Defendants] agree[] not to compete, either directly or indirectly, with MJM in its present line(s) of business or in future line(s) of business that may be disclosed to [Defendants] or learned of by [Defendants] through [their] association with MJM.

MJM Investigations, Inc. v. Sjostedt Portion of non-solicitation clause: [Defendants] will also specifically not solicit any current or prospect client of MJM for the purposes of providing the following services: Insurance Claims Investigations, Insurance Claims Task Service (excluding medical care services), Surveillance, Independent Adjusting, Fire Investigations, International Investigations and any related types of insurance or corporate services.

Hejl v. Hood, Hargett & Associates, Inc. Employee will not, for two years: directly or indirectly, seek to induce, promote, facilitate, solicit, quote rates for, receive, write, bind, broker, transfer or accept replacement or renewal of insurance or otherwise provide insurance and/or insurance services on behalf of any person, firm or entity to whom [Defendant] has sold any product or service, or quoted any product or service, whether or not for compensation, in the one year prior to the time [Plaintiff] ceases to be employed by [Defendant].

Hejl v. Hood, Hargett & Associates, Inc. With a geographic restriction: in (1) Charlotte, North Carolina, or (2) in any other city, town, borough, township, village or other place in the State of North Carolina or the State of South Carolina in which city, borough, township, village or other place [Defendant] is engaged in rendering its services or selling its products.

Confidentiality Agreements No new consideration required No territory limits No time limit, although timeliness is implicit in what is confidential Must define what is protected with adequate specificity

Trade Secret Protection What is a trade secret? NCGS § 66-152: business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Trade Secret Protection How do you prove misappropriation and disclosure? Courts: inevitable disclosure doctrine Statute: substantial evidence that the person against whom relief is sought: Knows or should have known of the trade secret; and Has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner.

Trade Secret Protection What are the remedies? Injunction Economic losses Attorneys fees for willful & malicious misappropriation Possible: Unfair and Deceptive Trade Practice Recent example: Edgewater Services, Ltd. v. Epic Logistics, Inc. (2009)

Questions

Thank You C. Marshall Lindsay Smith Moore Leatherwood LLP Charlotte, NC T: 704.384.2648 F: 704.384.2924 marshall.lindsay@smithmoorelaw.com Patti Ramseur Smith Moore Leatherwood LLP Charlotte, Greensboro, NC T: 704.384.2654 T: 336.378.5304 F: 336.378.5400 patti.ramseur@smithmoorelaw.com Rick Coughlin Smith Moore Leatherwood LLP Greensboro, NC T: 336.378.5471 F: 336.378.5400 rick.coughlin@smithmoorelaw.com