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October 15, 2026 | Legal Advisory

On October 14, 2026, the Massachusetts Supreme Judicial Court ruled that employers seeking preliminary injunctive relief for alleged trade secret misappropriation must demonstrate actual irreparable harm, rather than relying on a presumption that such harm necessarily results from the misappropriation of trade secrets. In Daikin Applied Americas Inc. v. Russo, SJC-13881 (Mass. Oct. 14, 2026), the Court unanimously rejected an employer’s attempt to enjoin former employees from soliciting its customers for one year. Notably, it held that even if an employer establishes a likelihood of success on a claim that a former employee misappropriated its trade secrets, the employer still must independently show that there will be irreparable harm (i.e., something more than quantifiable damages) in the absence of the requested preliminary injunction.

Background

Daikin Applied Americas Inc., a commercial HVAC company, sued two former employees who Daikin claimed had established a competing business before they left Daikin’s employ. Daikin alleged further that, before their departures, the employees forwarded confidential company information to their personal email accounts, including customer contacts, pricing and cost information, internal service bulletins, and equipment passwords.

Daikin sought a preliminary injunction that would have required the former employees to return its confidential information, refrain from using that information, submit their devices for forensic examination, and refrain from soliciting 75 specific Daikin customers for one year.

Although the former employees agreed to a limited forensic review and to return Daikin’s confidential information and refrain from using it, they opposed the proposed non-solicitation restriction. Notably, neither employee had signed a noncompetition or non-solicitation agreement with Daikin. The Superior Court denied Daikin’s request for a customer non-solicitation injunction, concluding that Daikin had failed to establish irreparable harm.

The SJC's Decision

Before the SJC, Daikin argued that its likelihood of success on its trade secret misappropriation claims entitled it to a presumption of irreparable harm. The SJC rejected that argument and found such a presumption was inconsistent with both the Massachusetts Uniform Trade Secrets Act and traditional equitable principles governing preliminary injunctions. Thus, under the precedent established by Daikin, courts must in considering requests for injunctive relief evaluate the particular circumstances, the nature of the alleged irreparable harm, and whether the requested relief is necessary to prevent that harm.

The SJC also rejected Daikin’s alternative argument that it had independently established irreparable harm through the potential loss of customers, goodwill, and future revenue. The Court explained that economic losses, including lost sales and maintenance contracts, are generally compensable through monetary damages and that economic harm becomes irreparable only when it threatens the very existence of the employer’s business. Although Daikin asserted on appeal that it would suffer damage to its customer goodwill, it apparently offered no evidence through affidavit before the lower court to support that claim.

The SJC expressly noted that Daikin had not obtained non-solicitation or non-competition agreements from the employees, and opined that Daikin was effectively seeking a benefit for which it had neither bargained nor compensated its employees. Given that the former employees were already prohibited from using Daikin’s confidential information, the Court concluded that Daikin had not established a basis for the additional non-solicitation restriction.

Key Takeaways for Employers

The Daikin decision has several important implications for Massachusetts employers:

• Evidence of irreparable harm is essential. Employers seeking preliminary injunctive relief for trade secret misappropriation must present concrete evidence demonstrating why monetary damages would be inadequate. Generalized assertions about lost customers, competitive harm, or damage to goodwill will not suffice.
• Enter restrictive covenants with employees. Courts will not necessarily use trade secret claims to impose post-employment restrictions that an employer never obtained by contract. Employers seeking to restrict customer solicitation should consider appropriately drafted and enforceable non-solicitation agreements rather than relying exclusively on trade secret protections.
• Injunctive relief must be narrowly tailored. Courts will evaluate whether the particular restrictions requested are necessary to prevent irreparable harm. An agreement by departing employees to return and refrain from using confidential information may undermine the need for broader restrictions on competitive activities.

Bottom Line

The Daikin decision makes clear that establishing likely trade secret misappropriation is not enough, standing alone, to justify injunctive relief. Employers must also demonstrate, with specific evidence, that the requested relief is necessary to prevent harm that cannot adequately be remedied through monetary damages. The decision also makes clear that employers who are concerned that former employees may solicit customers should consider having non-solicitation agreements in place as even evidence of a former employee’s use of confidential information may not be sufficient to protect those customer relationships.

This advisory was prepared by Nutter’s Labor, Employment and Benefits practice group. For more information, please contact any member of the LEB group or your Nutter attorney at 617.439.2000.

This advisory is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.