Diamond Assets LLC v. Note Tech Industries, LLC et al

Filing 35

OPINION & ORDER granting 30 Motion for Leave to File Reply in Support of Motion for Preliminary Injunction; denying 4 Motion for Preliminary Injunction. Signed by District Judge James D. Peterson on 8/18/2017. (kwf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

DIAMOND ASSETS LLC,
Plaintiff,
v.

OPINION & ORDER

NOTE TECH INDUSTRIES, LLC, and
REPAIR CENTER, LLC,

17-cv-479-jdp

Defendants.
Plaintiff Diamond Assets LLC runs a business buying back and refurbishing Apple
products. In 2015, it entered a “strategic alliance” with defendants Note Tech Industries, LLC,
and Repair Center, LLC, to mutually exchange referrals for customers and send iPads to
defendants for repairs. Dkt. 1, ¶ 36. The parties signed a non-disclosure agreement vowing not
to use each other’s confidential information for any other purpose. See Dkt. 1-1. The alliance
deteriorated, and Diamond now accuses defendants of misappropriating its trade secrets to
enter the buy-back market in direct competition with Diamond.1 Diamond alleges that in April,
defendants undercut Diamond’s bids with two school districts, costing Diamond over
$830,000 in gross revenue.
Diamond alleges violations of the Federal Defend Trade Secrets Act, 18 U.S.C. § 1836,
Wisconsin’s Uniform Trade Secrets Act, Wis. Stat. § 134.90, breach of contract, conversion,
and tortious interference with advantageous business relationships. It seeks preliminary

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The parties dispute whether defendants were already engaging in the buy-back business before
entering the alliance with Diamond. See Dkt. 29, ¶ 8. The status quo may be a decisive point
in some cases, but not here. So the court need not resolve this factual dispute at this time.

injunctive relief under Federal Rule of Civil Procedure 65. Dkt. 4. The court previously denied
its motion for a temporary restraining order because it had not established that it would suffer
immediate and irreparable injury before the court could rule on its motion for a preliminary
injunction. Dkt. 11. The preliminary injunction motion is now fully briefed. The court will
deny it for similar reasons.
A preliminary injunction is “an extraordinary and drastic remedy” that may be granted
only when the movant carries the burden of persuasion by a “clear showing.” Boucher v. Sch. Bd.,
134 F.3d 821, 823 (7th Cir. 1998) (quoting Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)).
To obtain preliminary injunctive relief, Diamond must show that (1) it will suffer irreparable
harm before the final resolution of its claims without the preliminary injunction; (2) traditional
legal remedies are inadequate; and (3) its claims have some likelihood of success on the merits.
BBL, Inc. v. City of Angola, 809 F.3d 317, 323-24 (7th Cir. 2015). If Diamond makes this
threshold showing, it must further demonstrate that the balance of harms tips in its favor and
that the public interest favors the injunction. Id. at 324. Even if the court assumes that
Diamond can make the requisite showing of likely success on the merits, Diamond has not
demonstrated that it will suffer irreparable harm absent the injunction.
Diamond contends that defendants’ continued misappropriation of its trade secrets will
damage its customer goodwill and industry reputation, resulting in irreparable harm. But the
evidence it adduces doesn’t support this contention. The parties agree that Diamond generates
75 percent of its annual revenue between May 15 and August 15. Dkt. 29, ¶ 70. Diamond filed
this lawsuit on June 20 and alleged that defendants “stole” two contracts from it in April by
using Diamond’s trade secrets. (Defendants agree that they won two bids but deny using
Diamond’s trade secrets to do so.) Diamond concedes that lost contracts do not amount to

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irreparable harm—those are lost profits that can be recovered through damages. See In re Aimster
Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003). Rather, it uses the two lost contracts to
argue that irreparable harm will result from the “loss of market share, and the dramatic shift in
Diamond’s competitive position, that will result from defendants’ entry into the market.” Dkt.
5, at 25. But defendants entered the market over three months ago, the important summer
season is almost at a close, and although Diamond has recently moved to add further evidence
to the record, it does not indicate that defendants have undercut any more of its bids.2
Apparently, Diamond will emerge from the summer season relatively unscathed. Diamond has
simply not adduced any evidence that defendants’ presence in the buy-back market will
interfere with its customer goodwill and reputation any more than a run-of-the-mill
competitor’s presence would.

ORDER
IT IS ORDERED that:
1. Plaintiff Diamond Assets LLC’s motion for leave to file reply affidavit, Dkt. 30, is
GRANTED.
2. Plaintiff’s motion for a preliminary injunction, Dkt. 4, is DENIED.
Entered August 18, 2017.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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The court will grant Diamond’s motion, Dkt. 30.

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