Injunction

What is an Injunction exactly?

‍An injunction is a powerful legal remedy issued by a court that either compels a party to perform a specific act or, more commonly, prohibits them from doing something. In the business world, injunctions are often used as an emergency measure to prevent immediate harm, such as a former employee stealing sensitive data or a competitor infringing on a trademark.

‍Unlike a standard lawsuit where the goal is usually to recover money (damages), an injunction focuses on stopping a harmful action before it causes irreparable damage. For example, if a business partner is about to sell the company's main asset without permission, waiting months for a trial to get the money back might be pointless if the asset is gone. An injunction can "freeze" the situation immediately.

‍For founders and startups, understanding injunctions is vital because they are the "nuclear option" of legal disputes. They can be obtained very quickly—sometimes within hours—and ignoring one is considered contempt of court, which can lead to hefty fines or even imprisonment for the individuals involved.

What are the different types of Injunction?

‍The most common type of injunction is a "prohibitory injunction," which stops a party from taking a certain action, such as launching a product that uses your intellectual property. Conversely, a "mandatory injunction" requires a party to take a positive step, like returning stolen company files or restoring access to a shared server.

‍Injunctions are also categorised by their timing. An "interlocutory" or "interim" injunction is a temporary measure put in place while the rest of the legal case is being decided. A "permanent injunction" is a final order granted at the end of a trial to provide a long-term solution to a legal breach.

‍In urgent situations, a court might grant an "ex parte" injunction. This is done in the absence of the other party, usually when there is a high risk that the person being restrained would destroy evidence or rush to complete the harmful act if they were given advance notice of the hearing.

How does a court decide to grant an Injunction?

‍Courts do not grant injunctions lightly because they interfere with a person's freedom of action before a full trial has taken place. In the Irish legal system, judges typically apply the "Campus Oil" principles, which ask three main questions: Is there a "fair question" to be tried? Are "damages" an adequate remedy? and where does the "balance of convenience" lie?

‍The most critical factor is often "irreparable harm." If the court believes that the damage caused by the defendant's actions can be easily fixed later by a cash payment, they will likely refuse the injunction and tell the parties to wait for a standard trial. However, if the harm involves losing your business reputation or unique trade secrets, an injunction is much more likely.

‍The "balance of convenience" essentially asks: who will suffer more? The court compares the hardship the plaintiff will face if the injunction is refused against the hardship the defendant will face if it is granted. If stopping a company's entire production line for a minor dispute seems disproportionate, the court might decline the request.

What is an "undertaking as to damages"?

‍When you apply for an interim injunction, the court will almost always require you to give an "undertaking as to damages." This is a legally binding promise that if you lose the eventual trial, you will compensate the other party for any losses they suffered because the injunction stopped them from working.

‍This is a significant risk for founders. If you obtain an injunction to stop a competitor from selling a product, but a judge later decides you were wrong, you could be liable for all the profit that competitor lost during the months they were blocked from the market. This ensures that injunctions are only sought when there is a very strong and genuine legal claim.

Can an Injunction be used to protect trade secrets?

‍Yes, protecting confidential information is one of the most common uses for an injunction in the tech and startup world. If a former developer or high-level manager leaves and takes your source code or customer lists, a "Springboard Injunction" can be used to prevent them from using that information to gain an unfair head start in a new venture.

‍Courts recognise that once trade secrets are made public or used by a competitor, the value of that information is often lost forever. Because money cannot "un-leak" a secret, an injunction is considered the only appropriate way to protect the integrity of your intellectual property.

How long does it take to get an Injunction?

‍In urgent "interim" cases, an injunction can be obtained within days or even hours if the threat of damage is imminent. You do not always need to wait for a full court schedule; judges are available for emergency hearings specifically to deal with matters that cannot wait for a regular trial date.

‍However, obtaining an emergency injunction is an expensive and intensive process. It requires your legal team to prepare extensive evidence (affidavits) very quickly. While the initial speed is an advantage, keep in mind that this is only the first step in what will likely be a much longer legal battle to reach a final resolution.

What happens if someone breaches an Injunction?

‍Breaching an injunction is an extremely serious matter because it is a direct challenge to the authority of the court. The person or company in breach can be found in "contempt of court." This can lead to the court seizing assets, imposing heavy fines, or in severe cases, committing individuals to prison.

‍For a company, a contempt of court finding is disastrous for its reputation and can trigger defaults in commercial contracts or joint venture agreements. It signals to investors and partners during due diligence that the management team is willing to ignore legal mandates, making the business virtually uninvestable.