Tesla, Inc. v. Khatilov
- Yvonne Rogers
- 4:21-cv-00528
- U.S. District Court · Northern District of California
- 7
In Tesla v. Khatilov, Judge Rogers granted Tesla’s temporary restraining order barring alleged trade-secret disclosure and requiring evidence preservation.
Tesla, Inc.; Alex Khatilov; and people acting in concert or participation with Khatilov. Khatilov was barred from handling specified Tesla trade-secret information and was required to return materials, provide access and information, and preserve evidence.
What happened
In Tesla, Inc. v. Khatilov, Tesla alleged that Alex Khatilov downloaded about 26,377 quality-assurance files during his two-week employment and transferred them to Dropbox. Tesla sought immediate protection against disclosure, expedited information gathering, and preservation of evidence.
The court found a substantial likelihood that Tesla would succeed on its trade-secret misappropriation and contract claims, and that Tesla faced immediate, irreparable harm. It granted the temporary restraining order, immediately barring Khatilov and people acting with him from using or disclosing the specified information. The order also required Khatilov to return Tesla materials, identify and provide access to storage media containing Tesla information, disclose other recipients or locations, and preserve related evidence. The order was set to expire on February 5, 2021, and required Khatilov to appear and explain why a preliminary injunction should not issue.
Judge Yvonne Gonzalez Rogers also issued an evidence-preservation order, found that no security bond was necessary, and terminated the motion docket entry. The ruling was temporary and did not decide the case’s merits.
The detailed version
- Tesla, Inc. v. Khatilov · No. 4:21-cv-00528
- Yvonne Rogers
- Jan. 22, 2021
Background
Tesla filed an emergency request for a temporary restraining order against Alex Khatilov. Tesla alleged that Khatilov stole trade secrets during his employment, which lasted two weeks. According to Tesla’s submissions, Khatilov saved approximately 26,377 files involving quality-assurance computer scripts and transferred them to a personal Dropbox account beginning three days after he started working for Tesla. Tesla also alleged that he deleted the Dropbox desktop application and responded slowly to requests to authorize access to his computer during Tesla’s investigation.
Tesla asked the court to prevent further disclosure of its trade secrets, allow expedited discovery to determine the extent of the alleged misappropriation, and order preservation of evidence.
Court’s Analysis
The court explained that a temporary restraining order is an extraordinary remedy intended to preserve the existing situation and prevent irreparable loss before a final judgment. Applying the standards used for preliminary injunctions, the court considered whether Tesla was likely to succeed, whether it faced irreparable harm, whether the balance of hardships favored relief, and whether the public interest supported an injunction.
Based on the limited record, the court found a substantial likelihood that Tesla would succeed on claims for trade-secret misappropriation and breach of contract based on unauthorized downloading while Khatilov was employed by Tesla. The court also found that Tesla would suffer immediate and irreparable injury without relief, that the hardships favored Tesla, and that protecting trade secrets served the public interest. The court emphasized that the temporary restraining order was not a final decision on the merits.
Ruling
The court granted Tesla’s motion for a temporary restraining order. The order immediately restrained Khatilov and people acting with him from obtaining, retaining, using, transmitting, disseminating, or disclosing Tesla quality-assurance files that he allegedly obtained from Tesla’s servers between December 28, 2020, and January 6, 2021, as well as information contained in or derived from those files.
The order required Khatilov, within three days, to return Tesla equipment and information; identify computers, storage devices, accounts, and documents containing Tesla trade secrets; produce that media or allow Tesla’s agents to preserve and copy it; provide necessary login information; and identify people, entities, or locations to which he had transmitted, disclosed, or stored Tesla trade secrets.
The court found that no security bond was necessary. The temporary restraining order was effective immediately and was scheduled to expire on February 5, 2021, at approximately 1:15 p.m. Pacific time. The court separately ordered Khatilov and people acting with him to preserve evidence and prohibited deletion, destruction, removal, alteration, concealment, or other loss of relevant information. Khatilov was ordered to appear on February 4, 2021, to show why a preliminary injunction should not be issued. The court stated that the order terminated Docket Number 3.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.