Apex.AI, Inc. v. Langmead

Background

Apex.AI sued Neil Richard Langmead, Verifa, Inc., and CodeClinic LLC dba Lattix. It asserted a federal trade-secret claim under the Defend Trade Secrets Act and state-law claims for breach of contract, fraud, and unfair competition.

Apex.AI said it develops software tools for autonomous and software-defined vehicles, including Apex.OS, Apex.Grace, and Apex.Ida. It treated its products, source code, and related technology as trade secrets and took steps to keep them confidential.

In November 2019, Apex.AI entered a consulting agreement with Verifa. Langmead, identified as Verifa’s principal and its “Owner” for purposes of the agreement, worked on Apex.AI’s functional safety team and had access to much of Apex.AI’s software, source code, and other intellectual property. Apex.AI said it paid Verifa $780,000 for the consulting work. According to Apex.AI, Langmead provided a proof of concept for an automated process but did not provide a final version, and later marketed the process to third parties through CodeClinic. Apex.AI also presented evidence concerning files and directories on a company laptop issued to Langmead.

Emergency Relief

Apex.AI sought a temporary restraining order, or TRO, without notice to the defendants. A TRO is short-term emergency injunctive relief. Apex.AI asked the court to bar the defendants from using or disclosing its trade secrets and confidential information, prevent destruction of evidence, require the return of its property and data, permit expedited discovery, allow alternate service on Langmead, and require the defendants to explain why a preliminary injunction should not issue.

The court found that Apex.AI had provided specific facts showing a risk of immediate and irreparable harm before the defendants could respond. The court relied on evidence that Langmead and Verifa had access to Apex.AI’s information, that Langmead allegedly disclosed or used it for his own benefit, that he still possessed an Apex.AI-issued laptop, and that files or activity history on the laptop could be erased. The court therefore found that issuing a TRO without notice was appropriate.

Merits Showing for the TRO

The court focused primarily on Apex.AI’s claim under the Defend Trade Secrets Act. For purposes of the TRO, the court found that Apex.AI had presented evidence that it owned trade secrets, that Langmead, Verifa, and CodeClinic had used or disclosed them without authorization, and that the alleged conduct had damaged or would continue to damage Apex.AI.

The court found a strong likelihood that Apex.AI would succeed on its federal trade-secret claim and therefore did not address the likelihood of success on the state-law claims. It also found likely irreparable harm, concluding that the alleged disclosure could destroy the value of Apex.AI’s products and deprive it of marketing opportunities. The court found that the balance of equities favored Apex.AI and that the public interest supported preventing trade-secret misappropriation.

Scope of the Order

The court found that Apex.AI was entitled to prohibitory injunctive relief, meaning orders barring specified conduct. The defendants were enjoined from accessing Apex.AI’s files; using any of Apex.AI’s trade secrets or confidential information; disclosing that information to anyone other than Apex.AI; and altering, destroying, or disposing of evidence or other materials relating to the action.

The court also granted mandatory injunctive relief, meaning an order requiring specified actions. It ordered the defendants to return Apex.AI’s trade secrets, confidential information, property, and data, including Langmead’s Apex.AI-issued laptop, Apex.AI source code stored on CodeClinic’s GitLab instance, and source code stored elsewhere outside Apex.AI’s files. The court concluded that the more demanding standard for this type of relief was satisfied.

The temporary restraining order was granted. The court did not require Apex.AI to provide security because it found no realistic likelihood that the defendants would be harmed by being barred from using or disclosing information taken from Apex.AI.

Other Rulings and Next Steps

The request for expedited discovery was denied without prejudice. This means the request was denied in a way that did not prevent Apex.AI from submitting a later, narrower discovery plan, particularly if the parties agreed to extend the preliminary-injunction hearing date. The court stated that Apex.AI had not offered a realistic discovery plan and that there was not enough time to complete the requested discovery before the required hearing.

The court granted Apex.AI’s request for alternate service on Langmead by email followed by Federal Express delivery to his home in Bath, England. Apex.AI was ordered to file proof of service on all defendants by May 13, 2023. The defendants were ordered to explain in writing by May 17, 2023, why a preliminary injunction should not issue. The court set a hearing on Apex.AI’s preliminary-injunction motion for May 22, 2023.