WalkMe Ltd., an Israeli company v. Whatfix, Inc., a Delaware corporation

Background

WalkMe Ltd. and WalkMe, Inc. sued Whatfix, Inc., seeking emergency relief based on claims including inducing breach of contract and violating California’s Unfair Competition Law. WalkMe alleged that employees of Whatfix Private Limited accessed WalkMe’s digital-adoption software through accounts created by two existing or former WalkMe customers. WalkMe asserted that the access exposed confidential and proprietary information and allowed Whatfix to examine and copy WalkMe’s features and functionality.

Whatfix said its employees accessed customer-facing functions to help migrate customers’ content to the Whatfix platform. Dipit Sharma admitted that he used credentials from a former WalkMe customer in July 2023 to examine how a WalkMe feature worked for competitive analysis. He also attempted to access the platform again in August 2023 but could not do so after WalkMe suspended his credentials.

WalkMe sought a temporary restraining order, an emergency order intended to preserve the situation while the case proceeds. WalkMe relied on its inducement-of-contract-breach claim and, to the extent its Unfair Competition Law claim was based on the same conduct, asked for relief on that claim as well. WalkMe did not seek a temporary restraining order based on its other claims.

Legal standard

The court explained that a temporary restraining order is an extraordinary remedy. To obtain one, WalkMe had to show a likelihood of success on the merits, likely irreparable harm without the order, that the balance of hardships favored it, and that the order would serve the public interest. The court also noted that relief may be available when there are serious questions about the merits and the hardship balance strongly favors the plaintiff, provided the other requirements are met.

Court’s analysis

Under California law, an inducement claim requires proof of a valid contract with a third party, the defendant’s knowledge of the contract and intent to cause its breach, an actual breach, wrongful conduct causing the breach, and resulting damages.

Whatfix argued that California’s Uniform Trade Secrets Act superseded WalkMe’s inducement claim because the claim was based on alleged misappropriation of confidential or trade-secret information. The court explained that the statute does not supersede claims based on contractual remedies or wrongdoing materially different from trade-secret misappropriation. Because WalkMe had not asserted a separate trade-secret-misappropriation claim, the court examined whether the inducement claim presented a genuinely different legal theory or merely restated a trade-secret claim.

The court concluded that at least part of the alleged harm was based on conduct that California’s trade-secret statute would supersede. WalkMe alleged that Whatfix caused customers to violate confidentiality provisions, giving Whatfix access to confidential, commercially sensitive, and proprietary information. But WalkMe also alleged that Whatfix caused a customer to violate contract provisions that did not necessarily involve secrecy or confidential information. Because the court could not determine that the entire inducement claim was superseded, it proceeded to consider whether WalkMe had shown Whatfix’s knowledge of the contracts and interference with their performance.

The court found that WalkMe had not submitted evidence supporting an inference that Whatfix knew, before WalkMe sent its cease-and-desist letter in June 2023, that Whatfix was interfering with the customers’ performance of the contracts by causing violations of restricted-use or confidentiality provisions. The court therefore held that WalkMe had not shown a likelihood of success on the inducement claim or serious questions going to its merits.

Disposition

The court denied WalkMe’s application for a temporary restraining order and denied WalkMe’s request for expedited discovery. The court stated that the ruling was without prejudice to WalkMe moving for a preliminary injunction as the case progressed. It did not decide whether WalkMe could ultimately prevail on its claims, and it expressed no opinion on portions of the Unfair Competition Law claim based on conduct not presented as the basis for the temporary restraining order.