Preliminary Injunction Backfire
If you don’t own it, asking for a preliminary injunction is the wrong strategy. VitaVet Labs, Inc. sells horse vitamins. Its website was old and clunky. VitaVet hired Integrated Software Solutions, Inc. to update the site. According to the terms of the agreement, VitaVet owned the source code and had an absolute right to access it. VitaVita was to pay Integrated on an incremental basis upon receipt of deliverables. From almost the beginning, things went wrong. Integrated didn’t reach its project development goals. VitaVet paid some of the installments but VitaVet was not pleased with Integrated’s work. Meanwhile, VitaVet’s website was getting clunkier and harder to use. Integrated asserted that the software was finished but VitaVet didn’t agree. So VitaVet refused to pay the remaining installments. Integrated filed suit and sought a preliminary injunction. VitaVet countersued for a preliminary injunction seeking turnover of the source code. Usually, a preliminary injunction just maintains the status quo. The status quo was that Integrated had the source code and wouldn’t have to turn it over to VitaVet. But in this case, the trial court entered a preliminary injunction order that changed the status quo and ordered Integrated to turnover the source code to VitaVet. In affirming the decision, the California Appellate Court reasoned that the balance of equities favored disturbing the status quo in VitaVet’s favor. VitaVet owned the source code and VitaVet had a dire need to upgrade its website. So much for Integrated’s aggressive strategy against VitaVet.
WHY YOU SHOULD KNOW THIS. VitaVet did a lot of things right in this case. It made sure that it owned what Integrated was developing for it. When challenged, VitaVet did a great job of showing that it was entitled to extraordinary relief. On the other hand, Integrated might have done well to think things through before going after VitaVet in the first place.