# Magnesita Refractories v. Mishra: Seizing a Laptop Without the DTSA Seizure Statute

> An Indiana court held that a Rule 65 temporary restraining order can authorize the seizure of a defendant's laptop to preserve trade-secret evidence, sidestepping the DTSA's stringent ex parte seizure provision entirely.

Topic: Trade Secrets  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/magnesita-refractories-v-mishra-rule-65-seizure/


The Defend Trade Secrets Act gave plaintiffs a dramatic new tool (the ex parte civil seizure order), but it did not repeal the older one. Courts could already order a defendant to surrender a device through an ordinary temporary restraining order. The question that *Magnesita Refractories Co. v. Mishra*, No. 2:16-cv-00524-PPS-JEM, squarely confronted is whether plaintiffs must use the DTSA's stringent seizure mechanism to take a laptop, or whether Rule 65 will do. Judge Philip P. Simon of the United States District Court for the Northern District of Indiana held that Rule 65 will do. In a written opinion issued on January 25, 2017 rejecting the defendant's argument that Rule 64 required the laptop's return, he produced one of the clearest statements of why the two remedies are distinct. A later opinion, on February 17, 2017, denied the defendant's separate Rule 65(b)(4) motion to dissolve the restraining order.

## At a glance

- **Case:** *Magnesita Refractories Co. v. Mishra*, No. 2:16-cv-00524-PPS-JEM
- **Court:** U.S. District Court for the Northern District of Indiana
- **Judge:** Philip P. Simon
- **TRO authorizing seizure:** entered at a hearing on December 20, 2016
- **Opinion and order holding Rule 64 inapplicable and denying return of the laptop:** January 25, 2017
- **Opinion and order denying the Rule 65(b)(4) motion to dissolve:** February 17, 2017
- **Relief sought:** Ex parte TRO authorizing seizure of the defendant's personal laptop to preserve trade-secret evidence
- **Holding:** A Rule 65 TRO may authorize seizure of a device to preserve evidence; Rule 64 does not govern such a seizure, and the DTSA's § 1836(b)(2) seizure provision is not the exclusive path to taking a defendant's property
- **Significance:** Establishes that Rule 65 seizure is an accessible alternative when the DTSA's "extraordinary circumstances" bar is hard to clear

Magnesita Refractories alleged that Surendra Mishra, then a vice president at the company, was conspiring with a terminated former employee and outside businessmen to misappropriate the company's trade secrets, which were stored on the laptop Mishra owned and used for both business and personal purposes. At a hearing on December 20, 2016, the court entered an ex parte temporary restraining order authorizing seizure of that laptop, finding a strong likelihood that Mishra was conspiring to steal the company's trade secrets and that the seizure was necessary to prevent the impending harm. Mishra surrendered the laptop at a hearing two days later, and it was housed in the Clerk's Office vault. He then argued that Rule 64 governed the seizure and required the laptop's return. The court's resolution of that argument is the case's lasting contribution.

## The defendant's argument: that Rule 64 governed and the DTSA was the only door

Mishra's challenge was procedural rather than factual. Raised for the first time at a January 9, 2017 hearing, it contended that the seizure of his computer was governed by Rule 64 of the Federal Rules of Civil Procedure, and he sought the laptop's return along with attorney's fees. The thrust of the argument was that taking a defendant's property mid-litigation is the province of specific seizure authority (Rule 64's provisional remedies, or, in the trade-secret context, the DTSA's purpose-built § 1836(b)(2) seizure provision), and that a garden-variety Rule 65 restraining order could not be stretched to accomplish the same thing.

The argument had surface appeal. The DTSA seizure provision is elaborate precisely because it authorizes the government to take property without notice; it bristles with safeguards: a security bond, a "narrowest seizure" command, custody by the court, a seven-day post-seizure hearing, and wrongful-seizure damages. If Rule 65 could be used to seize a laptop with none of that apparatus, a plaintiff might appear to route around the statute's protections. Mishra's motion forced the court to explain why that is not what happened.

## The holding: Rule 64 addresses judgments; Rule 65 preserves evidence

Judge Simon rejected the Rule 64 framing. The court explained that Rule 64 concerns the seizure of property to secure satisfaction of a potential judgment: it is about making sure assets are available to pay an eventual award. The TRO in *Magnesita* did nothing of the kind. It seized the laptop to preserve the evidence on it, a fundamentally different purpose. Because the seizure was not aimed at securing a judgment, Rule 64 simply did not apply, and its absence created no defect.

That left Rule 65, and the court held it adequate to the task. A temporary restraining order can require a party to deliver up a device to prevent the destruction or dissemination of the very material the litigation concerns; preserving the status quo and preventing irreparable harm are core functions of equitable relief. The seizure of Mishra's personal laptop was therefore proper as an exercise of the court's Rule 65 power, and his request for its return was denied. The court went on to appoint a Special Master to image the laptop so that it could be given back to Mishra.

Crucially, the court read the DTSA itself as confirming, rather than foreclosing, this result. The DTSA's seizure provision is available only where "an order issued pursuant to Rule 65 of the Federal Rules of Civil Procedure or another form of equitable relief would be inadequate to achieve the purpose of this paragraph because the party to which the order would be issued would evade, avoid, or otherwise not comply with such an order." 18 U.S.C. § 1836(b)(2)(A)(ii)(I). That clause presupposes that Rule 65 relief is the default and that DTSA seizure is the exception reserved for when Rule 65 cannot do the job. In other words, the statute does not displace Rule 65; it sits on top of it, reachable only after Rule 65 has been shown to be insufficient. A plaintiff who can accomplish the protective goal through a restraining order has no need of, and no entitlement to, the DTSA seizure remedy.

## What *Magnesita* means for how plaintiffs frame emergency relief

The practical upshot is that the DTSA's seizure provision is, for many cases, beside the point. If a court can order a defendant to turn over a device through a TRO, the plaintiff obtains the protective benefit (the data is preserved and placed beyond the defendant's reach) without having to satisfy the DTSA's demanding catalog of findings or expose itself to the statute's heightened wrongful-seizure liability. That is a meaningful strategic insight: counsel seeking to lock down a laptop should generally frame the request as Rule 65 relief and reserve the DTSA seizure statute for the narrow situations the statute alone can address.

It also reframes the relationship between the two remedies as a hierarchy rather than a choice. *Magnesita* and the contemporaneous denial in *OOO Brunswick Rail Management v. Sultanov* are two sides of one coin. In *Brunswick*, the court refused DTSA seizure as "unnecessary" because a delivery order plus a TRO would protect the same devices. In *Magnesita*, the court affirmed that exact substitute is procedurally sound. Together they teach that the ordinary restraining order is doing the real work in most device-preservation cases, and the DTSA seizure statute is a backstop for when ordinary process cannot reach the defendant, the scenario that played out in *Mission Capital Advisors v. Romaka*.

There is a note of caution embedded here, too. A Rule 65 seizure is still a seizure, and a defendant whose property is taken without notice retains the protections that attend ex parte relief: the requirement that the applicant show immediate and irreparable harm, the prompt-hearing guarantee of Rule 65(b), and Rule 65(c)'s security provision. Those strings are looser than the DTSA's, though. Mishra asked the court to require a bond covering his entire financial identity in case the imaging exposed his bank and credit card data, and Judge Simon refused, reasoning that Rule 65(c) covers costs and damages from a wrongful restraint and that Mishra would suffer none because the laptop would be returned once imaged and the image destroyed if the seizure were later found improper. *Magnesita* does not give plaintiffs a no-strings shortcut; it confirms that the strings are Rule 65's, not the DTSA's, when the relief sought is preservation of evidence rather than the statutory seizure remedy.

## Open questions

*Magnesita* settles that Rule 65 can authorize a preservation seizure, but it leaves the boundary between the two remedies underspecified. The opinion does not draw a bright line marking when a Rule 65 delivery order ends and a DTSA seizure begins: for instance, whether marshal-executed entry onto private premises to take property can ever be characterized as Rule 65 relief, or whether that physical, government-executed character is what triggers the DTSA's exclusive machinery. Nor does the decision address how a court should police the risk that plaintiffs will rebrand what is functionally a DTSA seizure as a Rule 65 order to escape the statute's wrongful-seizure damages and "narrowest seizure" constraints. Those questions await a case where a defendant frames the objection in those terms rather than reaching, as Mishra did, for Rule 64.

## Implications

- **Frame device-preservation requests under Rule 65.** *Magnesita* confirms a TRO can order a laptop into custody to preserve evidence, without invoking the DTSA seizure statute or its heightened findings.
- **Rule 64 is the wrong objection.** Rule 64 governs seizures to secure a judgment, not to preserve evidence; a defendant resisting a preservation seizure must look elsewhere.
- **DTSA seizure is a backstop, not a default.** The statute's own text makes it available only where Rule 65 relief would be inadequate, confirming the hierarchy between the two remedies.
- **The protections still attach, but they are lighter.** A Rule 65 seizure carries Rule 65's safeguards (irreparable-harm showing, a prompt hearing, and Rule 65(c) security), so plaintiffs gain a simpler path, not a consequence-free one. Judge Simon nonetheless declined to order the bond Mishra requested, which shows how much thinner the Rule 65 protections are than the DTSA's wrongful-seizure regime.
- **Reserve the DTSA statute for cases ordinary process cannot reach.** Pair this with *Mission Capital*: DTSA seizure earns its keep when a defendant evades service or otherwise places himself beyond Rule 65's enforcement.

## Frequently asked questions

**Did the court use the DTSA's seizure provision to take the laptop?** No. The court authorized the seizure through a Rule 65 temporary restraining order. It treated the DTSA's § 1836(b)(2) seizure mechanism as a separate, more demanding remedy reserved for situations in which Rule 65 relief would be inadequate.

**Why did the defendant's Rule 64 argument fail?** Because Rule 64 governs the seizure of property to secure satisfaction of a potential judgment, whereas the TRO seized the laptop to preserve evidence. Different purpose, different rule. Rule 64 did not control and supplied no basis for returning the laptop.

**Can any trade-secret plaintiff seize a laptop through a TRO instead of the DTSA?** Where the goal is to preserve evidence and the defendant is within the court's reach, *Magnesita* shows a Rule 65 TRO can do it, subject to Rule 65's own safeguards. The DTSA seizure statute remains the path for cases where ordinary equitable relief cannot achieve the protective purpose.

## Authorities and sources

- *Magnesita Refractories Co. v. Mishra*, No. 2:16-cv-00524-PPS-JEM (N.D. Ind. Feb. 17, 2017), Opinion and Order denying the Rule 65(b)(4) motion to dissolve (DE 55), full text PDF: http://business.cch.com/ipld/MagnesitaRefractoriesCompanyMishra20170217.pdf
- "The DTSA and Civil Seizure Under Federal Rule of Civil Procedure 65," National Law Review (quoting the January 25, 2017 Opinion and Order on Rule 64): https://natlawreview.com/article/dtsa-and-civil-seizure-under-federal-rule-civil-procedure-65
- "Courts Still Heavily Favor Rule 65 TROs Over DTSA Ex Parte Seizures," Orrick Trade Secrets Watch (June 7, 2017), discussing *Magnesita*, *Brunswick Rail*, and *Mission Capital*: https://www.orrick.com/en/insights/2017/06/courts-still-heavily-favor-rule-65-tros-over-dtsa-iex-partei-seizures
- Docket, *Magnesita Refractories Co. v. Mishra*, PacerMonitor: https://www.pacermonitor.com/public/case/20168201/Magnesita_Refractories_Company_v_Mishra
- 18 U.S.C. § 1836(b)(2) (Defend Trade Secrets Act civil seizure provision), Cornell LII: https://www.law.cornell.edu/uscode/text/18/1836
- Fed. R. Civ. P. 64, Cornell LII: https://www.law.cornell.edu/rules/frcp/rule_64
- Fed. R. Civ. P. 65, Cornell LII: https://www.law.cornell.edu/rules/frcp/rule_65