Palltronics, Inc., a Michigan-based pallet manufacturer, has petitioned a federal court to reject a discovery request from competitor PALIoT Solutions, Inc. in an ongoing trade secrets litigation. Palltronics contends that the request is unwarranted, premature, and submitted in bad faith.
The dispute originates from Palltronics’ acquisition of assets from the bankrupt Lightning Technologies, Inc. in 2021. This purchase included intellectual property and trade secrets related to smart pallet technology. Palltronics alleges that former Lightning employees established PALIoT Solutions and utilized these trade secrets to develop a competing product, thereby violating the terms of the asset purchase agreement and the bankruptcy court’s sale order.
In February 2023, the U.S. District Court for the Eastern District of Michigan granted Palltronics a preliminary injunction, recognizing the likelihood of trade secret misappropriation and the potential for irreparable harm. The court noted that Palltronics had sufficiently identified the trade secrets in question and demonstrated a risk of competitive injury.
Subsequent to the injunction, discovery disputes have arisen. Palltronics has advocated for a two-tiered protective order, including an “attorneys’ eyes only” provision, to safeguard sensitive information. The court approved this protective order in May 2025, emphasizing the necessity of protecting highly sensitive trade secrets from direct competitors.
PALIoT Solutions’ recent motion seeks additional discovery, which Palltronics argues is unnecessary and filed in bad faith. The court has yet to rule on this motion.
This case underscores the complexities of trade secret litigation, particularly when former employees establish competing enterprises. It also highlights the critical role of protective orders in balancing the need for discovery with the protection of confidential information.
For more detailed information on the case, refer to the court’s order granting the preliminary injunction: https://business.cch.com/ipld/PalltronicsPALIoTSolutions20230227.pdf