Parev Prods. Co. v. I. Rokeach & Sons, Inc.

124 F.2d 147 (2d Cir. 1941)

 

RULE:

Where intent, though obscure, is nevertheless discernible, it must be followed.

FACTS:

Plaintiff sought enforcement of implied non-competition covenant in contract granting defendant exclusive license to manufacture cooking oil with plaintiff's secret formula after defendant began manufacturing and selling a competing product. Plaintiff sought an injunction prohibiting the sale of the competing product. The district court dismissed the complaint. Plaintiff appealed. The appeals court affirmed dismissal of plaintiff's complaint because the action was brought too soon and without sufficient evidence to allow the court to determine if product made by defendant from plaintiff's secret formula suffered a market loss as a result of defendant's production and sale of a competing product.

 

ISSUE:

Should an injunction be issued to enforce an asserted implied negative covenant in a contract granting an exclusive license to use a secret formula for a food product?

ANSWER:

No.

CONCLUSION:

The appeals court determined that a complete denial of relief to plaintiff would be unfair because defendant could keep plaintiff's product under its control while it developed a market for its competing product. However, the court refused to issue an injunction because there was insufficient evidence for the court to determine if product made from plaintiff's secret formula suffered a market loss because of defendant's production and sale of a competing product. Thus, because a broad injunction would have been unfair to defendant, and a narrow one would have been an empty gesture, the dismissal of plaintiff's complaint was affirmed.

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