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

124 F.2d 147 (1941)

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Nature of the Case

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Facts

P entered into a contract with D. P was not in the best of financial condition. P made a cooking oil from coconut oil in such a way as to be Kosher. It was manufactured by a secret formula. D engaged in extensive merchandising of food and cleaning products, mostly to Orthodox Jews. D obtained the exclusive use of all the necessary secret formulae, etc., for a period of twenty-five years, with an option to renew for another twenty-five years. P was to receive royalties on all sales. D could terminate the contract at any time it found the formula not to have been secret. D could also terminate the contract without cause upon payment of $100; and after two years, upon payment of $500. If any patents were judicially declared invalid, the contract was to terminate automatically. D was privileged to use the product as it should 'think fit for its use and benefit absolutely.' P agreed not to engage or aid in the manufacture or sale of any product 'similar' to Parev Schmaltz or in any business incidental thereto during the life of the contract. D changed the name to Nyafat commenced production. Nyafat was a success. Fifteen-year royalties were $135,000. D began the distribution of Kea, a semisolid cooking oil made almost wholly from cottonseed oil. D distributed it under its own label as a Kosher product to the same orthodox Jewish trade in order to compete with Crisco and Spry shortenings. P seeks an injunction against any further sales of Kea by D. D sought a negative covenant on the part of D not to compete with its own Nyafat, or in any other way to interfere with the sales of Nyafat. D posited that an implied covenant would only prohibit tortious competition. The complaint was dismissed in that P could not show damages for the injunction. P appealed.