678 F.2d 410 (2nd Cir. 1982), 1035, Arrow United Industries, Inc. v. Hugh Richards, Inc.

Docket Nº:1035, Docket 82-7101.
Citation:678 F.2d 410
Party Name:216 U.S.P.Q. 940 ARROW UNITED INDUSTRIES, INC., Plaintiff-Appellee, v. HUGH RICHARDS, INC., Defendant-Appellant, and A. J. Pegno Construction Corp., Defendant.
Case Date:May 06, 1982
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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678 F.2d 410 (2nd Cir. 1982)

216 U.S.P.Q. 940



HUGH RICHARDS, INC., Defendant-Appellant,


A. J. Pegno Construction Corp., Defendant.

No. 1035, Docket 82-7101.

United States Court of Appeals, Second Circuit

May 6, 1982

Argued April 8, 1982.

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Martin E. Goldstein, New York City (McAulay, Fields, Fisher, Goldstein & Nissen, New York City, on the brief), for plaintiff-appellee.

Alfred L. Haffner, Jr., New York City (Lorimer P. Brooks, Brooks, Haidt, Haffner & Delahunty, New York City, on the brief), for defendant-appellant.

Before TIMBERS, KEARSE and PIERCE, Circuit Judges.

KEARSE, Circuit Judge:

In this action brought principally under the Lanham Act, 15 U.S.C. § 1125(a) 1976), defendant Hugh Richards, Inc. ("Richards") appeals from the entry of a preliminary injunction against it in the United States District Court for the Southern District of New York, Henry F. Werker, Judge, prohibiting it (1) from designating certain products manufactured by plaintiff Arrow United Industries ("Arrow") as Richard's own products, and (2) from fulfilling two contracts with defendant A. J. Pegno Construction Corporation ("Pegno"). We affirm so much of the order as enjoins Richards

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from designating Arrow products as its own; but because Arrow failed to show that it would likely suffer irreparable harm if Richards were to perform the Pegno contract without passing off Arrow products as its own, we vacate so much of the injunction as prohibits Richards from performing the contracts.


Arrow and Richards are competitors in the manufacture and installation of various types of air-control equipment, including dampers. Since about 1964 Arrow has manufactured and installed a damper known throughout the industry as the "Arrow-Foil." The district court found that no other entity in the United States makes or sells a damper like the Arrow-Foil. Richards apparently has been manufacturing and installing dampers of other types since 1963.

During the summer of 1981, the New York City Transit Authority ("Transit Authority"), invited bids on two contracts for the installation of ventilation equipment, including dampers, for the New York City subway system. The contract specifications required that all dampers be the product of a single manufacturer and be Arrow-Foil dampers or an approved equal. Pegno was a general contractor planning to bid on the Transit Authority contracts. In determining its bid for each of the general contracts, Pegno received bids with respect to dampers from both Richards and Arrow. In each instance Richards submitted the lower bid, 1 and when Pegno was awarded the general contract it awarded Richards the subcontract.

Thereafter, Pegno and Richards were required by the contracts to submit to the Transit Authority acceptable sample dampers. To comply with this requirement Richards purchased three standard Arrow-Foil dampers from a jobber. It proceeded to remove the various stickers identifying these dampers as products of Arrow, it modified the dampers in size and perhaps in other respects, and it submitted the resulting dampers to Pegno and the Transit Authority with labels attached identifying them as Richards "Uni-Foil" dampers. 2

Ultimately the Transit Authority found the samples "generally acceptable" in "concept." In the interim, however, Transit Authority personnel informed Arrow that the sample dampers submitted by Richards closely resembled Arrow-Foil dampers. Upon examination Arrow concluded that the samples were slightly modified Arrow-Foil dampers. Arrow then commenced the present action, claiming that Richards and Pegno had violated section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), 3 by engaging in unfair competition, false representation, and false designation of origin. The complaint alleged that Richards and Pegno had submitted modified Arrow-Foil dampers to the Transit Authority as Richard's own, in order to show that they could meet the Transit Authority's contract specifications even though they lacked that capability. Arrow promptly moved, pursuant to Fed.R.Civ.P. 65, for a preliminary injunction preventing

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Richards from "displaying to potential customers a product of Plaintiff which bears an indicia (sic) of manufacture by Defendant Hugh Richards, or which is displayed in such manner as to create the impression that it is a product of Defendant Hugh Richards"; and from "filling any orders for the 'Uni-foil' for which samples were received by the New York City Transit Authority in about August 1981, or at any time thereafter."

On January 22, 1982, following an evidentiary hearing, the district court orally granted the motion. It ruled that Arrow was threatened with irreparable harm, because "(i)t is well settled that 'the consequences of trademark infringement, or passing off, and unfair competition generally, are by their nature not fully compensable by money damages,' " quoting National Lampoon, Inc. v. American Broadcasting Companies, 376 F.Supp. 733 (S.D.N.Y.), aff'd, 497 F.2d 1343 (2d Cir. 1974). The Court held that Arrow had established the existence of sufficiently serious questions on the merits to make them a fair ground for litigation...

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