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UPJOHN CO. v. LIBERTY DRUG CO.

May 11, 1959

UPJOHN COMPANY, Plaintiff,
v.
LIBERTY DRUG CO., Inc., Defendant



The opinion of the court was delivered by: LEVET

This is a motion for a preliminary injunction to enjoin the defendant from advertising, offering for sale or selling at retail merchandise bearing plaintiff's trademarks or brand names for prices less than those stipulated in plaintiff's fair trade contracts in effect with certain retailers in the State of New York.

The plaintiff is a manufacturer of ethical pharmaceuticals and other drug products, all of which bear the trademark, 'Upjohn,' together with individual product marks, including 'Unicaps,' 'Zymacaps,' 'Zymadrops,' 'Kaopectate,' 'Cheracol' and 'Cebenase.'

The defendant is a retail drug store located at 126 Liberty Street, New York City. Though it has purchased substantial quantities of plaintiff's products in the past and is apparently continuing to do so, it has not signed a fair trade contract with the plaintiff.

 In support of its motion, plaintiff alleges:

 1. That for many years it has been engaged in an extensive advertising program, promoting its products to physicians, pharmacists and indirectly to ultimate consumers, as a result of which plaintiff has developed a vast good will.

 2. That in the course of plaintiff's development and maintenance of its good will and system of distribution, it has established, wherever permitted by law, a fair trade structure under which uniform prices have been established for its products.

 3. That such a fair trade structure was first established in the State of New York subsequent to the enactment of the New York Fair Trade Act in 1937.

 4. That in order to assure itself that retailers are complying with its established resale prices, plaintiff investigates every infraction reported to or discovered by it and explains its fair trade program to retailers accused of violations thereof.

 5. That plaintiff has an established policy of sending warning letters to retailers who persist in violations and of bringing suit where the retailers, after such warning, still refuse to stop their illegal conduct.

 6. That in furtherance of its policy of enforcing its established minimum prices, plaintiff, in the past two years, has shopped every retailer in the Boroughs of Manhattan and Brooklyn who carried its products and that extensive investigations have also been conducted in the Bronx, Queens and Nassau Counties.

 7. That more than thirty suits have been filed against retailers who have persisted in their unlawful price cutting and more than twenty permanent injunctions have been obtained.

 8. That a warning against price violations was sent to the defendant on August 6, 1958, to no avail, and on November 19, 1958, action was commenced against the defendant seeking to enjoin its price cutting on plaintiff's products; however, defendant's price cutting is continuing.

 9. That the defendant is a large retail drug establishment servicing the Wall Street area and employing at least thirty full-time employees; that its customers come from all over the City of New York and from the outlying suburban counties in both New York State and New Jersey, and consequently the defendant is competing with local retail druggists throughout the city and the surrounding suburban communities.

 10. That the defendant's continued price cutting threatens to undermine plaintiff's fair trade price structure and is causing immediate and irreparable harm both to the good will and business of the plaintiff and to the good will and business of ...


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