1011 Such is the rule in unfair competition cases. Damages must correspond to "the amount which the plaintiff would have made except for the defendant's wrong ..., not the profits or revenues actually received or earned" by the defendant ( McRoberts Protective Agency v. Lans d ell Protective Agency, 61 A.D.2d 652, 655, 403 N.Y.S.2d 511 [1st Dept. 1978] [citations and internal quotation marks omitted]; see David Fox & Sons, Inc. v. King Poultry Co., 30 A.D.2d 789, 790–791, 292 N.Y.S.2d 21 [1st Dept. 1968] [Eager, J., dissenting], mod on dissenting op below 23 N.Y.2d 914, 298 N.Y.S.2d 314, 246 N.E.2d 166 [1969], rearg. denied 24 N.Y.2d 896, 301 N.Y.S.2d 634, 249 N.E.2d 476 [1969] ; Santa's Workshop, Inc. v. Sterling, 2 A.D.2d 262, 267, 153 N.Y.S.2d 839 [3d Dept. 1956], affd 3 N.Y.2d 757, 163 N.Y.S.2d 986, 143 N.E.2d 529 [1957] ). Another way of stating this rule is that damages in unfair competition cases should correspond to "plaintiff's losses [that] were a proximate result of defendants'

Restatement of Torts, Sec. 741 (1938), Lucien Lelong, Inc. v. Lander Co., 2 Cir., 1947, 164 F.2d 395. In cases where the New York courts have occasionally granted relief without proof of secondary meaning, one of the aforementioned predatory practices was established: In Santa's Workshop, Inc. v. Sterling, 3d Dept. 1956, 2 A.D.2d 262, 153 N.Y.S.2d 839, it was palming off; in Oneida, Ltd. v. National Silver Co., Sup.Ct.Madison Co. 1940, 25 N.Y.S.2d 271 and Avon Periodicals v. Ziff-Davis Publishing Co., 1st Dept. 1953, 282 App. Div. 200, 122 N.Y.S.2d 92, it was actual deception; in Dior v. Milton, Sup.Ct.N.Y.Co. 1956, 9 Misc.2d 425, 155 N.Y.S.2d 443, affirmed 1st Dept. 1956, 2 A.D.2d 878, 156 N.Y.S.2d 996, and Metropolitan Opera Ass'n v. Wagner-Nichols Record Corp., Sup.Ct.N.Y. Co. 1950, 199 Misc. 786, 101 N.Y.S.2d 483, affirmed 1st Dept. 1951, 279 App. Div. 632, 107 N.Y.S.2d 795, it was violation of plaintiff's property rights. The federal decisions fall into the same pattern: Artype, Incorporated v. Zappulla, 2 Cir., 1956, 228 F.2d 695, and Flint Co. v. Oleet Jewelry Manufacturing Co., D.C.S.D.N.Y. 1955, 133 F. Supp. 459 (actual deception); Upjohn Company v. Schwartz, 2 Cir., 1957, 246 F.2d 254 (palming off); International News Service v. Associated Press, 1918, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (appropriation of property rig

Both New York and federal law allow injunctions to issue without proof of secondary meaning in certain limited situations. Norwich Pharmacal Co. v. Sterling Drug, Inc., supra. These involve cases in which the defendant has engaged in various predatory practices such as abuse of confidential business secrets (Noma Lites, Inc. v. Lawn Spray, Inc., supra), breach of fiduciary duty (Flexitized, Inc. v. National Flexitized Corp., supra), or palming off its product as that of plaintiff (Santa's Workshop, Inc. v. Sterling, 2 A.D.2d 262, 153 N.Y.S.2d 839 (1956)). In the present case the question comes down to whether Lipton has been attempting to palm off its semimoist cat food as Purina's. The court is of the opinion that Purina has failed to present sufficient evidence to justify preliminary relief at this stage of the litigation.

However, in view of the substantial and unnecessary expenses incurred by the defendants in the form of excessive salaries and otherwise, a bare accounting for the defendants' profits may not make the plaintiff whole. The accounting Justice should determine what the plaintiff's margin of net profit would have been if it had retained the business which the defendants diverted (see Westcott Chuck Co. v. Oneida Nat. Chuck Co., 199 N.Y. 247; Santa's Workshop v. Sterling, 2 A.D.2d 262). With respect to determining sales which the plaintiff could reasonably have expected to make but for defendants' disloyalties, there is in this case "a causal relation not wholly unsubstantial and imaginary, between the gains of the aggressor and those diverted from his victim". ( Underhill v. Schenck, 238 N.Y. 7, 17.)

accounting of the disloyal employee's gain, a calculation of what the employer would have made of the diverted corporate opportunity is an available measure of damages (see Harry R. Defler Corp. v. Kleeman, 19 A.D.2d 396, 403-404, affd 19 N.Y.2d 694). The choice of remedy belongs to the employer (see Western Elec. Co. v. Brenner, supra at 295, citing Restatement, Agency 2d, § 421A, Comment on Clause [c]). It is in this choice that the distinction becomes obscured between the measure of damages for breach of a covenant not to compete and for breach of the duty of loyalty. For the contractual damages of breach of the non-competition obligation, an employer must prove its own loss of profits, not what the employee's profits were (see Michel Cosmetics v. Tsirkas, 282 N.Y. 195, 200; Pencom Sys. v. Shapiro, 193 A.D.2d 561; Borne Chem. Co. v. Dictrow, 85 A.D.2d 646, 650; Weinrauch v. Kashkin, 64 A.D.2d 897, 898; McRoberts Protective Agency v. Lansdell Protective Agency, 61 A.D.2d 652, 655; Santa's Workshop v. Sterling, 2 A.D.2d 262, 267, affd 3 N.Y.2d 757). Once a party wronged by a violation of a restrictive covenant has proven its net loss of profits, the wrongdoer may rebut by "showing with reasonable certainty the proportion of the loss of profits attributable to the wrongful act of the defendant and recoverable as damages as opposed to the proportion due to other causes" (Borne Chem. Co. v. Dictrow, supra at 651). Also involved in thecalculation of an employer's net profits in this context is consideration of its own generalized expenses of administration and overhead (see 342 Holding Corp. v. Carlyle Constr. Corp., 31 A.D.2d 605, 606; American Elecs. v. Neptune Meter Co., 30 A.D.2d 117, 119, republished 30 A.D.2d 529; but cf. Lenobel, Inc. v. Senif, 252 A.D. 533, 536; Vitex Mfg. Corp. v. Caribtex Corp., 377 F.2d 795, 798 [3d Cir]; Resolute Ins. Co. v. Percy Jones, 198 F.2d 309, 312 [10th Cir]; see also Sayer v. Wilstrop, 200 A.D. 364, 377 [concurring opinion].

There the court found that "the tendency of the similarity of the brand and accompanying design, and of the make-up of the packages, to mislead ultimate consumers, is so evident, that it seems to us a case of unfair competition is made out" (240 U.S. at pages 423-424, 36 S.Ct. at page 364). On appeal from a judgment in the plaintiff's favor in Santa's Workshop v. Sterling, 3rd Dept. 1956, 2 A.D.2d 262, 153 N.Y.S.2d 839, the court affirmed but reduced the judgment, one judge dissenting and voting to dismiss. The facts showed such an obvious theft of the plaintiff's business ideas, physical layout and advertising that the fraudulent nature of the defendant's competition was most apparent.

The reparation to which plaintiff is entitled is "the amount of loss sustained by it, including opportunities for profit on the accounts diverted from it through defendants' conduct" ( Duane Jones Co. v. Burke, 306 N.Y. 172, 192, supra). In other words, so far as profits are concerned, what is to be ascertained by the Referee is "the amount which the plaintiff would have made except for the defendant's wrong" ( Santa's Workshop v. Sterling, 2 A.D.2d 262, 267, affd. 3 N.Y.2d 757; Ronson Art Works v. Gibson Lighter Co., supra, p. 232; see Michel Cosmetics, Inc. v. Tsirkas, 282 N.Y. 195, 200, 202; Conviser v. Brownstone Co., 209 App. Div. 584, 592). In our opinion the present record does not justify the trial court's assumption that the profits defendants made are necessarily "a valid measure" of those plaintiff would have made (see Dad's Root Beer Co. v. Doc's Beverages, 193 F.2d 77, 83).

The basic rule of damages in a case of unfair competition is the amount which the plaintiff would have made, except for the defendant's wrong. ( Santa's Workshop v. Sterling, 2 A.D.2d 262, 267; Michel Cosmetics v. Tsirkas, 282 N.Y. 195, supra.) On the record before us, we are not persuaded that an award of the defendants' entire profits, as found by the Referee, would be proper in the circumstances of this case.

Plaintiff's loss was computed on the basis of a percentage of gross profits which would have been earned upon the gross business diverted to Lansdell. The appropriate measure of plaintiff's damage is "the amount of loss sustained by it, including opportunities for profit on the accounts diverted from it through defendants' conduct" (Duane Jones Co. v Burke, supra, p 192) or, stated differently, "the amount which the plaintiff would have made except for the defendant's wrong" (Santa's Workshop v Sterling, 2 A.D.2d 262, 267, affd 3 N.Y.2d 757; see, also, Bruno Co. v Friedberg, 21 A.D.2d 336), not the profits or revenues actually received or earned by Lansdell. The trial court, however, erred in computing plaintiff's loss by fixing damages based upon plaintiff's estimated gross profits, rather than by measuring recovery upon plaintiff's estimated net profits (Santa's Workshop v Sterling, supra), and further erred in limiting recoverable damages to a one-year period.

Norwich Pharmacal Co. v. Sterling Drug, Inc., 2 Cir., 271 F.2d 569, 571, certiorari denied 362 U.S. 919, 80 S.Ct. 671, 4 L.Ed.2d 739. See Santa's Workshop, Inc. v. Sterling, 3rd Dep't, 2 A.D.2d 262, 153 N.Y.S.2d 839; Upjohn Co. v. Schwartz, 2 Cir., 246 F.2d 254. Cf. Yale Elec. Corp. v. Robertson, 2 Cir., 26 F.2d 972. That plaintiffs' and defendant's restaurants are far apart is not necessarily a decisive fact. See, e.g., Ambassador East, Inc. v. Orsatti, Inc., 3 Cir., 257 F.2d 79 (Chicago "Pump Room" obtains injunction against Philadelphia restaurant); Stork Restaurant, Inc. v. Sahati, 9 Cir., 166 F.2d 348 (New York "Stork Club" obtains injunction against San Francisco tavern); Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332 (Paris "Maxim's" obtains injunction against New York restaurant). Appellant also claims that the dismissal of an application by appellees for an injunction pursuant to New York Penal Law McKinney's Consol.Laws, c. 40, § 964, which makes it a misdemeanor for one with intent to deceive the public to assume the corporate, assumed, or trade name of another and provides for injunctive relief, is res judicata here.