Perma Research v. Singer

Citation

Perma Research & Development Co. v. Singer Co., 542 F.2d 111 (2d Cir. 1976) (full-text).

Factual Background

Plaintiff entered into a contract with defendant for the manufacture and marketing of an automobile anti skid device. The plaintiff assigned its patent in the device to the defendant in exchange for the payment of royalties. At the time the contract was executed, the brake device, while operable in theory, consistently failed the safety tests. After about one year, Singer abandoned the contract.

Trial Court Proceedings

The jury found that Singer breached its obligation to use its best efforts to manufacture and market the device, and awarded Perma $7 million.

At trial, the key evidence was testimony by plaintiffs witness that computer testing revealed such a device was feasible. The defendant objected to this, and claimed prejudicial error.

Appellate Court Proceedings

Justice Clark, writing for the majority, held that though the plaintiff did not provide all of the underlying data for its testing model, it did establish sufficiently the feasibility of such a device.

There was a vigorous dissent which argued that this particular evidence did not fall within the business records exception to the hearsay rule. He argued that this particular computer test was not made in the ordinary course of business, but rather specifically for the purpose of litigation. The program itself was not available for examination. Thus, there was nothing presented to insure the kind of reliability exhibited by a printout prepared in the usual course of business. Since the entire case rested on proof of the device's feasibility, the admission of such evidence was prejudicial.

The dissent concluded that the evidence should have been excluded and the judgment reversed.