                                                                                 FILED
                                                                     United States Court of Appeals
                                      PUBLISH                                Tenth Circuit

                     UNITED STATES COURT OF APPEALS                        November 7, 2019

                                                                         Elisabeth A. Shumaker
                           FOR THE TENTH CIRCUIT                             Clerk of Court
                       _________________________________

 MRS. FIELDS FRANCHISING, LLC, a
 Delaware limited liability company; MRS.
 FIELDS FAMOUS BRANDS, LLC, a
 Delaware limited liability company, d/b/a
 Famous Brands International,

       Plaintiffs Counterclaim
       Defendants - Appellants,

 v.                                                    Nos. 19-4046 & 19-4063

 MFGPC, a California corporation,

       Defendant Counterclaimant -
       Appellee.
                      _________________________________

                    Appeal from the United States District Court
                              for the District of Utah
                       (D.C. No. 2:15-CV-00094-JNP-DBP)
                      _________________________________

Avery Samet, Storch Amini, New York, New York (Rod N. Andreason, Kirton
McConkie, Salt Lake City, Utah, with him on the briefs), appearing for Appellant.

Brian M. Rothschild, Parsons Behle & Latimer, Salt Lake City, Utah, appearing for
Appellee.
                       _________________________________

Before BRISCOE, KELLY, and LUCERO, Circuit Judges.
                  _________________________________

BRISCOE, Circuit Judge.
                     _________________________________
      Plaintiffs and counterclaim-defendants Mrs. Fields Famous Brands, LLC

(Famous Brands) and Mrs. Fields Franchising, LLC (Fields Franchising) appeal from

the district court’s order granting a preliminary injunction in favor of defendant and

counterclaim-plaintiff MFGPC Inc. (MFGPC). In August 2018, the district court

entered partial summary judgment in favor of MFGPC on its counterclaim for breach

of a trademark license agreement that afforded MFGPC the exclusive use of the

“Mrs. Fields” trademark on popcorn products. The district court’s summary

judgment order left only the question of remedy to be decided at trial. MFGPC then

moved for a preliminary injunction, arguing that there was a substantial likelihood

that it would prevail at trial on the remedy of specific performance. After conducting

a hearing, the district court granted MFGPC’s motion and ordered Fields Franchising

to terminate any licenses it had entered into with other companies for the use of the

Mrs. Fields trademark on popcorn products, and to instead comply with the terms of

the licensing agreement it had previously entered into with MFGPC. Famous Brands

and Fields Franchising argue in this appeal that the district court erred in a number of

respects in granting MFGPC’s motion for preliminary injunction. Exercising

jurisdiction pursuant to 28 U.S.C. § 1292(a)(1), we agree with appellants, and

consequently reverse the district court’s grant of a preliminary injunction in favor of

MFGPC.




                                           2
                                            I

                                      The parties

      Famous Brands is a limited liability company organized under the laws of the

State of Delaware with its principal place of business in Broomfield, Colorado. The

sole member of Famous Brands is Mrs. Fields Original Cookies, Inc. (MFOC), a

Delaware corporation with its principal place of business in Salt Lake City, Utah.

MFOC is not a party to this action.

      Fields Franchising, LLC is a limited liability company organized under the

laws of the State of Delaware with its principal place of business in Salt Lake City,

Utah. The sole member of Fields Franchising is Famous Brands.

      Defendant MFGPC is a California corporation with its principal place of

business in Mission Viejo, California.

                    The License Agreement and its relevant terms

      Fields Franchising owns the rights to the “Mrs. Fields” trademark and licenses

those rights to allow other entities to manufacture, sell, and distribute products using

the “Mrs. Fields” trademark.

      On April 30, 2003, MFOC entered into a Trademark License Agreement

(License Agreement) with LHF, Inc. (LHF), an affiliate of MFGPC. Aplt. App., Vol.

1 at 25, 45 (copy of actual agreement). On June 30, 2003, LHF assigned all rights

under the License Agreement to MFGPC, and MFGPC agreed to be bound by and

perform in accordance with the License Agreement. Id. at 25, 69 (copy of

assignment). The License Agreement granted MFGPC a license to develop,

                                           3
manufacture, package, distribute and sell prepackaged popcorn products bearing the

“Mrs. Fields” trademark through all areas of general retail distribution. Id. at 46.

The License Agreement prohibited MFOC from competing with MFGPC by making

Mrs. Fields branded popcorn or licensing the right to use the Mrs. Fields trademark

for use on popcorn. Id., Vol. 5 at 866.

       Section 5 of the License Agreement, entitled “LICENSE FEE AND

ROYALTIES,” required MFGPC to pay MFOC an “initial license fee” comprised of

two payments: (1) $50,000 on or before June 1, 2003; and (2) an additional $50,000

on the “first anniversary of th[e] Agreement.” Id., Vol. 1 at 50. Section 5 also

required MFGPC to pay MFOC “Guaranteed Licensing Fees and Running Royalties”:

       Throughout the term (including Option Periods) of this Agreement the
       Running Royalty shall be 5% of Net Sales of Royalty Bearing Products.
       [MFGPC] shall remit such Running Royalties to [MFOC] on the last
       day of the month following the end of each calendar quarter covered by
       the Agreement. All Guaranteed Amounts and Running Royalties shall
       be non-refundable for any reason whatsoever.

Id.1

       Section 6 of the License Agreement, entitled “GUARANTEED ROYALTY,”

required MFGPC to pay MFOC a “Guaranteed Royalty . . . per year on the Net Sales

of Royalty Bearing Products during the initial term as set forth on the following

schedule:



       1
       The Definitions section of the License Agreement stated that “‘Guaranteed
Amounts’ shall have the meaning set forth in Section 5 hereof.” Aplt. App., Vol. 1 at
46. Section 5 of the License Agreement used the phrase “Guaranteed Amounts,” but
otherwise did not define it. Id. at 50.
                                           4
                               INITIAL TERM

                           Year 1               $    0.00
                           Year 2               $ 50,000
                           Year 3               $ 100,000
                           Year 4               $ 100,000
                           Year 5               $ 100,000

Id. at 50. “Royalty Bearing Products” were defined in the License Agreement as “the

food products described on Exhibit B hereto that are sold as prepackaged popcorn

products using the Licensed Names and Marks.” Id. at 48. Exhibit B to the License

Agreement stated that “Royalty Bearing Products” were “[h]igh quality, pre-

packaged, popcorn products.” Id. at 67.

      The License Agreement required MFGPC to “deliver to” MFOC quarterly and

annual reports detailing “the amount of Royalty Bearing Products sold, including

sufficient information and detail to confirm the [royalties] calculations.” Id. at 51. It

also required MFGPC to “provide [MFOC] a [monthly] summary of all written

consumer complaints received regarding the quality of the Royalty Bearing

Products.” Id. at 52.

      The “initial term” of the License Agreement began “upon the execution” of the

License Agreement and “continue[d] for a period of sixty (60) months (‘Initial

Term’).” Id. at 57. The License Agreement stated that, “[s]o long as [MFGPC]

[wa]s not in material default and . . . ha[d] met and/or paid Running Royalties based

on its Guaranteed Royalty,” the License Agreement “would then automatically renew

for successive five year terms (‘Option Periods’) until such time as either party

                                            5
terminate[d] the Agreement upon no more than twenty (20) days prior written notice

to the other party.” Id.

      The License Agreement stated, in pertinent part, that it could be terminated in

the following manner:

             (i)    If [MFGPC] defaults in the payment of any Running
      Royalties then this Agreement and the license granted hereunder may be
      terminated upon notice by [MFOC] effective thirty (30) days after
      receipt of such notice, without prejudice to any and all other rights and
      remedies [MFOC] may have hereunder or by law provided, and all
      rights of [MFGPC] hereunder shall cease.

             (ii) If [MFGPC] fails to pay its Guaranteed Royalty . . . , then,
      this Agreement and the license granted hereunder may be terminated
      upon receipt of such notice by [MFGPC], without prejudice to any and
      all other rights and remedies [MFOC] may have hereunder or by law
      provided, and all rights of [MFGPC] hereunder shall cease.

             (iii) If [MFGPC] fails to perform in accordance with any
      material term or condition of this Agreement . . . and such default
      continues unremedied for thirty (30) days after the date on which
      [MFGPC] receives written notice of default, unless such remedy cannot
      be accomplished in such time period and [MFGPC] has commenced
      diligent efforts within such time period and continues such effort until
      the remedy is complete, then this Agreement may be terminated upon
      notice by [MFOC], effective upon receipt of such notice, without
      prejudice to any and all other rights and remedies [MFOC] may have
      hereunder or by law provided.

             ***

             (v)    If [MFOC] . . . files a petition in bankruptcy or for
      reorganization . . . , then this Agreement and the License granted
      hereunder may be terminated upon notice by [MFGPC], effective upon
      receipt of such notice, without prejudice to any and all other rights and
      remedies [MFGPC] may have hereunder or by law provided . . . .

            (vi) If [MFOC] fails to perform in accordance with any
      material term or condition of this Agreement and such default continues
      unremedied for thirty (30) days after the date on which [MFOC]

                                          6
      receives written notice of default, then this Agreement may be
      terminated upon notice by [MFGPC], effective upon receipt of such
      notice, without prejudice to any and all other rights and remedies
      [MFGPC] may have hereunder or by law provided.

Id. at 57–58.

            MFOC’s assignment of its rights under the License Agreement

      After entering into the License Agreement, MFOC assigned its rights and

obligations under the License Agreement to Fields Franchising. Id. at 35; Dist. Ct.

Docket No. 98 at 3 (“Counterclaim Defendants admit . . . that the rights of [MFOC]

under the License Agreement were assigned to” Fields Franchising).

                        The renewal of the License Agreement

      Fields Franchising and MFGPC continued to operate under the License

Agreement through the end of 2014, a period of more than eleven years. According

to MFGPC, it “paid the royalties required of it during the first term of the License

Agreement, consisting of $450,000 in Guaranteed Royalties.” Aplt. App., Vol. 1 at

35. MFGPC alleges that it owed no Guaranteed Royalties during the subsequent

terms of the License Agreement, and instead was only required to pay Running

Royalties. MFGPC also alleges that in 2013, Fields Franchising “required MFGPC

to make a $50,000 investment in package design changes for its products which was

obviously premised on the license being in full force and effect.” Id.

                MFGPC’s non-payment of Running Royalties in 2013

      “On January 13, 2013, there was a fire at a business next to MFGPC’s

chocolate drizzling co-packer.” Id., Vol. 2 at 319. “This left [the co-packer’s] plant


                                           7
filled with smoke and damaged most all of the Mrs. Fields inventory and packaging,

rendering them valueless.” Id. MFGPC alleges that Fields Franchising’s CEO at that

time, Neal Courtney, “was sympathetic to the position that MFGPC had been put in

by the fire and he agreed that MFGPC could forego payment of Q4 2012 and all of

2013 Running Royalties until 2014 to assist it in getting its operations back into

production and restarting its revenue streams.” Id. at 319–320. Courtney disputes

that he agreed to allow MFGPC to forego paying Running Royalties.

             Amounts owed by Fields Franchising and MFGPC in 2014

       Because of the accrued Running Royalties that it owed to Fields Franchising

for the fourth quarter of 2012 and all of 2013, MFGPC delayed invoicing Fields

Franchising and Famous Brands for orders of popcorn that MFGPC shipped directly

to them for resale in March and September of 2014. The accrued Running Royalties

were allegedly less than the combined open invoices payable from Fields Franchising

and Famous Brands to MFGPC. By December 2014, Fields Franchising and Famous

Brands together effectively owed MFGPC a balance of $26,660.43.

         Fields Franchising’s notice of termination and MFGPC’s response

      On December 22, 2014, Fields Franchising’s counsel sent a letter to MFGPC

notifying MFGPC that Fields Franchising considered the License Agreement to not

have automatically renewed in 2013 due to MFGPC’s failure to pay royalties since

the third quarter of 2012, and also due to MFGPC’s alleged failure to comply with

the terms of the License Agreement. Fields Franchising’s counsel further asserted



                                           8
that, to the extent the License Agreement had automatically renewed, Fields

Franchising intended to terminate the License Agreement.

      MFGPC’s counsel responded by letter on January 19, 2015, disputing Fields

Franchising’s authority to terminate the License Agreement, alleging that no royalties

were due by MFGPC to Fields Franchising, further alleging that Fields Franchising

and Famous Brands owed MFGPC $26,660.43, and indicating MFGPC’s intent to

hold Fields Franchising responsible for damages arising from the wrongful

termination. According to MFGPC, the result of Fields Franchising’s December 22,

2014 letter is that MFGPC has been effectively prevented from marketing and

shipping its prepackaged popcorn products.

      Fields Franchising did not respond to MFGPC’s letter. Instead, as discussed

below, Fields Franchising filed this action against MFGPC.

           Fields Franchising’s acquisition of Maxfield’s Candy Company

      On December 24, 2014, two days after its counsel notified MFGPC of the

intent to terminate the License Agreement, Fields Franchising issued a press release

announcing its acquisition of Maxfield’s Candy Company. The press release stated

that, with the acquisition, Fields Franchising was acquiring the “Nutty Guys”

premium brand of “popcorn products.” Id. It is unclear from the record what, if

anything, Fields Franchising subsequently did with that brand.

                  Fields Franchising’s agreement with Perfect Snax

      On September 22, 2017, while MFGPC’s initial appeal was pending before

this court (that initial appeal is discussed below), Fields Franchising entered into a

                                            9
new license agreement with Perfect Snax Prime, LLC (Perfect Snax), granting

Perfect Snax a license to market and sell popcorn using the Mrs. Fields trademark.

Fields Franchising subsequently terminated the licensing agreement with Perfect

Snax on August 7, 2018. On August 27, 2018, seven days after the district court

entered partial summary judgment in favor of MFGPC, Fields Franchising entered

into a reinstatement agreement with Perfect Snax that effectively reinstated Perfect

Snax’s license under slightly more onerous terms than were contained in the original

agreement. Perfect Snax has plans to distribute a cookie popcorn product, called

CookiePop, that uses the Mrs. Fields trademark.

                                           II

                           Fields Franchising’s complaint

      On February 10, 2015, Fields Franchising initiated this diversity action by

filing a complaint against MFGPC in the United States District Court for the District

of Utah. The complaint sought a declaratory judgment “that the License Agreement

[w]as . . . properly terminated and [wa]s no longer in effect.” Id., Vol. 1 at 29. The

complaint also sought “contractual attorneys’ fees and costs.” Id.

                      MFGPC’s counterclaim and cross-claims

      On February 24, 2015, MFGPC filed a counterclaim and cross-claims against

Fields Franchising, Famous Brands, and Mrs. Fields Confections, LLC (MFC). The

first claim for relief alleged breach of the License Agreement by Fields Franchising.

The second claim for relief sought payment of $26,660.43 allegedly due from

Famous Brands to MFGPC for merchandise that MFGPC had “prepared, packaged,

                                          10
and shipped” to Famous Brands “for sale by [Famous Brands] to its customers.” Id.

at 39. The third claim alleged intentional interference with prospective economic

advantage against Famous Brands and MFC. The fourth claim alleged negligent

interference with prospective economic advantage against Famous Brands and MFC.

The fifth claim alleged breach of the implied covenant of good faith and fair dealing

against Fields Franchising and Famous Brands.

               MFGPC’s motion for TRO and preliminary injunction

      On February 27, 2015, MFGPC filed a motion for temporary restraining order

and preliminary injunction “prohibiting [Fields Franchising] from interfering with the

right and ability of MFGPC to sell pre-packaged popcorn products bearing the ‘Mrs.

Fields’ trademark and trade name” under the License Agreement. Id. at 72. The

district court held a hearing on the motion on March 30, 2015, and, at the conclusion

of the hearing, denied the motion.

                 The initial judgment in favor of Fields Franchising

      In late 2015 and early 2016, the district court “granted a motion to dismiss

MFGPC’s claims and allowed [Fields Franchising] to voluntarily dismiss its own

claim for a declaratory judgment.” Mrs. Fields Franchising, LLC v. MFGPC, 721 F.

App’x 755, 757 (10th Cir. 2018). The district court subsequently issued an order

granting Fields Franchising’s motion for judgment and award of attorney fees.

                          This court’s reversal and remand

      MFGPC appealed. On January 8, 2018, this court issued an order and

judgment (a) affirming Fields Franchising’s voluntary dismissal of its claim for

                                          11
declaratory judgment, (b) affirming the dismissal of MFGPC’s account-stated claim

“because MFGPC failed to plead an essential element,” and (c) reversing the

dismissal of MFGPC’s breach of contract claim “because [MFGPC’s] allegations in

the complaint state[d] a plausible basis for relief.” Id.

                        The parties’ summary judgment motions

      On remand, the parties moved for summary judgment with respect to

MFGPC’s counterclaim for breach of contract. On August 20, 2018, the district court

issued a memorandum decision and order denying Fields Franchising’s motion for

summary judgment and granting in part MFGPC’s motion for summary judgment.

The district court found that (a) “MFGPC paid the Guaranteed Royalty in full during

the Initial Term,” (b) “[i]n June 2008, at the end of the Initial Term, the Agreement

automatically renewed for a five-year Option Period that ran from June 1, 2008 to

April 30, 2013,” (c) “[t]he parties continued to perform under the Agreement, and it

automatically renewed for another five-year Option Period in June 2013 that ran from

June 1, 2013 to April 30, 2018.” Aplt. App., Vol. 2 at 317. The district court in turn

concluded that the December 22, 2014 letter sent by Fields Franchising’s counsel to

MFGPC “was inaccurate for a number of reasons.” Id. To begin with, the district

court noted, “there was no requirement that MFGPC pay ‘a Guaranteed Royalty of

$100,000 a year.’” Id. Rather, the district court concluded, “[t]he Guaranteed

Royalty [wa]s defined as four payments that MFGPC was required to make during

the Initial Term.” Id. Second, the district court concluded that “[t]he second Option

Period ended in 2013, not 2012.” Id. Third, the district court concluded that the

                                           12
License “Agreement did automatically renew at the end of the second Option Period,

and MFGPC therefore retained a license to manufacture and sell ‘Mrs. Fields’

branded popcorn.” Id. at 317–18 (emphasis in original). Fourth, the district court

concluded that “the Agreement could not be terminated ‘pursuant to Section 16(b)(ii)

[based on] MFGPC’s failure to pay Guaranteed Royalties,’ because MFGPC had paid

the Guaranteed Royalty in full.” Id. at 318. The district court noted that, although

MFGPC’s counsel sent a letter to Fields Franchising on January 19, 2015, explaining

the inaccuracies in Fields Franchising’s counsel’s December 22, 2014 letter, Fields

Franchising “never responded and instead filed suit less than a month later.” Id. at

319.

       The district court in turn concluded that Fields Franchising’s “actions—

sending the notice of termination [letter] and then refusing to respond to MFGPC’s

letter—unequivocally indicated that [Fields Franchising] no longer intended to

perform under the [License] Agreement.” Id. at 332. The district court further

concluded that Fields Franchising “had no right to terminate the [License] Agreement

under Section 16(b)(ii) because MFGPC had paid the Guaranteed Royalty in full.”

Id. The district court rejected, as inconsistent “with the plain language of the

[License] Agreement,” Fields Franchising’s assertion “that MFGPC was required to

pay ‘Running Royalties in an amount equal to the Guaranteed Royalty’ during the

Option Periods.” Id. The district court also concluded that, “[b]ecause Section

16(b)(ii) [wa]s not applicable,” Fields Franchising “would need to rely on either

Section 16(b)(i) or (b)(iii) to justify the notice of termination.” Id. at 334. “But

                                           13
neither” of those subsections, the district court noted, gave Fields Franchising “the

right to terminate the Agreement effective immediately, so [Fields Franchising]

necessarily breached the Agreement by purporting to terminate it immediately.” Id.

Lastly, the district court rejected Fields Franchising’s assertion that MFGPC had

breached the License Agreement in other ways, including by failing to pay Running

Royalties. The district court noted that “[t]he undisputed testimony of [MFGPC’s

CEO] establishe[d] that the parties had a practice of offsetting amounts [Fields

Franchising or its affiliates] owed for popcorn against the amount MFGPC owed in

Running Royalties.” Id. at 335.

       Ultimately, the district court concluded that MFGPC “ha[d] established the

first three elements of its counterclaim: (1) the parties’ relationship was governed by

a valid contract, the Licensing Agreement; (2) MFGPC substantially performed under

the Agreement; and (3) [Fields Franchising] improperly repudiated the Agreement,

thereby committing an actionable breach.” Id. at 340. The district court further

concluded that “[t]he only issue that remain[ed] [wa]s damages.” Id. And the district

court concluded that the damages issue had to “be resolved through a subsequent

motion or at trial.” Id. at 339.

                     MFGPC’s motion for preliminary injunction

       On October 13, 2018, MFGPC filed a motion for temporary restraining order

and preliminary injunction seeking specific performance of the License Agreement.

In its motion, MFGPC asserted that Fields Franchising was “continu[ing] to license

and market competing products using the Trademark in contravention of the terms of

                                          14
the . . . License Agreement.” Id. at 345. MFGPC further asserted that it would suffer

irreparable harm unless the district court ordered Fields Franchising

      to once again recognize [MFGPC] as the exclusive worldwide
      manufacturer and distributor of Mrs. Fields-branded popcorn, forward
      all popcorn orders to [MFGPC], resume sales and orders of [MFGPC’s]s
      products for their stores, and cease manufacturing, purchasing, and
      ordering popcorn from competitors.

Id. at 345–346. Fields Franchising opposed MFGPC’s motion.

      The district court held a hearing on MFGPC’s motion on January 14, 2019.

On March 20, 2019, the district court issued a memorandum decision and order

granting a preliminary injunction in favor of MFGPC. The district court found, in

pertinent part, that “[t]he rights granted to MFGPC under the . . . License Agreement

[we]re valuable to MFGPC because . . . MFGPC’s license was effectively perpetual

absent material breach . . . .” Id., Vol. 5 at 870. The district court in turn concluded

that “[c]alculating damages for [Fields Franchising’s] wrongful termination of

MFGPC w[ould] be difficult, if not impossible.” Id. at 871. The district court noted,

in part, that “[c]alculating damages for permanent deprivation of the license w[ould]

be practically impossible and would require speculation because there [wa]s no

comparable transaction in the marketplace,” and because “proxy measures like prior

performance [we]re of limited use because they [we]re tainted by the great recession

preceding the breach and by a fire that significantly disrupted MFGPC’s ability to

ship its product.” Id. at 871–72. The district court therefore concluded it was

“highly unlikely that MFGPC could be made whole through an award of money

damages because (a) it would be difficult if not impossible to accurately calculate the

                                           15
damages to MFGPC of being permanently deprived of the right to use the Mrs. Fields

Trademark for popcorn; and (b) no license for a comparable brand on such favorable

terms could be obtained.” Id. at 876–77. Ultimately, the district court concluded that

“MFGPC ha[d] established a strong likelihood that [the district] court w[ould] order

specific performance by [Fields Franchising] of the . . . License Agreement.” Id. at

878. “Thus,” the district court “conclude[d] that MFGPC [wa]s likely to succeed on

the merits of its claim for equitable relief.” Id.

       As for irreparable harm, the district court concluded that, “[i]n the absence of

an injunction, MFGPC w[ould] be deprived of an opportunity to distribute a unique

product—Mrs. Fields-branded popcorn.” Id. at 879. In other words, it concluded,

Fields Franchising “would be free to license to other third-parties, and MFGPC

would suffer a further diminishment of its competitive position in the marketplace.”

Id. The district court also concluded that “MFGPC (and the court) would have

extreme difficulty calculating damages for the future and permanent deprivation of

MFGPC’s right to exclusive use of the Trademark for selling Mrs. Fields Branded

Popcorn,” and “[t]he speculative nature of calculating damages w[ould] only increase

over time.” Id. “Thus, the [district] court conclude[d] that MFGPC w[ould] suffer

irreparable harm if the temporary injunction w[as] denied.” Id.

       As for the balance of harms, the district court noted that Fields Franchising

“w[ould] be harmed because it w[ould] not be able to continue its business

relationship with Perfect Snax.” Id. The district court concluded, however, that

“[a]ny harm to [Fields Franchising] ar[ose] from either (1) [Fields Franchising’s]

                                            16
initial breach of the . . . License Agreement, or (2) [Fields Franchising’s] decision to

reinstate the Perfect Snax Agreement after [the district] court granted MFGPC’s

motion for Summary Judgment against Mrs. Fields.” Id. at 880 (emphasis in

original). The district court also noted that Fields Franchising “wrongly breached the

Agreement with MFGPC in attempting to terminate the Agreement.” Id. The district

court concluded that, “[i]n light of its behavior, [Fields Franchising could not] rely

on the harm that w[ould] be caused by the termination of its agreement as a reason

for denying an injunction.” Id. The district court also concluded that Fields

Franchising could not “rely on any harm to Perfect Snax” because Fields Franchising

“ha[d] the contractual right to terminate its licensing agreement with Perfect Snax

based on Perfect Snax’s failure to abide by the terms of that agreement.” Id. The

district court further noted that “any harm to Perfect Snax arising from an injunction

was caused by [Fields Franchising] and not MFGPC.” Id. The district court in turn

concluded that, “to the extent that Perfect Snax’s rights [would] be affected by an

injunction, Perfect Snax must seek compensation from [Fields Franchising].” Id. at

881.

       Lastly, the district court “conclude[d] that the public has a strong interest in

honoring and enforcing lawful contractual obligations,” and that “[t]he public interest

favor[ed] the issuance of MFGPC’s requested injunction, especially as this injunction

will discourage [Fields Franchising] from engaging in the type of behavior it has in

the past.” Id.



                                            17
      The district court ordered Fields Franchising to, within thirty days of the date

of the order, (a) “refrain from using the Mrs. Fields Trademark in association with

Mrs. Fields-branded popcorn in accordance with the . . . License Agreement,” (b)

“refrain from licensing any third parties to use the Mrs. Fields Trademark in

association with Mrs. Fields-branded popcorn,” “(c) “terminate any licenses and

purported licenses to third parties to manufacture, market, and sell Mrs. Fields-

branded popcorn,” (d) “recognize MFGPC as the exclusive worldwide licensee and

source of Mrs. Fields-branded popcorn,” (e) “enforce MFGPC’s exclusive right to

use the Trademark in the world-wide territory in good faith,” (f) “forward all orders

received for Mrs. Fields-branded popcorn to MFGPC for fulfillment,” (g) “if [Fields

Franchising] chooses to sell Mrs. Fields-branded popcorn, to resume selling

exclusively MFGPC-manufactured Mrs. Fields-branded popcorn; and (h) “remove or

cause to be removed all competing Mrs. Fields-branded popcorn using the Mrs.

Fields Trademark from sale, including from all retailers and online distributors,

worldwide.” Id. at 882–883.

                        Fields Franchising’s notice of appeal

      Fields Franchising filed a timely notice of appeal from the district court’s

memorandum decision and order granting preliminary injunction in favor of MFGPC.

                                          III

      Fields Franchising argues in this appeal that the district court erred in granting

a preliminary injunction in favor of MFGPC. In support, Fields Franchising argues

that the district court erred in finding that the License Agreement afforded MFGPC a

                                          18
“perpetual license.” Fields Franchising further argues that the district court erred in

its analysis of each of the requirements for imposition of a preliminary injunction.

As discussed below, we agree with Fields Franchising that the district court erred in

finding that the License Agreement afforded MFGPC a “perpetual license.” And we

in turn conclude that this error fatally infected the district court’s analysis of the

requirements for imposing a preliminary injunction

                   Legal standards governing preliminary injunctions

       “‘A preliminary injunction is an extraordinary remedy, the exception rather

than the rule.’” Free the Nipple–Fort Collins v. City of Fort Collins, Colo., 916 F.3d

792, 797 (10th Cir. 2019) (quotations omitted). “To succeed on a typical

preliminary-injunction motion, the moving party needs to prove four things: (1) that

she’s ‘substantially likely to succeed on the merits,’ (2) that she’ll ‘suffer irreparable

injury’ if the court denies the injunction; (3) that her ‘threatened injury’ (without the

injunction) outweighs the opposing party’s under the injunction, and (4) that the

injunction isn’t adverse to the public interest.’” Id. (quoting Beltronics USA, Inc. v.

Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070 (10th Cir. 2009)).

       “But courts ‘disfavor’ some preliminary injunctions and so require more of the

parties who request them.” Id. (citing Schrier v. Univ. of Colo., 427 F.3d 1253,

1258–59 (10th Cir. 2005)). “Disfavored preliminary injunctions don’t merely

preserve the parties’ relative positions pending trial.” Id. “Instead, a disfavored

injunction may exhibit any of three characteristics: (1) it mandates action (rather than

prohibiting it), (2) it changes the status quo, or (3) it grants all the relief that the

                                             19
moving party could expect from a trial win.” Id. “To get a disfavored injunction, the

moving party faces a heavier burden on the likelihood-of-success-on-the-merits and

the balance-of-harms factors: She must make a strong showing that these tilt in her

favor.” Id. (quotations omitted).

      “District courts have discretion over whether to grant preliminary injunctions,

and we will disturb their decisions only if they abuse that discretion.” Id. at 796

(citations omitted). “A district court’s decision crosses the abuse-of-discretion line if

it rests on an erroneous legal conclusion or lacks a rational basis in the record.” Id.

“As we review a district court’s decision to grant or deny a preliminary injunction,

we thus examine the court’s factual findings for clear error and its legal conclusions

de novo.” Id. at 796–797.

            The district court’s erroneous finding of a “perpetual license”

      We begin our analysis by turning to the factual findings made by the district

court in its memorandum decision and order granting a preliminary injunction in

favor of MFGPC. Most of those findings simply recount the history of the

relationship between Fields Franchising and MFGPC and are undisputed. One key

finding, however, is disputed by Fields Franchising. In Paragraph 23 of its factual

findings, the district court stated: “The rights granted to MFGPC under the

Trademark License Agreement are valuable to MFGPC because . . . MFGPC’s

license was effectively perpetual absent material breach . . . .” Aplt. App., Vol. 5 at

870 (emphasis added). Fields Franchising argues, and we agree, that this finding is



                                           20
clearly erroneous because the License Agreement did not, in fact, afford MFGPC a

perpetual license.

      Section 16 of the License Agreement was titled “TERM AND

TERMINATION.” Id., Vol. 1 at 57. Section 16(a), entitled “Term,” specified that

“[t]he initial term of th[e] Agreement” was sixty months. Id. Section 16(a) in turn

stated that, “[s]o long as [MFGPC] was not in material default,” the Agreement

“would then automatically renew for successive five year terms (‘Option Periods’)

until such time as either party terminates the Agreement upon no more than twenty

(20) days prior written notice to the other party.” Id. In other words, this provision

of Section 16(a) allowed either party to prevent the License Agreement from

renewing at the end of each five-year period even in the absence of default or breach.

Section 16(b), entitled “Termination,” outlined a set of six specific circumstances

under which Fields Franchising and MFGPC could otherwise terminate the License

Agreement (as opposed to preventing it from renewing). Id. For example, Section

16(b)(iv) authorized Fields Franchising to terminate the License Agreement at any

time if MFGPC was “determined to be insolvent” or “file[d] a petition in

bankruptcy.” Id. Read as a whole, Section 16 authorized Fields Franchising and

MFGPC (a) to prevent the License Agreement from renewing at the end of each five-

year period, and (b) to terminate the License Agreement at other points in time if

specific circumstances occurred. In other words, as Fields Franchising asserts in its

opening brief, reading Section 16 as a whole “means that the [License] Agreement

c[ould] be terminated without cause prior to each five-year renewal and mid-term,

                                          21
[and] with cause only upon specified [circumstances and] procedures.” Aplt. Br. at

31.

      Thus, contrary to the district court’s finding, nothing in Section 16 afforded

MFGPC a “perpetual license.” Rather, at best, MFGPC could have reasonably

expected only to continue using the license so long as Fields Franchising was

interested in allowing the License Agreement to automatically renew, and so long as

none of the specific circumstances outlined in Section 16(b) occurred and prompted

Fields Franchising to terminate the License Agreement. As the undisputed facts

make clear, however, Fields Franchising clearly did not intend to proceed with the

License Agreement and it notified MFGPC of this fact. Even though Fields

Franchising may have breached the License Agreement by failing to comply with the

non-renewal procedure outlined in Section 16(a),2 it is apparent that Fields

Franchising would not have allowed the License Agreement to renew again. Indeed,

we essentially noted this fact in our earlier opinion: “the [L]icense [A]greement

would have allowed MFGPC to continue to sell the popcorn for roughly [2.5] more

years in the absence of a termination” by Fields Franchising. Mrs. Fields

Franchising, 721 F. App’x at 760–761.




      2
         The district court reached this conclusion in granting summary judgment in
favor of MFGPC on its breach of contract claim. Because that ruling is not before us
in the interlocutory appeal, we do not reach the merits of it. Instead, we simply
assume, without deciding, that Fields Franchising’s actions breached the License
Agreement.

                                          22
      As we shall proceed to discuss, the district court’s erroneous finding that the

License Agreement afforded MFGPC a “perpetual license” impacted its analysis of

MFGPC’s likelihood of success on the merits and the existence of irreparable harm.

More specifically, we conclude that the district court’s analysis of both of these

requirements is fatally flawed.

                     Likelihood of success - specific performance

      The district court concluded that MFGPC “met its burden of showing a

likelihood that the court w[ould] order [Fields Franchising] to reinstate the

[L]icens[e] [A]greement with MFGPC.” Aplt. App., Vol. V at 875. In support of

this conclusion, the district court noted that, “[u]nder Utah law, a party seeking

specific performance must prove 1) that a contract exists; 2) that the essential terms

of the contract are clear and definite; and 3) that there is no adequate remedy at law.”

Id. (citing Tooele Assocs. Ltd. v. Tooele City, 251 P.3d 835, 835 (Utah 2011) and

South Shores Concession v. State, 600 P.2d 550, 552 (Utah 1979)). Focusing on the

last prong of this test, the district court concluded that calculating “damages due to”

Fields Franchising’s breach of the License Agreement would be “very difficult, if not

impossible.” Id. at 876. More specifically, the district court concluded it was

“highly unlikely” that “MFGPC could be made whole through an award of money

damages because . . . it would be difficult if not impossible to accurately calculate the

damages to MFGPC of being permanently deprived of the right to use the Mrs. Fields

Trademark for popcorn . . . .” Id. at 876–77 (emphasis added). The district court



                                           23
also concluded that “no license for a comparable brand on such favorable terms could

be obtained.” Id. at 877.

      Fields Franchising argues on appeal, and we agree, that the district court’s

likelihood of success analysis was flawed because it rested, in significant part, on the

erroneous finding that the License Agreement afforded MFGPC a perpetual license.

Specifically, the district court’s reference to “permanent deprivation” quite clearly

rested on the district court’s finding that the License Agreement gave MFGPC a

“perpetual license.” Although we have no doubt that it would be difficult to calculate

damages for a permanent deprivation of a license, that is simply not the case here.

Rather, as this court previously noted, it appears that MFGPC’s damages will be

limited to a period of approximately two-and-a-half years (i.e., the remainder of the

third five-year term of the License Agreement). And, as we shall discuss below, we

are not persuaded that calculating such damages will be impossible. Consequently,

we conclude the district court erred in determining that MFGPC established a strong

likelihood that it will prevail on its claim for specific performance.

                                   Irreparable harm

      Generally speaking, the “breach of an exclusivity clause almost always

warrants the award of injunctive relief.” Dominion Video Satellite, Inc. v. Echostar

Satellite Corp., 356 F.3d 1256, 1262 (10th Cir. 2004). That said, “the breach of an

exclusivity provision alone” does not “satisf[y] the irreparable harm factor of the

preliminary injunction test.” Id. In other words, “[d]espite the general

acknowledgment that irreparable harm often arises from the breach of [an

                                           24
exclusivity] agreement, courts do not automatically, nor as a matter of course, reach

this conclusion.” Id. at 1263. “Rather, they have identified the following as factors

supporting irreparable harm determinations: inability to calculate damages, harm to

goodwill, diminishment of competitive positions in marketplace, loss of employees’

unique services, the impact of state law, and lost opportunities to distribute unique

products.” Id. (citing cases).

       Here, the district court concluded that MFGPC “w[ould] be irreparably harmed

should the court fail to enter an injunction.” Aplt. App., Vol. 5 at 878. In support of

this conclusion, the district court stated, in pertinent part: “MFGPC (and the court)

would have extreme difficulty calculating damages for the future and permanent

deprivation of MFGPC’s right to exclusive use of the Trademark for selling Mrs.

Fields Branded Popcorn.” Id. at 879 (emphasis added). The district court also stated

that the terms of the License Agreement were “unusually licensee-friendly and would

be difficult, if not impossible, to obtain in today’s licensing environment.” Id. at

871.

       These references, we conclude, indicate that the district court rested its

irreparable harm analysis, at least in part, on its erroneous finding that the License

Agreement afforded MFGPC a perpetual license. MFGPC could only have suffered a

“permanent deprivation” if the License Agreement afforded it a perpetual license. As

previously discussed, however, the License Agreement did not do so. As for the

district court’s reference to “unusually license-friendly” terms, the district court did

not identify what those terms were, and we, having carefully examined the License

                                           25
Agreement, are left to conclude that the district court was referring only to its

erroneous conclusion that the License Agreement afforded MFGPC a perpetual

license. Even assuming, for purposes of argument, that the License Agreement was

“unusually licensee-friendly” in some other respect, the fact remains that the License

Agreement was not permanent in nature and it expressly afforded Fields Franchising

the right to terminate it. Thus, we conclude that the difficulty that MFGPC may face

in obtaining a similar agreement with another company simply is not a proper factor

to consider in determining whether irreparable harm exists.

       The district court also, in discussing the issue of irreparable harm, pointed to

two other factors. First, the district court concluded that “MFGPC’s prior

profitability” was not “a good prediction of its future profitability because the great

recession and the warehouse fire reduced its profits prior to the breach.” Aplt. App.,

Vol. 5 at 876. Second, and relatedly, the district court noted that “there [we]re no

comparable products from which [MFGPC’s] damage could be estimated.” Id. We

are not persuaded, however, that these factors support the district court’s irreparable

harm determination.

       Generally speaking, “evidence of past profits in an established business” is the

best “proof of future profits.” Palmer v. Conn. Ry. & Lighting Co., 311 U.S. 544,

559 (1941). Here, it is undisputed that the parties operated under the terms of the

License Agreement for nearly twelve years. Presumably, MFGPC’s financial

statements for all of those years are or will be available to the district court for



                                            26
assistance in calculating MFGPC’s damages.3 The district court questioned the

validity of such proof in this case “because,” it stated, “the great recession and the

warehouse fire reduced [MFGPC’s] profits prior to [Fields Franchising’s] breach.”

Aplt. App., Vol. 5 at 876. It is unclear to us, however, how the district court arrived

at this conclusion. The “great recession” mentioned by the district court did not

begin until approximately December of 2007, more than four years into the original

term of the License Agreement, and ended in June of 2009, approximately four-and-

a-half years prior to Fields Franchising’s decision to terminate the License

Agreement. See Robert Rich, The Great Recession (Nov. 22, 2013),

federalreservehistory.org/essays/great_recession_of_200709. Precisely why the

years prior to or following the recession cannot serve as a reasonable proxy to

determine MFGPC’s damages is unclear and was not discussed at all by the district

court. Similarly, the warehouse fire that was mentioned by the district court did not

occur until January 13, 2013, over ten years into the parties’ continuing business

relationship, and approximately three-and-a-half years after the end of the recession.

Setting aside the period of the great recession and the period following the warehouse

fire, that leaves a total of approximately eight years and three months’ worth of sales

data of MFGPC’s own products for the district court to consider for purposes of



      3
       According to Fields Franchising, the record before the district court included
MFGPC’s “financial statements for the six years pre-termination showing its
revenues, costs and profits for each year.” Aplt. Br. at 25. There is no suggestion by
MFGPC that additional years of financial statements are unavailable.

                                           27
calculating damages.4 Nothing in the record or in MFGPC’s briefs persuades us that

this data cannot serve as a reasonable measure of MFGPC’s damages.

      As for the purported lack of comparable products, we conclude that is

irrelevant, given the fact that there appears to be a wealth of actual data regarding the

sales of MFGPC’s own products.

      For these reasons, we conclude that the district court’s irreparable harm

analysis was flawed and that, contrary to its conclusion, MFGPC failed to establish

the existence of irreparable harm.

                         Balance of harms and public interest

      Having concluded that MFGPC failed to establish a likelihood of success on

the merits of its claim for specific performance, or, relatedly, the existence of

irreparable harm, it is unnecessary for us to address the remaining two requirements

for the imposition of a preliminary injunction.

                                           III

      We therefore REVERSE the preliminary injunction entered by the district

court in favor of MFGPC.




      4
        The period from April 2003 until December 2007 (excluding December
2007) yields a total of four years and eight months. The period from June 2009
through January 2013 (excluding January 2013) yields a total of three years and
seven months. Together, this results in a total of eight years and three months.
                                           28
