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KOOS, INC. v. PERFORMANCE INDUS.

October 17, 1990

KOOS, INC., Plaintiff,
v.
PERFORMANCE INDUSTRIES, INC., Defendant


James H. Alesia, United States District Judge.


The opinion of the court was delivered by: ALESIA

JAMES H. ALESIA, UNITED STATES DISTRICT JUDGE

 On October 9, 1990, plaintiff, Koos, Inc. ("Koos") filed a verified complaint, along with a motion for a temporary restraining order, against defendant, Performance Industries, Inc. ("PII"). In response, PII filed a verified answer and raised certain defenses. Both parties also submitted affidavits. The Court scheduled a hearing on plaintiff's motion for a temporary restraining order on October 12, 1990. At the outset of the hearing, the Court raised the issue of whether this district was the proper venue for plaintiff's action. After hearing arguments of counsel on this issue, and reviewing the pleadings and affidavits filed by both parties, this Court, on its own motion, issued a minute order transferring this action to the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1404(a). (See Minute Order of October 12, 1990). In the same minute order, the Court also declined to reach the merits of Koos' motion for a temporary restraining order and advised the parties that a written opinion addressing the issues under Section 1404(a) would follow. Pursuant to that order, the Court sets forth its reasons for transferring this action to the United States District Court for the Eastern District of Pennsylvania under Section 1404(a).

 I. Facts

 Koos is a Wisconsin corporation with its principal place of business in Kenosha, Wisconsin. Koos is engaged in the business of manufacturing, advertising, and selling an ice-melting product called "SAFE STEP Ice Melter" ("Safe Step"). "Safe Step" is sold for use in thawing ice and snow on sidewalks, driveways, and other similar surfaces. "Safe Step" is a registered trademark owned by Koos, and Koos manufactures "Safe Step" under two patents issued by the United States Patent Office. "Safe Step" has generated millions of dollars in sales for Koos.

 PII is a Pennsylvania corporation with its principal place of business in Trevose, Pennsylvania. PII is engaged in the business of manufacturing and marketing an ice-melting product called "safe-t-thaw." PII competes directly with Koos, selling its product to the same customers and in the same market as Koos. Like Koos, PII has obtained a patent on its "safe-t-thaw" product from the United States Patent Office. Last year, "safe-t-thaw" generated $ 500,000 in gross sales for PII.

 This action arises out of PII's distribution of allegedly misleading comparative advertisements. In these advertisements, PII compares its "safe-t-thaw" product to Koos' "Safe Step" product. Since approximately May 1989, PII, by its own admission, has been distributing brochures containing these comparative advertisements to potential customers, brokers, manufacturers' representatives, and end-users, both by mail and in person on a regular basis. These brochures are the only form of advertising for PII's product.

 During 1989 and 1990, PII's brokers and manufacturers' representatives attended regional trade shows on a regular basis and distributed this advertising during those shows. In addition, during 1990, PII displayed and distributed this advertising at several trade shows, including the North American Snow Conference in St. Louis, Missouri in April, 1990; the Canadian Public Works Show in Manitoba, Canada in May, 1990; an airport managers show in Buffalo, New York in June, 1990; and, most recently, at the National Hardware Show in Chicago, Illinois in August, 1990.

 On August 10, 1990, counsel for Koos apparently followed up his letter with a telephone call to counsel for PII. That same day, PII's counsel sent a letter to Koos' counsel acknowledging their telephone conversation. In his August 10, 1990 letter, counsel for PII advised counsel for Koos that PII would obliterate the "Safe Step" trademark from PII's advertisements and, beyond that, counsel for PII would review Koos' allegations with PII. During the course of the National Hardware Show, additional telephone conversations and correspondence ensued regarding PII's advertising and its dissemination at the National Hardware Show. Based on the contents of this correspondence, the parties disagreed as to what type of agreement, if any, had been reached between them before the National Hardware Show.

 Finally, in a letter dated September 12, 1990, counsel for PII responded to Koos' letter of July 26, 1990. In his September 12, 1990 letter, counsel for PII denied Koos' allegations that PII's literature was false and implied that PII planned to continue to distribute the advertisements. By letter dated September 26, 1990, counsel for Koos replied, advising counsel for PII that Koos disagreed with PII's conclusions and that Koos continued to believe that PII's advertising materials contained false and misleading information. In his letter, counsel for Koos also enclosed a draft complaint and informed counsel for PII that unless PII agreed to refrain from any further dissemination of its false advertising, counsel for Koos had been instructed to file the draft complaint in this district.

 On October 4, 1990, counsel for Koos again wrote to counsel for PII, acknowledging receipt of a proposal from PII to settle the dispute. In this letter, counsel for Koos advised counsel for PII that PII had its choice of either providing specific, definitive evidence of the truth of its claims within 24 hours or agreeing to modify its claims so that they would not be false. Counsel for Koos also reiterated its threat to file the complaint attached to its previous letter in the absence of an appropriate response.

 On October 5, 1990, PII filed suit against Koos in the United States District Court for the Eastern District of Pennsylvania. In its complaint, styled as Performance Industries, Inc. v. Koos, Inc., No. 90-6435 (E.D.Pa. October 5, 1990) ("the Pennsylvania action"), PII seeks a declaratory judgment that it has not violated the Lanham Act, 15 U.S.C. § 1051 et seq., the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa.S.A. § 202-1 et seq., or various common law doctrines.

 On October 9, 1990, Koos filed this action. This action arises out of the same subject matter as the Pennsylvania action. In the instant complaint, Koos alleges that PII violated the Lanham Act, 15 U.S.C. § 1051 et seq., the Illinois Consumer Fraud and Deceptive Business Practices Act, Ill. Rev. Stat. ch. 121 1/2, paras. 261-272, and the Illinois Uniform Deceptive Trade Practices Act, Ill. Rev. Stat. ch. 121 1/2, para. 311 et seq. Along with its complaint, Koos filed a motion for a temporary restraining order. The primary purpose of Koos' motion is to restrain PII from distributing its comparative advertising materials at the upcoming International Sanitary Supply Association Show in Atlanta, Georgia ("the ISSA Show"). ...


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