United States District Court, N.D. Illinois
January 6, 2004.
WILSON SPORTING GOODS COMPANY, Plaintiff,
NICKLAUS GOLF EQUIPMENT COMPANY, L.L.C, GOLDEN BEAR INTERNATIONAL INC., and JACK NICKLAUS, Defendants
The opinion of the court was delivered by: JOHN GRADY, Senior District Judge
Before the court is defendants' motion to dismiss pursuant to Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(2) and the Declaratory
Judgment Act. For the reasons stated below, the motion is granted.
This declaratory judgment action arises out of a trademark dispute over
the use of the term "JACK" in association with a new golf ball introduced
by plaintiff Wilson Sporting Goods Company ("Wilson").
In October 2002, Robert P. Kelly, CEO of defendant Nicklaus Golf
Equipment Company, L.L.C. ("Nicklaus Golf"), sent a letter to Jim Baugh,
president of Wilson, indicating that Nicklaus Golf and defendants Golden
Bear International, Inc. and Jack Nicklaus believed that Wilson's use of
the term "JACK" in relation to a golf
ball was causing confusion in the marketplace because customers
were incorrectly associating the ball with Jack Nicklaus and his related
companies. (Wilson was also using the phrase "You don't know Jack" in its
marketing.) Mr. Kelly stated that Nicklaus Golf had previously used the
mark "JACK" in relation to golf clubs. The conclusion of the letter
expressed defendants' hope to "amicably resolve" the matter and invited a
proposal from Wilson. (Memorandum in Support of Motion to Dismiss, Ex. A,
Letter from Robert P. Kelly to Jim Baugh, October 24, 2002.)
Discussions ensued. In December 2002, general counsel for Wilson sent
Mr. Kelly a letter stating that "[i]t has surprised Wilson that
[defendants], in effect, claim exclusive rights to use the ` . . . you
don't know Jack' colloquialism in the field of golf," but also stating a
hope to resolve the dispute "short of litigation." (Memorandum in Support
of Motion to Dismiss, Ex. B, Letter from Ray Berens to Robert P. Kelly,
December 17, 2002.)
In February 2003, defendants' outside counsel, Scott A. McCollister,
responded to Mr. Berens's letter. This letter was considerably more
detailed than defendants' first letter to Wilson, and clarified that
defendants were not so much concerned with Wilson's use of the phrase
"You don't know Jack," but with Wilson's use of the simple mark "JACK."
The letter also stated in part:
Wilson's use of the mark JACK is targeted to the
same customers courted by the Nicklaus
organization. Thus, the Wilson JACK golf ball is
likely to cause confusion, deception or mistake as
to the source of
products. In addition, the Wilson use of the
JACK trademark dilutes the relative value of that
mark to Nicklaus. This constitutes, at a minimum,
federal trademark infringement, deceptive trade
practices, and unfair competition in violation of
15 U.S.C. § 1051 et seq. and various state
. . .
We believe that the newly introduced Wilson JACK
ball is [also] a violation of Jack Nicklaus'
rights under common law and various statutes
governing the right of publicity.
. . .
While injunctive relief is available, Wilson's
violation of the Right of Publicity statute may
also render Wilson liable for the greater of
actual damages and/or profits derived from the
unauthorized use of Jack's identity. In addition,
an entity who violates another's right of
publicity may be liable for punitive damages.
In short, the Nicklaus business organization and
Jack Nicklaus personally must insist that Wilson
immediately cease and desist and end all use of
the trademark JACK as indicia on any golf
products. Accordingly, any further communications
from Wilson on this matter need to address the
trademark and right of publicity issues associated
with the mark JACK, not the slogan ". . . you
don't know Jack."
In summary, while we believe that the use of the
phrase ". . . you don't know Jack" in association
with golf products, may constitute copyright
infringement and infringement of Mr. Nicklaus'
right of publicity, in the spirit of compromise,
we will not presently insist that Wilson abandon
its use. However, we must insist that Wilson cease
the use of the singular name JACK as it appears on
packaging, advertisements or products associated
with golf equipment, including golf balls.
Quite frankly, in response to Mr. Kelly's
letter, we hoped that Wilson would acknowledge its
error in adopting the JACK trademark and work to
develop an exit strategy from using the mark.
However, Nicklaus representatives at the 2003 PGA
Show found what appears to be an escalating focus
on JACK branded golf balls making the matter more
important to the Nicklaus organizations and to Mr.
Nicklaus personally. In fact, Wilson seems intent
on attempting to embarrass Mr. Nicklaus. Its
decision to place JACK branded advertisements over
urinals with the phrase "nice package" is nothing
short of offensive.
Please provide us with your intended course
of action to alleviate our concerns by the end of
(Memorandum in Support of Motion, Ex. C, Letter from Scott A.
McCollister to Raymond M. Berens ("McCollister Letter"), February 11,
Wilson's outside counsel, Jeffery A. Key, responded in part as follows
in a letter dated February 26, 2003:
As an initial matter, I would like to reiterate
that Wilson would like to resolve this matter
without resort to litigation. To that end, perhaps
we can discuss a means for mediating or
arbitrating the trademark issues you have raised.
It would be helpful . . . if you could supply us
with documentation [of trademark registrations and
. . .
Accordingly, please contact the undersigned to
discuss a means for resolving this dispute that
would be expeditious and save our clients the
great expense of protracted litigation.
(Memorandum in Support of Motion, Ex. D, Letter from Jeffery A. Key
to Scott A. McCollister, February 26, 2003.)
Two days later, on February 28, 2003, Wilson filed the complaint in the
instant action, seeking a declaratory judgment that Wilson has not
infringed defendants' trademarks or violated other laws and that any
trademark for the term "JACK" on golf balls is invalid. About a month and
half later, on April 14, 2003, defendants filed a trademark infringement
action against Wilson in the Southern District of Ohio.
Defendants now move to dismiss the complaint.
Defendants contend that the complaint must be dismissed for lack of
subject matter jurisdiction because there is no "actual controversy"
here. Alternatively, defendants argue that should we find that we have
subject matter jurisdiction, we should exercise our discretion to decline
to hear this action.
A. Subject Matter Jurisdiction
When considering a Rule 12(b)(1) motion to dismiss for lack of subject
matter jurisdiction, a district court accepts as true all well
pled factual allegations and draws reasonable inferences from the
allegations in favor of the plaintiff. See Capitol Leasing Co. v.
FDIC, 999 F.2d 188, 191 (7th Cir. 1993). The court may also look
beyond the allegations of the complaint and consider affidavits and other
documentary evidence to determine whether subject matter jurisdiction
exists. See id.
The Declaratory Judgment Act, 28 U.S.C. § 2201, allows federal
courts to render declaratory judgments only when an "actual controversy"
exists. See Crown Drug Co. v. Revlon, Inc., 703 F.2d 240, 243
(7th Cir. 1983). "[T]he question . . . is whether the facts alleged,
under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory
judgment." Maryland Cas. Co. v. Pacific Coal & Oil Co.,
312 U.S. 270, 273 (1941). "`The defendant must
have engaged in conduct giving rise to a reasonable apprehension on
plaintiff's part that it will face. . . . suit or the threat of one if it
commences or continues the activity in question.'" Trippe Mfg. Co.
v. American Power Conversion Corp., 46 F.3d 624, 627 (7th Cir. 1995)
(quoting International Harvester Co. v. Deere & Co.,
623 F.2d 1207, 1210 (7th Cir. 1980)). "The focus of the inquiry must rest on
the defendant's statements and conduct. . . ." Trippe, 46 F.3d
at 627. Because the crucial date for determining whether a federal court
has jurisdiction is the date the complaint was filed, see Arrowhead
Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 734 n. 2
(Fed. Cir. 1988), we must confine our analysis to factual developments
occurring before the filing of the complaint in this case, the
communications from defendants to Wilson in the letters described
Defendants assert that Wilson had no reasonable apprehension of being
sued at the time it filed the complaint, relying on the fact that the
exchange of letters referred to hopes of settling the dispute without
resorting to litigation. We disagree with defendants. Although both of
Wilson's letters expressed the desire to negotiate, only the
initial letter from defendants did so. The second letter from defendants
(the McCollister Letter) upped the ante: it explicitly accused Wilson of
trademark infringement, deceptive trade practices, unfair competition,
and violation of the right to publicity. "A reasonable apprehension of an
suit may be based upon the defendant's assertion of exclusive
rights against another party." G. Heileman Brewing Co. v. Anheuser
Busch, Inc., 873 F.2d 985, 990 (7th Cir. 1989).
Moreover, the McCollister Letter referred to the possibility of
injunctive relief, damages and punitive damages, and it also demanded
that Wilson "cease and desist" use of the mark JACK. The letter concluded
with the description of Wilson's advertising as "offensive" to Mr.
Nicklaus. There is no indication that defendants' position changed during
the two-week period between the sending of the letter and Wilson's filing
of the complaint. Given the content of the McCollister Letter, we believe
that Wilson had a reasonable apprehension of being sued at the time it
filed the complaint. We find, therefore, that we have subject matter
B. Discretion Regarding Declaratory Judgment Actions
Defendants argue that even if we have subject matter jurisdiction, we
should decline to exercise our jurisdiction under the Declaratory
Judgment Act because the action was filed in anticipation of an
In Tempco Electric Heater Corp. v. Omega Engineering, Inc.,
819 F.2d 746, 747 (7th Cir. 1987), the Seventh Circuit stated that "[i]t
is well settled that the federal courts have discretion to decline to
hear a declaratory judgment action, even though it is within their
jurisdiction." In Tempco, the Court of Appeals held
that the district court did not err in declining to exercise its
jurisdiction over a declaratory judgment action that was filed in
anticipation of a trademark infringement action, noting in relevant part:
Where, as here, the declaratory judgment action is
filed in anticipation of an infringement action,
the infringement action should proceed, even if
filed four days later. . . . In [certain]
circumstances, a federal court may grant a
declaratory judgment to prevent one party from
continually accusing the other, to his detriment,
without allowing the other to secure an
adjudication of his rights by bringing suit.
However, [defendant] has not engaged in such
conduct. It promptly [filed] suit to enforce its
claim that Tempco had infringed its trademark.
Thus, a declaratory judgment would serve no useful
purpose and was properly denied. . . . [T]he mere
fact that Tempco filed its declaratory judgment
action first does not give it a "right" to choose
a forum. This circuit has never adhered to a rigid
"first to file" rule. . . . As we have noted
before, "The wholesome purpose of declaratory acts
would be aborted by its use as an instrument of
procedural fencing either to secure delay or to
choose a forum."
Id. at 749 (footnote omitted) (quoting American
Auto. Ins. Co. v. Freundt, 103 F.2d 613
, 617 (7th Cir. 1939)). Our
colleagues in this district have applied Tempco to dismiss
declaratory judgment actions where trademark infringement suits were
filed promptly thereafter. See, e.g., Wireless Mktg. Corp. v.
Cherokee Inc., No. 98 C 1406, 1998 WL 719944 (N.D. Ill. Oct. 6,
1998); Successories, Inc. v. Arnold Palmer Enters., Inc.,
990 F. Supp. 1044 (N.D. Ill. 1998).
Wilson maintains that we should not apply Tempco because
defendants filed the action in the Southern District of Ohio about
45 days after Wilson filed the instant action, and this does not
constitute a "promptly" filed infringement action. We acknowledge that
the case law cited by the parties applies Tempco to instances
involving a lapse of anywhere from 2 to 12 days between the filing of the
declaratory judgment action and the filing of the infringement action.
Nonetheless, we do not read Tempco or the district court
opinions as setting any particular time limit for an action to be
considered "promptly" filed. Under the circumstances, we believe that
defendants' infringement action was promptly filed.
Wilson also contends that Tempco does not apply because it
will be expensive and inconvenient for Wilson to litigate the dispute in
Ohio. This argument is not relevant to the principles of
Tempco, though; it is a venue argument that should be addressed
to the Ohio court. See Trippe, 46 F.3d at 629;
Successories, 990 F. Supp. at 1047.
In sum, Tempco controls this case. Defendants' prompt filing
of the Ohio trademark infringement action obviates the need for Wilson's
declaratory judgment action. Accordingly, in our discretion, we decline
to exercise jurisdiction.*fn1
For the foregoing reasons, defendants' motion to dismiss is granted.