-4-

Please provide us with your intended course of action to
alleviate our concerns by the end of February, 2003.

(Memorandum in Support of Motion, Ex. C, Letter from Scott A.
McCollister to Raymond M. Berens (“McCollister Letter”), February
11, 2003.)

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 uses. ]
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.


-9-
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.?

¥/ Defendants also argued in their motion and briefs that the court has
no personal jurisdiction over them, but we suggested that, at this juncture, the
parties focus on the subject matter jurisdiction issues because Wilson requested
discovery on the personal jurisdiction matter. In light of our ruling, it is not
necessary to address defendants’ personal jurisdiction arguments.



-6-
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 supra.

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 infringement



-~5-
DISCUSSION

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


-B-
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



Minute Order Form (06/97)

Sl

United States District Court, Northern District of Illinois

Name of Assigned Ju inj
ov Maglatrate Judge John F. Grady “than anipred Judge
CASE NUMBER 03 C 1520 DATE 1/6/2004
CASE Wilson Sporting Goods Company vs. Nicklaus Golf Equipment Co. et al
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION;

DOCKET ENTRY:

(1) oO Filed motion of [ use listing in “Motion” box above.]

(2) Oo Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer briefdue___.

(4) a Ruling/Hearing on___set for at

(5) a Status hearing[held/continued to] [set for/re-set for] on set for at

(6) o Pretrial conference[held/continued to] [set for/re-set for} on set for at.

) Oo Trial[set for/re-set for] on at

(8) Qa (Bench/Jury trial] [Hearing] held/continued to____—_at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) CiLocal Rule 41.1 OFRCP41(a)(1) OO FRCP41(a)(2).

do [Other docket entry] - ENTER MEMORANDUM OPINION: Defendants’ motion to dismiss is
granted. [7-1]

ay @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required.

Notices mailed by judge's staff.

Notified counsel by telephone.

Docketing to mail notices.

x Mail AO 450 form.

4YN99 Lalgisig “+
MYa19 asa

Copy to judge/magistrate judge.

62:8 WY 8- Ker ny
OT phledlindeleebel afin

centrat Clerk’s Office.

courtroom
deputy's
initials

AMM

Lh

mailing deputy initials



-10-
CONCLUSION

For the foregoing reasons, defendants’ motion to dismiss is

granted.

DATE: January 6, 2004

ENTER: aL

John F./Gragy, United States Distric idge



-7-
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

j
id

demanded that Wilson “cease and const |fet of the mark JACK. The

‘| Il : -
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
jurisdiction.
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 infringement action.

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



-3-

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 laws.

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.



-2-
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



03-1520.041-JCD January 6, 2004

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
WILSON SPORTING GOODS COMPANY,
Plaintiff,
v. No. 03 C 1520
NICKLAUS GOLF EQUIPMENT COMPANY,

L.L.C, GOLDEN BEAR INTERNATIONAL,
INC., and JACK NICKLAUS,

Defendants.

MEMORANDUM OPINION

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.

BACKGROUND

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

Va