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ONTEL PRODS. v. PROJECT STRATEGIES CORP.

September 13, 1995

ONTEL PRODUCTS, INC., d/b/a PET & GROOM, Plaintiff, against PROJECT STRATEGIES CORP. and STEPHEN ZISKIND, Defendants.


The opinion of the court was delivered by: HAROLD BAER, JR.

 HAROLD BAER, JR., United States District Judge

 I. FACTS

 Defendant Project Strategies Corporation ("P.S.C.") sells a pet grooming device that it advertises through various media including television. The product is the "pet mitt" that enables pets to be groomed by a glove that pulls off loose hair from the pet. It packages this product with a label that reads "As Seen On TV." P.S.C. is incorporated in and has its only place of business in Florida. It discovered that plaintiff Ontel Products ("Ontel"), which has its principal place of business in New Jersey, was selling a different pet grooming device with the claim that it is "Similar To Those Seen On TV." *fn1"

 P.S.C. informed Ontel that because Ontel does not advertise its own pet grooming device on television, Ontel's packaging violates P.S.C.'s rights. Ontel, meanwhile, informed P.S.C. that P.S.C. was harming Ontel's sales of its product by creating the allegedly incorrect impressions to market participants, through advertising, threatened lawsuits, and other means, that (1) Ontel's product violates a P.S.C.-owned patent, and (2) Ontel's use of the "Similar To Those Seen On TV" phrase on its packaging infringes P.S.C.'s rights. The parties entered settlement negotiations, but while the negotiations were ongoing, P.S.C. claims that Ontel filed the instant suit in order to choose the venue of the Southern District of New York rather than the District of New Jersey where P.S.C. could be expected to file a lawsuit if settlement did not transpire.

 Ontel filed this action for a declaratory judgment holding that the packaging of its pet grooming device did not infringe P.S.C.'s rights. In addition, Ontel seeks damages for anti-trust violations, unfair competition, false advertising, various commercial torts, and illegal patent marking, and requests an injunction enjoining defendants, inter alia, from

 
interfering with [Ontel's] existing or potential contracts to sell pet mitt product[s] by implying to [Ontel's] suppliers and/or potential suppliers, customers, potential customers and/or to the trade or consuming public that [Ontel's] pet mitt products are somehow illegal, or not totally free to be sold without authorization of [P.S.C.] . . . .

 Am. Compl. P 4(e). *fn2" Later that same day, P.S.C. filed a suit in the District of New Jersey alleging violation of the Lanham Act and seeking damages. P.S.C. brought the instant motion to (1) dismiss Ontel's suit for lack of personal jurisdiction or improper venue; (2) transfer for forum non conveniens to the District of New Jersey; or (3) dismiss the action, or stay it pending disposition of the District of New Jersey proceeding.

 For the reasons below, P.S.C.'s motions are granted in part and denied in part. I conclude that the dispute should be resolved here. The parties are therefore enjoined from pursuing the District of New Jersey action, which action has been held in abeyance by the District of New Jersey pending resolution of the instant motions.

 II. DISCUSSION

 A. Personal Jurisdiction

 1. P.S.C.

 The extent to which P.S.C. "does business" in New York State subjects it to personal jurisdiction here pursuant to N.Y. Civ. Prac. L. & R. ("CPLR") 301. *fn3" P.S.C.'s transaction of business here includes, among other activities:

 (i) an ongoing relationship with Just Packaging, Inc. (which is located in the Eastern District of New York), an independent New York packaging and distribution center that receives the pet grooming mitts from abroad, repackages them, and ships them out to fulfill 80% of P.S.C.'s orders from within and without New York State, Pl.'s Mem. L. Opp'n at 5-6 (citing Decl. of Def. Ziskind);

 (ii) a contract with a Manhattan based company, Media Syndication Group (MSG) (which is located in the Southern District of New York), giving it exclusive print media advertising and corresponding distribution rights. MSG purchases pet mitts from the Hong Kong manufacturer and P.S.C. receives commissions on MSG's purchases; and

 (iii) a relationship with Emson, a Manhattan based distributor (which is located in the Southern District of New York), whereby P.S.C. has granted Emson the right to sell to retail markets ...


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