ESKAY Corp., the first new business to locate in the state as a result of Gov. Norm Bangerter's recent overseas trade mission, is being sued for deceptive trade practices along with ESKAY President James K. Allred.

The lawsuit was filed Monday by Eaton-Kenway, which markets the same type of warehouse-automation products that ESKAY will sell, just one day before the governor welcomed ESKAY to the state at a press conference.According to a press release from Eaton-Kenway, the suit charges that the corporation and Allred "have been asserting falsely that Mr. Allred was a co-founder of Eaton-Kenway in order to unfairly gain a product sales advantage."

The release states the legal action was taken "because the actions of the defendants improperly trade on and dilute the goodwill and business reputation developed by Eaton-Kenway over a period of 25 years."

During the Tuesday press conference called to welcome the company, Allred said he considers himself a co-founder of the Salt Lake-based Eaton-Kenway even though he joined the company in 1967, three years after it was started.

Allred said nearly all of Eaton-Kenway's business came after he helped change its focus from engineering services to automated storage and retrieval systems.

"He was definitely significant to the company," Eaton-Kenway spokeswoman Duanne Struck said. "We're just protecting our name and those of our deceased co-founders," Salt Lake businessmen Kenneth A. Richins and Wayne S. Brown.

Allred, who most recently was director of factory automation for Intel Corp., is joined in the ESKAY joint venture by Dean Jolley, president of Auto-Soft Corp., a Bountiful software firm, and Daifuku U.S.A. Inc.

Daifuku U.S.A. Inc., which owns 80 percent of ESKAY, is a subsidiary of Daifuku Co. Ltd., the world's largest producer of automated storage and retrieval systems with $700 million in sales in 1989.

ESKAY should have 10 employees within a few weeks, Allred said, to market the systems which utilize robots that travel the aisles of warehouses to retrieve products cataloged by computer.

The work force could double by the end of the year, he said. "The growth after that is dependent on how successful we are in selling the product," Allred said.

Utah economic development officials hope ESKAY will eventually employ as many as 200 employees, possibly someday manufacturing the systems here instead of in Japan.

"The initial presence of ESKAY Corp. will seem small, but their plans for the next few years should see ESKAY become a significant Utah employer and a major exporter of goods," Bangerter said during the press conference.

The governor visited the Tokyo headquarters of Daifuku last month during his trade mission to Europe, the Soviet Union and the Far East. This is the first announcement of a company locating in Utah since the governor returned.