Au New Haven, LLC et al v. YKK Corporation

Filing 794

MEMORANDUM OPINION AND ORDER re: 656 MOTION Motion to Determine the Ambiguity of the Term "High-End Outerwear" filed by YKK Vietnam Co., Ltd., YKK (Thailand) Co., Ltd., Dalian YKK Zipper Co., Ltd., YKK Austria GMBH, Y KK Korea Co., Ltd., YKK Fastening Products Sales Inc., YKK Bangladesh Pte. Ltd., YKK France Sarl, YKK Hong Kong Ltd., P.T. YKK Zipper Indonesia, Shanghai YKK Zipper Co., Ltd., Shanghai YKK Trading Co. Ltd., YKK Canada, YKK (U.S.A.) Inc., YKK Metal Ve Plastik Urunleri Sanayi Ve Ticaret A.S., YKK Zipper (Shenzhen) Co., Ltd., YKK Taiwan Co., Ltd, YKK Italia S.P.A., OOO YKK a/k/a YKK Russia, YKK (UK) Ltd., YKK Corporation, YKK Canada Inc., YKK Deutschland GMBH. For the reasons stated above, the Court concludes that the term "high end outerwear" as used in the ELA is ambiguous. The meaning of the term is to be determined by a finder of fact looking to extrinsic evidence of the parties' intentions at the time of contract formation. The Clerk of Court is directed to terminate the motion pending at Dkt. No. 656. SO ORDERED. (Signed by Judge Gregory H. Woods on 2/26/2022) (va)

Case 1:15-cv-03411-GHW-SN Document 794 Filed 02/26/22 Page 1 of 9

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------------------------------------X
AU NEW HAVEN, LLC and TRELLEBORG
:
COATED SYSTEMS US, INC.,
:
:
Plaintiffs, :
:
-v :
:
YKK CORPORATION, YKK HONG KONG :
LTD., YKK FASTENING PRODUCTS SALES :
INC., SHANGHAI YKK ZIPPER CO., LTD., :
SHANGHAI YKK TRADING CO., LTD., YKK :
CANADA INC., YKK TAIWAN CO., LTD., P.T. :
YKK ZIPPER INDONESIA, YKK
:
BANGLADESH PTE. LTD., YKK KOREA CO., :
LTD., YKK FRANCE SARL, DALIAN YKK
:
ZIPPER CO., LTD., YKK VIETNAM CO.,
:
LTD., YKK DEUTSCHLAND GMBH, YKK
:
(THAILAND) CO., LTD., YKK (U.K.) LTD.,
:
YKK ZIPPER (SHENZHEN) CO., LTD., YKK :
AUSTRIA GMBH, YKK ITALIA S.P.A., OOO :
YKK a/k/a YKK RUSSIA, YKK METAL VE
:
PLASTIK URUNLERI SANAYI VE TICARET :
A.S., and YKK (U.S.A.) INC.
:
:
Defendants.:
---------------------------------------------------------------- X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 2/26/2022

1:15-cv-3411-GHW
MEMORANDUM OPINION
AND ORDER

GREGORY H. WOODS, District Judge:
I.

INTRODUCTION
Au New Haven, LLC and Trelleborg Coated Systems US, Inc. (collectively, “Plaintiffs”),

filed this action against YKK Corporation (“YKK”) and several of its affiliates (collectively,
“Defendants”), alleging patent infringement and breach of a licensing agreement. This opinion
resolves one narrow question among the many presented to the Court in this case: is the term “high
end outerwear” as used in the parties’ contract ambiguous? Because the term suggests various
meanings, it is ambiguous and its meaning must be determined by the finder of fact from the
extrinsic evidence presented by the parties.

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II.

BACKGROUND
The parties entered into the Exclusive License Agreement that is at the heart of this dispute

on February 13, 2002, just over 20 years ago. Dkt. No. 406-3 (the “ELA”). The ELA granted YKK
a license to manufacture and sell waterproof zippers. Paragraph 1 of the ELA describes the scope
of the license as follows:
[Harold Hoder and Stuart Press] hereby grants to the Company an
exclusive, worldwide right to manufacture, use, sell, offer for sale and
otherwise use and practice the invention contained in U.S. Patent No.
6,105,214, corresponding applications in Taiwan, Canada, Japan and
the European Patent Office, along with any re-issue, other foreign
filing, continuation or improvement of same (hereafter “The
Patents”), except for zippers placed in finished goods in the high end
outerwear, marine, military and luggage (excluding sports and cosmetic
bags) markets (collectively hereafter “Zippers”).
ELA ¶ 1 (emphasis added).
The Court has already examined Paragraph 1 of the ELA in its entirety and concluded that
the paragraph as a whole unambiguously embodies a license to use the patented technology and that
it is not a covenant not to compete. See Dkt. Nos. 425; 454. The only question presented here is
whether the term “high end outerwear,” is ambiguous as used in the agreement.
In their briefing, Defendants describe Plaintiffs’ shifting positions regarding whether or not
the term is ambiguous. In the initial conference with the Court, Plaintiffs’ counsel took the position
that the term was ambiguous and that extrinsic evidence would be required to construe the meaning
of the term.1 In his deposition, Stuart Press, who entered into the ELA with YKK, testified that
“high end outerwear” “is a term of art in the industry that would include but not be limited to, the
type of material used, he design of the jacket, the fit of the jacket, the look of the jacket and the

Transcript of July 2, 2015 Conference, Dkt. No. 36, 5:11-22 (MR. SCHAEFER [Plaintiffs’ Counsel]: Your Honor, we
do not believe that there is any need for extrinsic evidence with respect to marine, military and luggage. We do believe
there would be a basis for extrinsic evidence on the meaning of high end outerwear. . . . MR. WHITMER [Defendants’
Counsel]: Could I interrupt you, your Honor? I did not hear the first part of counsel’s statement. THE COURT: You
heard the most important part, which is that he agrees with you that extrinsic evidence is necessary to construe the
meaning of high end outerwear.”).

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performance of the jacket and the features of the jacket, and it is the sort of thing that when you see
it and wear it, you know it.” Declaration of Steven Cherny (“Cherny Decl.”), Ex. B, Dkt. No. 661,
at 207:21-208:7.
Over the course of his dealings with YKK, Mr. Press presented more concrete, but varying,
definitions of the term. At one point, according to YKK, Mr. Press described high end outerwear
solely by focusing on products sold by particular companies (North Face, Marmot, Arc’teryx). DX506. When asked to present a formal definition of the term, Mr. Press, through counsel, proposed
an understanding of the meaning of the term that included not only products made by specified
manufacturers, but also jackets made of certain types of fabric, jackets costing more than $150 at
retail, outerwear used in identified sports, and even “[o]uterwear jackets having more than two
zippers” as well as “[o]uterwear pants having any zippers.”2 DX-553. “High end outerwear,” thus,
could be defined alternatively by reference to style, price, quality of material, use, and even zipper
count.
The representative of YKK who signed the ELA, Masayuki Sarumaru, provided a somewhat
different understanding of the meaning of the term “high end outerwear” in his deposition. He
testified that the he understood the phrase “high end outerwear market” as follows: “My
understanding was that it was this was outerwear that was quite expensive, it was a luxury item and
that these this outerwear would be made in North America and a sort of representative one would
be those made by Arc’teryx.” Cherny Decl., Ex. C, Dkt. No. 660, at 118:15-22. He also testified
that “what I can say is that when I signed this agreement my understanding was that the high end

DX-553 (“you had requested from us that our definition of high-end outerwear for consideration of the meters made
in Japan. While this may not be a definition, it should provide you our understanding of industry standards as well as
our view of high-end: Outerwear jackets having more than two zippers; Outerwear pants having any zippers; Product,
including Gore-Tex. . . . Product including Torray fabric. . . . Outwear jackets sold at retail for more than $150 . . . .
Specialty outerwear for outdoor sports, including but not limited to hiking, skiing, snowboarding, cycling, running and
extreme sports. Outwear sold at retail by, but not limited to: Patagonia, North Face, Hammut, Seattle Sports, Mountain
Equipment coop, Helly Hansen, Moons Mountain Hardware, Adidas, Solomon, Eastern Mountain Sports, REI.”)

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market was one wherein the product was a high performance product, priced high and something
that was made in North America.” Id. at 133:17-22. Like the definitions proffered by Mr. Press, Mr.
Sarumaru testified that “high end” could refer to the price of the product, the manufacturer, the
quality and the use of the product. Mr. Sarumaru’s testimony calls out an additional potential
limitation on the meaning of the term—namely that “high end outerwear” refers only to products
manufactured in a particular geographic area: North America.
While Plaintiffs are now taking the position that the term “high end outerwear” is entirely
unambiguous, their volte face regarding the ambiguity of the term seems principally motivated by a
concern that the trier of fact might decide that the term high end outerwear indeed embraces the
geographic limitation advanced by Mr. Sarumaru in his deposition testimony. Memorandum of Law
in Opposition, Dkt. No. 674 (the “Opposition”), at 1 (“the only dispute, therefore, is whether ‘high
end’ also means ‘made in North America,’ as YKK contends.”). If all products manufactured
outside of North America are not “high end outerwear,” Plaintiffs’ claim for damages against
Defendants will be significantly reduced.
The issue of whether the phrase “high end outerwear” is ambiguous has been percolating
since the very first conference in this case. Defendants filed a motion asking that the Court
determine whether the phrase is ambiguous years after that first conference, together with a
supporting memorandum of law. Dkt. No. 656; 659. Plaintiffs filed their Opposition in response to
the motion; and the motion was fully briefed with Defendants’ reply. Dkt. No. 685.
III.

LEGAL STANDARD
The ELA is governed by New York law. ELA ¶ 13. Under New York law, “[w]hen

interpreting a contract, our ‘primary objective . . . is to give effect to the intent of the parties as
revealed by the language of their agreement.’” Chesapeake Energy Corp. v. Bank of New York Mellon Tr.
Co., 773 F.3d 110, 113–114 (2d Cir. 2014) (quoting Compagnie Financiere de CIC et de L’Union

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Europeenne v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 232 F.3d 153, 157 (2d Cir. 2000)). “The words
and phrases in a contract should be given their plain meaning, and the contract should be construed
so as to give full meaning and effect to all of its provisions.” Id. at 114 (brackets omitted) (quoting
Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89, 99 (2d Cir. 2012)).
As a “threshold question,” courts must consider if “the terms of the contract are
ambiguous.” Alexander & Alexander Servs., Inc. v. These Certain Underwriters at Lloyd’s, 136 F.3d 82, 86
(2d Cir. 1998). “Whether or not a writing is ambiguous is a question of law to be resolved by the
courts.” Orlander v. Staples, Inc., 802 F.3d 289, 294 (2d Cir. 2015) (quoting W.W.W. Assocs., Inc. v.
Giancontieri, 77 N.Y.2d 157, 162 (1990)). “Ambiguity is determined by looking within the four
corners of the document, not to outside sources.” CVS Pharmacy, Inc. v. Press Am., Inc., 377 F. Supp.
3d 359, 374 (S.D.N.Y. 2019) (quoting JA Apparel Corp. v. Abboud, 568 F.3d 390, 396 (2d Cir. 2009));
see also Brad H. v. City of New York, 17 N.Y.3d 180, 186 (2011) (“Ambiguity is determined within the
four corners of the document; it cannot be created by extrinsic evidence that the parties intended a
meaning different than that expressed in the agreement . . . .”).
Courts consider a contract unambiguous when it has “a definite and precise meaning,
unattended by danger of misconception . . . and concerning which there is no reasonable basis for a
difference of opinion.” Olin Corp., 704 F.3d at 99 (quoting Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889
F.2d 1274, 1277 (2d Cir. 1989)). “The language of a contract . . . is not made ambiguous simply
because the parties urge different interpretations.” Oppenheimer & Co. v. Trans Energy, Inc., 946 F.
Supp. 2d 343, 348 (S.D.N.Y. 2013) (internal quotation marks omitted) (quotation omitted).
Courts analyze ambiguity using the “normal rules of contract interpretation: words and
phrases should be given their plain meaning and a contract should be construed as to give full
meaning and effect to all of its provisions.” Orchard Hill Master Fund Ltd. v. SBA Commc’ns Corp., 830
F.3d 152, 157 (2d Cir. 2016) (internal quotation marks omitted) (quoting Orlander, 802 F.3d at 295);

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see also Brad H., 17 N.Y.3d at 185 (“To determine whether a writing is unambiguous, language should
not be read in isolation because the contract must be considered as a whole.”). “A contract is
ambiguous under New York law if its terms could suggest more than one meaning when viewed
objectively by a reasonably intelligent person who has examined the context of the entire integrated
agreement and who is cognizant of the customs, practices, usages and terminology as generally
understood in the particular trade or business.” Orchard Hill Master Fund Ltd., 830 F.3d at 156–57
(quoting Chesapeake Energy Corp., 773 F.3d at 114).
Where terms used in a contract are asserted to have specialized meaning in a particular trade
or business, parties must present evidence of the custom and usage of the terms to the court.
Evidence as to such custom and usage is to be considered by the court where
necessary to understand the context in which the parties have used terms that are
specialized. When the parties have used contract terms which are “in common use
in a business or art” and have “a definite meaning understood by those who use
them,” but which “convey no meaning to [t]hose who are not initiated into the
mysteries of the craft,” the parties, in order to have the court construe their
contracts, “must furnish [the court] with the dictionaries they have used.” In such
circumstances, the court “must be informed of the meaning of the language as
generally understood in that business, in the light of the customs and practices of the
business.” Proof of custom and usage does not mean proof of the parties’ subjective
intent, for “[e]xtrinsic evidence of the parties’ intent may be considered only if the
agreement is ambiguous,” . . . . Rather, proof of custom and usage consists of proof
that the language in question “is ‘fixed and invariable’ in the industry in question.”
The trade usage must be “so well settled, so uniformly acted upon, and so long
continued as to raise a fair presumption that it was known to both contracting parties
and that they contracted in reference thereto.”
L. Debenture Tr. Co. of New York v. Maverick Tube Corp., 595 F.3d 458, 465–68 (2d Cir. 2010) (internal
citations omitted).
IV.

ANALYSIS
The phrase “high end outerwear” is ambiguous. At the outset, neither party argues that the

term has a specialized industry definition. All parties point to contemporary dictionary definitions

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of the term “high-end.”3 The Webster’s New World College Dictionary(4th ed.) defined the term as
“ expensive and of very high quality.” Cherny Decl., Ex. D. The 2000 American Heritage
Dictionary (4th ed.) defined the term as “[a]ppealing to sophisticated and discerning customers . . . .”
Id. The 2001 New Oxford American Dictionary defined the term as “denoting the most expensive
of a range of products.” Id. And the 2001 Random House Webster’s College dictionary defined the
term as “being the most expensive and technically sophisticated.” Id.
The very array of potential meanings of “high-end” revealed in these definitions make the
term “high end outerwear” ambiguous. Depending on the dictionary definition used, a product
might be high end only because it is expensive, regardless of its style or technical sophistication
(New Oxford definition). It might be expensive, but not high end unless also technically
sophisticated (Random House Webster’s definition). It might appeal to discerning customers as a
result of its features regardless of price or technical sophistication (American Heritage definition).
Each of these definitions are feasible, but they vary in meaning. Because the term “high end
outerwear” suggests more than one meaning, it is ambiguous.
Having found that the term is ambiguous, it is for the trier of fact to discern the parties’
intentions at the time of formation of the contract. The Court cannot conclude as a matter of law
that the phrase does not include a geographical limitation, as Plaintiffs request. Plaintiffs argue that
“[b]ecause none of the dictionary definitions of ‘high end’ delineate between items only made in
North America and items made elsewhere, high end outerwear cannot reasonably be interpreted to
mean only outerwear made in North America. Overall, YKK is attempting to add an additional,
unexpressed term to the License Agreement.” Opposition at 11.
There are two principal issues with Plaintiffs’ argument. First, one contemporary dictionary
definition of the term defines “high-end” as “[a]ppealing to sophisticated and discerning customers .
3

Neither party asserts that the word “outerwear” standing on its own is ambiguous.

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. . .” This definition might encompass a geographical limitation. The Court cannot conclude as a
matter of law that the “sophisticated and discerning” customer of 2002 did not only find appealing
outerwear made in certain geographic regions, whether because of the perceived quality of clothing
made in Asia at the time or otherwise.
Second, the outcome of a determination regarding the ambiguity of a contractual term is
directed by a simple toggle switch: If the contractual term is unambiguous, the Court can state its
meaning. If, however, the term is ambiguous and the parties present extrinsic evidence of its
meaning, it is for the finder of fact to determine its meaning. After much searching, the Court has
not found a single case in which a New York court has determined that a term is ambiguous, and at
the same time put guardrails around what the finder of fact can conclude the term means. The
Court cannot determine that the term high end outerwear is ambiguous in part—in that it may
encompass varying understandings of the term based on price, technology, design, and “appeal”—
and at the same time rule that the term unambiguously does not encompass a limitation based on
geography. Once the Court determines that the term is ambiguous, it is for the finder of fact to
discern its meaning from the extrinsic evidence presented by the parties.4
To determine the meaning of an ambiguous term, the finder of fact may consider “extrinsic
evidence as to the parties’ intent . . . ” in the formulation of the contract. JA Apparel Corp. v. Abboud,
568 F.3d 390, 397 (2d Cir. 2009). The testimony of Plaintiffs’ expert, Mr. Cockrell, cannot be
introduced as extrinsic evidence of the parties’ intent. Plaintiffs acknowledge that he has nothing to

A court “may resolve the ambiguity in the contractual language as a matter of law if there is no extrinsic evidence to
support one party’s interpretation of the ambiguous language or if the extrinsic evidence is so-one sided that no
reasonable factfinder could decide contrary to one party’s interpretation.” Compagnie Financiere de CIC et de L’Union
Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 159 (2d Cir. 2000). Here, there is extrinsic evidence
of the meaning of the term. In this motion, the Court is asked only to make a threshold determination regarding
whether the words of the contract are ambiguous, not to decide the meaning of the term based on an assessment of the
extrinsic evidence. Of course, the Court might ultimately determine as a matter of law that no reasonable fact finder
could support a party’s view of the meaning of the term in response to a motion under Federal Rule of Civil Procedure
50 or otherwise.

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offer regarding the intentions of the parties at the time. Opposition at 17 (“Cockrell does not
purport to opine as to the meaning of the License Agreement . . . .”). Instead, Plaintiffs offer Mr.
Cockrell’s testimony as to the “qualitative factors recognized in the industry, and the application of
those factors to thousands of items of outerwear . . . .” Id.5
V.

CONCLUSION
For the reasons stated above, the Court concludes that the term “high end outerwear” as

used in the ELA is ambiguous. The meaning of the term is to be determined by a finder of fact
looking to extrinsic evidence of the parties’ intentions at the time of contract formation. The Clerk
of Court is directed to terminate the motion pending at Dkt. No. 656.
SO ORDERED.
Dated: February 26, 2022
New York, New York

_____________________________________
_____________________
__ _ __
_____________ _ __
____
_
GREGORY H
GREGORY H. WOODS
G R
United States District Judge
nited

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An issue to be determined is to what extent Mr. Cockrell’s definition deviates from the meaning ascribed to the term
by the finder of fact and whether, to the extent Mr. Cockrell’s definition deviates from the meaning of the term as
determined by the finder of fact, his testimony will indeed be helpful. Since the Court has determined that the term is
ambiguous, the Court invites the parties’ views regarding how best to stage the determination of that issue. The Court
previously asked if the parties were willing to put that evidentiary issue before the Court, or the assigned magistrate
judge, as the finder of fact in advance of trial. Other alternative proposals will be appreciated.

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