Au New Haven, LLC et al v. YKK Corporation

Filing 890

MEMO ENDORSEMENT re: 889 LETTER addressed to Judge Gregory H. Woods from Brian P. Daniels dated January 9, 2023 re: YKK's legally impermissible definition of "high end outerwear" (ECF 884); granting in part and denying in part 886 Motion re: 886 MOTION to Address Admissibility Issues with Certain of Plaintiffs' Exhibits for the High End Outerwear Trial . ENDORSEMENT: Application granted in part. The Court will take up this issue at the conference scheduled for January 13, 2023. SO ORDERED. (Signed by Judge Gregory H. Woods on 1/9/2023) (tg)

USDC1 SDNY
Case 1:15-cv-03411-GHW-SN Document 890 Filed 01/09/23 Page
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DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 1/9/2023
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

MEMORANDUM ENDORSED
---------------------------------------------------------------AU NEW HAVEN, LLC, and
:
TRELLEBORG COATED SYSTEMS US, INC., :
:
Plaintiffs,
:
:
v.
:
:
YKK CORPORATION et al.,
:
:
Defendants.
:
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CIVIL ACTION NO.
15-CV-03411-GHW-SN

January 9, 2023

Honorable Gregory H. Woods, United States District Judge
Daniel Patrick Moynihan United States Courthouse
500 Pearl St.
New York, NY 10007-1312
Re:

YKK’s legally impermissible definition of “high end outerwear” (ECF 884)

Dear Judge Woods:
Plaintiffs request that the Court add to the agenda for the scheduled January 13, 2023,
pretrial conference the following important, and potentially dispositive, issue: how, or even
whether, the January 23, 2023, trial should proceed in light of YKK’s newly minted, fourth
definition of “high end outerwear” (“HEO”) which objectively and impermissibly (1) renders the
HEO exclusion in the Exclusive License Agreement (the “ELA”) entirely meaningless and (2)
falls outside all feasible definitions of HEO. Under New York law, even where a contract term
may, on its face, have several “feasible” definitions that “vary in meaning,” see ECF 794 at 7, a
court should not find a triable dispute of fact if one party urges “an interpretation that effectively
renders [the contract term] meaningless,” Republic of Rwanda v. Ferone, 307 F. App'x 600, 602
(2d Cir. 2009) (summary order), or “strain[s] the contract language beyond its reasonable and
ordinary meaning.” Law Debenture Tr. Co. of New York v. Maverick Tube Corp., 595 F.3d 458,
467 (2d Cir. 2010) (internal quotations omitted). YKK’s new definition does both.
Rule 16(c)(2)(A) of the Federal Rules of Civil Procedure empowers the Court, at any
pretrial conference, to “consider and take appropriate action on … formulating and simplifying
the issues, and eliminating frivolous claims or defenses.” And Federal Rules of Evidence
(“FRE”) 401 and 403 empower the Court to exclude irrelevant and unduly prejudicial evidence.
For the reasons that follow, this Court should preclude YKK’s new, last minute definition of
HEO from being presented to the jury.

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I.

YKK’s new definition impermissibly renders the HEO exclusion meaningless.

The fundamental issue in this patent dispute is the scope of the substantive limitations
expressly placed on the patent rights that Plaintiffs licensed to YKK in the ELA. YKK now at the
11th hour has proposed a definition that results in no HEO exclusion at all, namely: “Outerwear
sold in a luxury market by garment manufacturers willing to pay higher prices for zippers
laminated by Uretek in New Haven and accept the delivery times associated with such zippers.”1
ECF 884. In effect, YKK now contends that any outerwear using YKK-laminated zippers (T8,
T9, and T10), including outerwear sold in the so-called “luxury market,” is not HEO by
definition solely because YKK (not Uretek) put the laminate film on the cloth stringer tapes
before YKK finished the manufacture of the final zipper product, a fact that no outerwear
consumer in 2002 or at any other time could ever know. See PX-11A & B (zipper components);
compare PX-14 (T4) & PX-18B (T8); see also Sarumaru Depo. Tr. 324:12-24 (explaining the
manufacturing process). Under this definition, YKK illogically could sell YKK-laminated
zippers to any outerwear manufacturer for use in any outerwear finished goods without ever
exceeding the scope of its limited patent rights because such outerwear, by YKK’s definition,
could not be HEO. The outerwear’s quality or where it was made suddenly no longer matters.2
YKK’s definition impermissibly would “have the effect of rendering” the ELA HEO
exclusion “superfluous and meaningless.” See Nashua Corp. v. Norton Co., 1994 WL 144251,
*7 (N.D.N.Y. 1994). “[I]t would be unreasonable to conclude that the parties ... would have
written an entire, separate contractual provision … expressly” excluding HEO from YKK’s
licensed patent rights “and then define [that exclusion] out of existence.” Id. (internal quotation
marks omitted). No reasonable patent owner would expressly exclude a field of use from a
patent license only to then define that exclusion such that it never could encompass any sales of
otherwise unauthorized, infringing products by the licensee. As a matter of law, no triable
dispute of fact exists when one party, like YKK here, urges “an interpretation that effectively
renders [the contract term] meaningless.” Republic of Rwanda, 307 F. App’x at 602.
YKK’s new definition also disregards the fundamental nature of patents underlying this
case. The main benefit of a patent is the ability to exclude others from practicing the invention.
The express purpose of the ELA was to permit YKK to sell YKK-laminated zippers in all
markets except the four excluded markets. An outerwear manufacturer’s decision not to use
Plaintiff-laminated zippers in their HEO (for whatever reason) could not expand the scope of
Nowhere does YKK provide a definition of “luxury market,” nor has YKK disclosed an industry expert opining on
what constituted the “luxury market” from 2002 through 2019. In any event, YKK’s Fed. R. Civ. P. 30(b)(6)
corporate designee, Akinobu Shibata (“Shibata”), testified that, while “luxury” as he used the term means
“something that has special value,” luxury was not defined by price. Shibata Depo. Tr. 26:25-27:5. Shibata then
testified that YKK would determine whether outerwear is in the luxury category by “[w]hether it is made in North
America.” Id. 27:6-9. When asked whether any luxury finished goods were made outside of North America, Shibata
testified that he did not know. Id. 27:9-12. Masayuki Sarumaru (“Sarumaru”), in turn, testified that, when he signed
the ELA, he understood HEO to mean a “luxury item” that “would be made in North America.” Sarumaru Depo. Tr.
118:14-22. But YKK has since disavowed any definition of HEO that includes an express or implied “made in North
America” geographic limitation (ECF 819 at 2-3), so even YKK’s current HEO definition is impermissibly vague.
1

For example, under YKK’s proposed definition, outerwear manufactured by Arc’teryx would be HEO when YKK
sold Arc’teryx Plaintiff-laminated T4 or T5 zippers, but those exact same styles of Arc’teryx outerwear allegedly
would not be HEO if YKK sold Arc’teryx YKK’s indistinguishable YKK-laminated T8 or T10 zippers.
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rights granted to YKK or otherwise unilaterally amend the ELA to give YKK the right to sell
YKK-laminated zippers for HEO use, even if that meant YKK and/or Uretek might lose
revenues. Uretek retained the HEO patent rights for itself. If YKK refused to insist that
manufacturers purchase only Plaintiff-laminated zippers (T4 and T5) for use in HEO, Uretek was
free to find another zipper manufacturer with whom Uretek could pursue those HEO sales.
This undisputed fact has tormented YKK from the beginning. YKK’s conspicuous
reluctance to articulate any definition of HEO as trial approached evidenced YKK’s struggle to
come up with a definition (1) to which Sarumaru and Shibata would be willing to testify under
oath, subject to the penalties of perjury in a United States federal court, (2) that has even the
slightest appearance of alleged factual support in the record, and (3) that also would absolve
YKK of all liability to Plaintiffs. See 12/21/22 Tr. 90:9-90:17 (YKK’s counsel: “Well, I’m
reluctant to pin it down.”). Now that YKK has been forced to pin down its definition of HEO,
this Court should evaluate that definition as if that were the definition contended by YKK
before the Court entered its HEO ambiguity order. And because YKK’s new, fourth
definition would render the HEO exclusion effectively meaningless, the Court should now
conclude as a matter of law that YKK’s definition cannot be presented to, much less than be
allowed to be adopted by, the jury.3
Nor is waiting for the jury to return a verdict before deciding this issue an option. The
jury will consist of six to eight (likely non-attorney) people who must reach a unanimous verdict.
Allowing YKK to submit evidence or argument in support of this impermissible definition would
be extremely prejudicial to Plaintiffs because even if only one juror unreasonably adheres to
YKK’s impermissible definition, that may lead to improper jury compromises when otherwise
the jury would have unanimously accepted Plaintiffs’ definition as its verdict.
II.

YKK’s new contention undisputedly falls outside any feasible definition of HEO.

A court also should not submit extrinsic evidence of the parties’ intentions to the jury
unless the parties urge two conflicting, plausible interpretations that are each consistent with a
feasible definition of the language used, but that nevertheless substantively vary in meaning visà-vis the case sub judice. YKK recognized this rule of law in its HEO briefing: “for the Court to
accept [Plaintiffs’] proffered definition as the unambiguous meaning of ‘high end’ as used in the
ELA, the Court must find YKK’s interpretation to be unreasonable.” ECF 685 at 9.
YKK did not serve its fourth definition of HEO on Plaintiffs until 6:17 pm on January 6, 2023, apparently needing
every last minute to formulate a new litigation strategy. YKK, of course, only needed to ask Sarumaru what he
meant by HEO when he signed the ELA, just as Plaintiffs did in Sarumaru’s deposition. See Sarumaru Depo. Tr.
119:18-119:23 & 164:02-169:25 (HEO was determined by the characteristics of the outerwear and whether it was
made in North America); see also ECF 794 at 4. Plaintiffs note that as soon as YKK successfully obtained the HEO
ambiguity order from this Court (ECF 794) based on YKK’s qualitative and made in North America definition,
YKK proposed a second definition of HEO, namely, “that the parties intended HEO to reflect the market where a
manufacturer was willing to pay more and wait longer for delivery of a laminated zipper.” ECF 819 at 2, 4 & 5.
After the Court denied YKK’s request to move for summary judgment on that second definition, YKK pivoted to a
third definition of HEO, one that focused on the outerwear manufacturer’s relative proximity to Uretek’s New
Haven, Connecticut factory, namely, “a participant in the HEO market had to be in reasonable proximity to the
manufacturing facilities (so as to minimize wait times) and had to sell items that could bear the additional cost of an
American-made laminated zipper when compared to the Asian competition.” ECF 854 at 2. With each iteration,
YKK’s proffered definition strayed farther from any reasonable and ordinary meaning of HEO and from the truth.
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YKK’s new definition of HEO abandons all pretense of reasonableness.4 This is
problematic for YKK because the “normal rules of contract interpretation” mandate that “words
and phrases ... should be given their plain meaning.” Orlander v. Staples, Inc., 802 F.3d 289, 295
(2d Cir. 2015) (quoting Shaw Grp. Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 121 (2d Cir.
2003)). Indeed, when interpreting a contract, a court is “not free to alter the plain terms of an
agreement or to strain language beyond its reasonable and ordinary meaning.” Shaw Grp. Inc.,
322 F.3d at 124. “[A]s in all cases involving contract interpretation,” the “words and phrases
used by the parties must … be given their plain meaning.” Ellington v. EMI Music, Inc., 24
N.Y.3d 239, 244 (2014) (emphasis added) (quoting Brooke Grp. Ltd. v. JCH Syndicate 488, 87
N.Y.2d 530, 534 (1996)). This rule is especially applicable here, where “neither party argues that
the term has a specialized industry definition.” ECF 794 at 6.
Although courts consider a contract unambiguous when it has “a definite and precise
meaning,” a contract “is not made ambiguous simply because the parties urge different
interpretations.” ECF 794 at 5 (citations omitted). Even where, in a vacuum, several “definitions
are feasible, but they vary in meaning,” id. at 7, a “court should not find the contract ambiguous
where the interpretation urged by one party would ‘strain the contract language beyond its
reasonable and ordinary meaning.’” Law Debenture Tr. Co. of New York, 595 F.3d at 467
(quoting Bethlehem Steel Co., 2 N.Y.2d at 459). “Nor is ambiguity created because one party
attaches a particular, subjective meaning to a term that differs from the term’s plain
meaning.” Thompson v. Mun. Credit Union, 2022 WL 2717303, *4 (S.D.N.Y. 2022).
Because “[t]he admission of extrinsic evidence to cure ambiguities … is an act of
contract interpretation, not contract reformation,” a court should never resort to extrinsic
evidence to “distort the meaning of those [terms] used and thereby make a new contract for the
parties under the guise of interpreting the writing.” Acranom Masonry, Inc. v. Wenger Constr.
Co., 2017 WL 4358751, *12 (E.D.N.Y. 2017) (emphasis added) (citing Collins v. HarrisonBode, 303 F.3d 429, 433-35 (2d Cir. 2002)). Rather, extrinsic evidence may be used solely “for
the limited purpose of resolving a specific ambiguity in the written agreement.” Id.
Whether a jury is needed to resolve a specific ambiguity depends on whether each party
has stated a facially reasonable interpretation. For example, in Hunt Ltd. v. Lifschultz Fast
Freight, Inc., 889 F.2d 1274, 1275 (2d Cir. 1989), the defendant agreed to pay the plaintiff, a
personnel placement firm, 2% of the monthly “booking” of any sales representative placed with
the defendant. The defendant contended that the undefined term “booking” “could reasonably be
read as comprising only business obtained from new customers,” and not business from existing
customers. Id. at 1276. The Second Circuit held that the district court correctly did not consider
extrinsic evidence because the term “booking” had “no connotation of limitation based on whose
reservations are accepted or for whom arrangements are made.” Id. at 1278. Similarly, in CBS
Broad. Inc. v. Jones, 460 F.Supp.2d 500, 505 (S.D.N.Y. 2006), the district court found that the
undefined contract term “pro rata” was “not wholly without ambiguity.” Still, it concluded that
YKK may have presumed that it could proceed without fear of an adverse court ruling given the proximity to trial,
as also evidenced by YKK’s previously expressed preferences of never offering a definition to the jury (12/21/22 Tr.
84:11-87:15) or of not disclosing YKK’s definition to the jury until YKK’s closing statement (id. 90:9-90:22).
Regardless of YKK’s strategies, this Court should rule on the issues that Plaintiffs’ raise in this letter before opening
statements.
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“as between the two competing interpretations before the Court,” “a reasonably intelligent
and objective person could give the Agreement only one interpretation.” Id. (emphasis added);
see also Bausch & Lomb Inc. v. Mimetogen Pharms., Inc., 2017 WL 2835250, *11 & *13
(W.D.N.Y. 2017) (defendant’s interpretation of the contract “is the only reasonable one” because
plaintiff’s interpretation “would require the Court to suspend the rules of common English usage
and add words into the Agreement”).5
In all events, “[e]xtrinsic evidence is admissible only to resolve conflicting, plausible
interpretations that straddle the ambiguity of a word, not interpretations that change the word’s
meaning.” Tom Doherty Assocs., Inc. v. Saban Ent., Inc., 60 F.3d 27, 36 (2d Cir. 1995). A
finding that a phrase has more than one feasible meaning does not permit the finder-of-fact to
attribute any meaning to the phrase. Id.; see also Pierson v. Willets Point Contracting Corp., 899
F. Supp. 1033, 1043-44 (E.D.N.Y. 1995) (because “[e]xtrinsic evidence is available only to
resolve conflicting, plausible interpretations of a word, not to change the word’s meaning,” the
ambiguous term “’legal services’ cannot be interpreted to include … ‘non-legal services’”).
Thus, the determination that a contract is ambiguous depends not only on whether the term has
more than one feasible definition, but also on whether the parties to the dispute have urged two
“conflicting, plausible interpretations” that are each consistent with a feasible definition, but
nevertheless substantively vary in meaning.
Comparing YKK’s new, fourth definition to the plain meaning definitions that the Court
considered in its HEO ambiguity order (ECF 794 at 7) allows only one reasonable conclusion:
YKK’s new definition is not a plausible interpretation of what constitutes HEO. YKK illogically
rests its definition on whether a manufacturer was willing to pay higher prices and accept certain
undefined delivery times. In other words, YKK’s definition effectively is based on whether the
outerwear manufacturer preferred to purchase YKK’s T8, T9 or T10 zippers because YKK
offered these indistinguishable, infringing zippers at a lower cost with a shorter delivery time.
This definition of HEO is unreasonable because the ELA phrase HEO contains no such
“connotation of limitation” based on these amorphous manufacturer preferences. Hunt Ltd., 889
F.2d at 1278.
YKK’s new manufacturer-centric definition also starkly contrasts with the consumercentric definition on which YKK previously obtained the HEO ambiguity and trial bifurcation
orders. This Court allowed YKK to proceed to trial on YKK’s then qualitative and made in
North America definition (1) because outerwear consumers would know where the outerwear
was made (presumably from the garment’s tag) and (2) because the Court could “not 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 ….” ECF 794 at 8 (emphasis added);
See also White Plains Aviation Partners, LLC v. Cnty. of Westchester, 2022 WL 743434, *4 (S.D.N.Y. 2022)
(rejecting proposed interpretation of undefined term “required” changes to include “desired” or “any” changes);
Summit Health, Inc. v. APS Healthcare Bethesda, Inc., 993 F.Supp.2d 379, 393 (S.D.N.Y. 2014), aff'd sub
nom. APEX Emp. Wellness Servs., Inc. v. APS Healthcare Bethesda, Inc., 725 F. App'x 4 (2d Cir. 2018) (rejecting
“the suggestion that ‘projection’ is intended as a synonym for ‘appointments’”); Hollis Park Manor Nursing Home
v. Landmark Am. Ins. Co., 803 F.Supp.2d 205, 209 (E.D.N.Y. 2011) (contract was not ambiguous because the
“broad definition of ‘derivative claim’ urged by [plaintiff] is not reasonable”); Command Cinema Corp. v. VCA
Labs, Inc., 464 F.Supp.2d 191, 201-202 (S.D.N.Y. 2006) (unreasonable to interpret contract term “become
defective” to “include a loss due to misdelivery” of film tape).
5

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see also ECF 664 at 5 (YKK noting “customer viewpoints”); Sarumaru Depo. Tr. 133:14-133:22
(noting “fashion trends and consumer trends”). If YKK had urged then the definition YKK urges
now, the Court likely would have reached a different conclusion.
That different conclusion would have been called for because outerwear consumers (endusers) would never be exposed to information about the garment manufacturer’s choice between
YKK-laminated zippers and the indistinguishable Plaintiff-laminated zippers. Nor would
consumers ever know the identity of the specific supplier that laminated the cloth stringer tapes
before YKK assembled and sold the completed zipper to outerwear manufacturers or how long
any of those manufacturers would have waited or how much they would have paid for zippers
from worldwide suppliers. Because “sophisticated and discerning” consumers in 2002 would not
have this information (unlike where the outerwear was made), no reasonable consumer could
have only found appealing outerwear with a zipper that had cloth stringer tapes laminated by
Uretek rather than by YKK.
III.

This Court should conclude as a matter of law that YKK’s new definition of HEO
should not be submitted to the jury.

In sum, in the HEO ambiguity order, this Court could not “conclude as a matter of law
that [HEO] does not include a geographical limitation.” ECF 794 at 7. But the Court noted that it
“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.” Id. at 8 n. 4 (emphasis added). This Court now can—and should—
(1) conclude that no reasonable fact finder could support YKK’s new, fourth definition; (2) enter
an order that the phrase “high end outerwear” was intended by the parties to have the reasonable
meaning submitted by Plaintiffs in their proposed verdict form (ECF 841-2); (3) cancel the
bifurcated January 23, 2023, HEO trial; and (4) schedule those pretrial conferences necessary for
the Court and the parties to be prepared to proceed with a full trial on the merits beginning
March 6, 2023.
************

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Case 1:15-cv-03411-GHW-SN Document 890 Filed 01/09/23 Page 7 of 8

Respectfully submitted,
By: /s/ Brian P. Daniels
Brian P. Daniels (pro hac vice)
David R. Schaefer (pro hac vice)
Michael T. Cretella (pro hac vice)
BRENNER, SALTZMAN & WALLMAN LLP
271 Whitney Avenue
New Haven, Connecticut 06511
Tel.: [phone]
Fax: [phone]
Email: [e-mail]
Email: [e-mail]
Email: [e-mail]
Norman H. Zivin (NZ-6053)
[e-mail]
Tonia A. Sayour
[e-mail]
WOLF, GREENFIELD & SACKS, P.C.
605 Third Avenue
New York, NY 10158
212.849.3341 Phone
617.646.8646 Fax
Michael A. Albert
[e-mail]
Emma L. Frank
[e-mail]
WOLF, GREENFIELD & SACKS, P.C.
600 Atlantic Avenue
Boston, MA 02210
617.646.8000 Phone
617.646.8646 Fax
Attorneys for Plaintiffs AU New Haven,
LLC and Trelleborg Coated Systems US, Inc.

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Case 1:15-cv-03411-GHW-SN Document 890 Filed 01/09/23 Page 8 of 8

CERTIFICATE OF SERVICE
I hereby certify that on January 9, 2023, a copy of the foregoing was filed electronically
[and served by mail on anyone unable to accept electronic filing]. Notice of this filing will be
sent by email to all parties by operation of the Court’s electronic filing system [or by mail to
anyone unable to accept electronic filing]. Parties may access this filing through the Court’s
system.
/s/Brian P. Daniels
Brian P. Daniels (pro hac vice)

11o57547.doc

Application granted in part. The Court will take up this issue at the conference scheduled for January 13, 2023.

SO ORDERED.

_____________________________________

Dated: January 9, 2023
New York, New York

GREGORY H. WOODS
United States District Judge

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