Au New Haven, LLC v. YKK Corporation

Background

Au New Haven, LLC and Trelleberg Coated Systems US, Inc. alleged that YKK Corporation and several affiliates infringed patents and breached an Exclusive License Agreement. The agreement restricted defendants from using or selling plaintiffs’ technology in finished goods in the “high end outerwear” market. The court had previously ruled that “high end outerwear” was ambiguous and that a jury would need to determine what the parties intended that phrase to mean when they signed the agreement.

The defendants asked for permission to file an additional motion for summary judgment—a motion asking the court to decide issues without a trial—on the meaning of “high end outerwear.” They also asked the court to divide the trial into separate stages, with the first jury deciding the phrase’s meaning. The plaintiffs opposed both requests.

Additional Summary-Judgment Motion

The court denied the defendants’ request for permission to file another summary-judgment motion. Under the scheduling rules, changing the case schedule required good cause. The court found that requirement was not met because the case had already received numerous deadline extensions, the defendants had previously been allowed a second round of summary-judgment briefing, and the new request came more than four years after the applicable 2018 deadline and only months before trial.

The court also noted that another round of briefing would likely delay the case rather than promote the efficient resolution of the litigation. The court did not decide the meaning of “high end outerwear” through summary judgment.

Bifurcated Trial

The court granted the defendants’ motion to bifurcate, meaning to hold separate trials on different issues. The first trial will determine the meaning of “high end outerwear” as used in the license agreement. A second jury will then consider the remaining claims and issues using the definition determined by the first jury.

The court found that separating the trials would reduce the risk of unfair prejudice and juror confusion. Evidence about such matters as alleged third-party sales, market demand, damages, and willful infringement could be relevant or irrelevant depending on how the phrase is defined. The court specifically identified potential problems with testimony from plaintiffs’ expert David Cockrell, whose market analysis used his own understanding of “high end outerwear,” because that understanding might differ from the definition the first jury adopts.

The court rejected the plaintiffs’ argument that limiting instructions could adequately cure these problems. Before the phrase’s meaning was established, the court could not know how other evidence should properly be considered.

Seventh Amendment

The court held that bifurcation would not violate the plaintiffs’ Seventh Amendment right to a jury trial. The second jury will be instructed not to reconsider the meaning of “high end outerwear” and instead to apply the first jury’s definition. Although some evidence may overlap between the trials, the court found that the plaintiffs had not shown that the same factual issue would be decided by both juries.

Judicial Estoppel

The court also rejected the plaintiffs’ request to prevent defendants from arguing that “high end outerwear” had a meaning broader than outerwear made in North America. Judicial estoppel is a rule that can prevent a party from taking a position inconsistent with one previously adopted by a court. The court held that the rule did not apply because it had previously found the phrase ambiguous and had not adopted defendants’ proposed definition or any other definition.

Disposition

The defendants’ application for leave to file an additional summary-judgment motion was DENIED. The defendants’ motion to bifurcate the trial to first determine the meaning of “high end outerwear” was GRANTED. The court directed that trial scheduling would proceed through a separate docket order.