Judge Woods Zips Up Loose Ends and Readies Zipper Dispute For Trial
On July 30, 2020, U.S. District Judge Gregory H. Woods (S.D.N.Y.) ruled on a second round of summary judgment motions brought by defendant YKK Corp. and its affiliates (together, “YKK”) against plaintiffs Au New Haven, LLC and Trelleborg Coated Systems US, Inc. (together, “Plaintiffs”), once again readying the case for trial.
Plaintiffs’ predecessor invented a water-resistant zipper claimed in U.S. Patent No. 6,105,214 (the “’214 Patent”), and granted an exclusive license to YKK to manufacture the zippers on a large scale. After the court’s March 31, 2019 summary judgment decision interpreted the license agreement and dismissed Plaintiffs’ breach of contract claims, the court allowed additional summary judgment motions once it became clear that the parties’ motions in limine raised “structural issues” more suited for full motion practice.
First, the court granted in part YKK’s motion for summary judgment on Plaintiffs’ false advertising claims under the Lanham Act, agreeing with YKK that statements referring to its status as the “exclusive licensee” of the ’214 Patent were protected by the patent publication privilege unless they were made in bad faith, or were “objectively baseless.” The court rejected Plaintiffs’ argument that the privilege doesn’t extend to patent licensees, explaining that the statute from which the publication privilege is derived, 35 U.S.C. § 287, covers “not just patentees, but ‘persons making, offering for sale, or selling’” patented products. The court then held that three of the four challenged statements were true and therefore protected by the privilege, but that YKK’s statements that it “has the exclusive right to manufacture, use, sell and import zippers incorporating . . . water repellant [slide fastener] technology [embodied in the ’214 Patent] ” was false because the license agreement excluded YKK from selling into certain markets, and that a reasonable jury could conclude that the statement was thus objectively baseless.
Second, the court denied YKK’s motion for summary judgment on Plaintiffs’ claim for lost profits under the Lanham Act with respect to the sole surviving category of challenged statements—that YKK was the exclusive seller of a patented water-resistant zipper in the relevant markets. The court held that, although the link would be “tricky” to prove, Plaintiff’s theory of causation was sufficient to present to a jury: that customers in the markets excluded from YKK’s license believed they had only one choice for water-resistant zippers, and that had YKK’s statements made clear that only Plaintiffs could sell water-resistant zippers in those markets, those sales would have been made by Plaintiffs and thus “every sale of a YKK zipper in the excluded market was a sale stolen from” Plaintiffs.
Finally, the court granted YKK’s motion for summary judgment on Plaintiffs’ claim under the Connecticut Unfair Trade Practices Act, holding that YKK’s conduct in the state, including registering to do business, was not actionable, and that YKK’s challenged statements did not occur within the state according to the statute’s language, despite being made globally and on websites accessible from Connecticut.
Case: Au New Haven, LLC et al. v. YKK Corp. et al., No. 1:15-CV-3411 (S.D.N.Y).