Case 3:17-cv-03197-M Document 33 Filed 06/06/18 Page 1 of 15 PageID 784

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

JENNY YOO COLLECTION, INC., a New §

York Corporation, §
§
Plaintiff, §
§
v. §
§ Civil Action No. 3:17-cv-3197-M
WATTERS DESIGNS, INC., a Texas §
Corporation doing business as WATTERS §
& WATTERS, and WTOO PARTNERS, §
L.P., a Texas Limited Partnership, §
§
Defendants. §

ORDER

Before the Court is Defendants’ Motion to Dismiss (ECF No. 15), Plaintiff’s Cross-

Motion on Collateral Estoppel (ECF No. 28), and Plaintiff’s Motion to Supplement (ECF No.

32). For the reasons stated below, Defendants’ Motion to Dismiss is GRANTED IN PART and

DENIED IN PART, Plaintiff’s Cross-Motion on Collateral Estoppel is DENIED, and Plaintiff’s

Motion to Supplement is GRANTED.

I. Factual and Procedural Background

Plaintiff Jenny Yoo Collection, Inc. is a designer and manufacturer of wedding apparel.

(Compl. ¶ 13, ECF No. 1). In particular, Plaintiff is known for its “Aidan” and “Annabelle”

bridesmaid dresses, which have “panels attached at the waist seam” that can be “rearranged for

purposes of converting the dress[es] into different neckline styles and inherently attractive,

elegant looks.” (Id. ¶ 2). Defendants Watters Designs, Inc. and WToo Partners, L.P. allegedly

copied the design of Aidan and Annabelle dresses, and Plaintiff filed suit for: (1) trade dress

infringement in violation of the Lanham Act, (2) common law trade dress infringement and

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unfair competition, (3) infringement of U.S. Patent No. D744,723, and (4) infringement of U.S.

Patent No. D698,120. (Id. ¶¶ 63-97).

Defendants move to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6).

Plaintiff cross-moves to preclude Defendants from litigating issues under the doctrine of

collateral estoppel. Plaintiff also moves for leave to notify the Court of case law.

II. Plaintiff’s Motion to Supplement

Plaintiff moves for leave to notify the Court of the Federal Circuit’s decision in Disc

Disease Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256 (Fed. Cir. 2018). The Motion is

GRANTED. See United States v. Schmitt, 748 F.2d 249, 255 (5th Cir. 1984) (“[T]he law . . .

whether depending upon statutes or upon judicial opinions . . . is a matter of which the courts of

the United States are bound to take judicial notice, without plea or proof.”).

III. Defendants’ Motion to Dismiss

a. Legal Standard

A pleading must contain “a short and plain statement of the claim showing that the

pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). The pleading standard Rule 8 announces

does not require “detailed factual allegations,” but it does demand more than an unadorned

accusation devoid of factual support. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a complaint

must contain sufficient factual matter to state a claim for relief that is plausible on its face.

Twombly, 550 U.S. at 570. The court must accept all factual allegations as true, but it is not

bound to accept as true “a legal conclusion couched as a factual allegation.” Id. at 555. Where

the facts do not permit the court to infer more than the mere possibility of misconduct, the

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complaint has stopped short of showing that the pleader is plausibly entitled to relief. Iqbal, 556

U.S. at 678.

b. Analysis

i. Trade Dress Infringement

Trade dress refers to the “total image and overall appearance of a product and may

include features such as the size, shape, color, color combinations, textures, graphics, and even

sales techniques that characterize a particular product.” Amazing Spaces, Inc. v. Metro Mini

Storage, 608 F.3d 225, 251 (5th Cir. 2010). To state a claim for trade dress infringement, a

plaintiff must plausibly allege “ownership in a legally protectable [trade dress]” and that “there is

a likelihood of confusion” between its trade dress and the allegedly infringing trade dress. 1 Id.

A trade dress qualifies for legal protection if it is nonfunctional and has achieved secondary

meaning in the public’s mind. See TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 29

(2001). Defendants argue that the Complaint fails to sufficiently (1) identify the trade dress and

(2) allege that the trade dress is legally protectable. (Def. Br. at 5-9, ECF No. 16).

1. Identification of the Trade Dress

A complaint must articulate the specific elements that comprise the trade dress so that the

defendant has fair notice of the grounds of the plaintiff’s claim. See Test Masters Educ. Servs.,

Inc. v. State Farm Lloyds, 791 F.3d 561, 565 (5th Cir. 2015); see also AMID, Inc. v. Medic Alert

Found. United States, Inc., 241 F. Supp. 3d 788, 807 (S.D. Tex. 2017) (dismissing a trade dress

claim because the plaintiff failed to identify the trade dress with sufficient “clarity or

consistency”). Defining the elements of the trade dress is especially critical where the plaintiff,

1
The standard for trade dress infringement under Texas common law is the same as the standard under the Lanham
Act. See, e.g., KLN Steel Prod. Co. v. CNA Ins. Companies, 278 S.W.3d 429, 441 (Tex. App.-San Antonio 2008,
pet. denied). Accordingly, the Court evaluates Plaintiff’s trade dress infringement claims together.

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as here, alleges that its trade dress is embodied in different products. Yurman Design, Inc. v.

PAJ, Inc., 262 F.3d 101, 116 (2d Cir. 2001). If the trade dress were vaguely defined as an

“overall look,” the case might “degenerate into a question of quality, or beauty, or cachet. Id. at

117.

Instead of seeking protection for an “overall look,” the Complaint identifies specific

elements that comprise the trade dress—namely, “two front panels and two rear panels attached

to the waist in a manner that allows them to blend seamlessly and elegantly into the bottom of

the dress,” regardless of the way in which the dress is worn. (Compl. ¶ 35). The Complaint is

sufficiently specific about the trade dress having four panels and the placement of those panels in

relation to the dress. However, the remainder of the description is too vague to give notice of

what is protected beyond that. The Complaint does not define what “blend[ing] seamlessly and

elegantly” means. 2 Nor does it define “bottom of the dress,” i.e., whether it refers to any portion

of the dress below the waist or just the ends of the dress. Although the Complaint includes

drawings of the Aidan and Annabelle dresses, which embody the trade dress, (id. ¶¶ 39-50), the

drawings are not helpful in resolving these ambiguities. See also National Lighting Co., Inc. v.

Bridge Metal Industries, LLC, 601 F. Supp. 2d 556, 562 (S.D.N.Y. 2009) (noting that simply

attaching pictures of products embodying the trade dress was not sufficient to identify the trade

dress). Accordingly, Defendants and other competitors “are left to guess as to how to design a

non-infringing product and are handicapped in defending against [Plaintiff’s] claim of

2
In its brief, Plaintiff argues that “seamlessly blend[ing]” is a term of art in the fashion industry with an understood
definition. (See Pl. Resp. at 6, ECF No. 22). If Plaintiff’s allegations involve “terms of art or other matters beyond
the understanding of a layman, [Plaintiff] should clearly explain these matters to the Court and [Defendants] in [its]
complaint.” McNamara v. Bre-X Minerals Ltd., 197 F. Supp. 2d 622, 639 n.7 (E.D. Tex. 2001).

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infringement.” YETI Coolers, LLC v. Imagen Brands, LLC, 2017 WL 2199012, at *4 (W.D.

Tex. May 18, 2017).

Because some elements of the alleged trade dress are sufficiently specific, it is not

necessary to dismiss Plaintiff’s claims entirely. See YETI Coolers, 2017 WL 2199012, at *4

(allowing an infringement claim to proceed even though some elements of the alleged trade dress

were “vague and fail[ed] to give notice of what is claimed”). However, Plaintiff is directed to

amend its Complaint to clarify what its trade dress covers beyond “two front panels and two rear

panels attached to the waist.”

2. Functionality of the Trade Dress

There are two tests for determining functionality. Under the “traditional” test, a product

element is functional if it is essential to the use or purpose of the product or if it affects the cost

or quality of the product. TrafFix, 532 U.S. at 24; see also Eppendorf-Netheler-Hinz GMBH v.

Ritter GMBH, 289 F.3d 351, 355 (5th Cir. 2002) (“[I]f a product feature is the reason the device

works, then the feature is functional.”). An element is essential to the use or purpose of a

product if it serves any significant function other than to distinguish a firm’s goods or identify

their source. See Poly-Am., L.P. v. Stego Indus., L.L.C., 2011 WL 3206687, at *10 (N.D. Tex.

July 27, 2011) (citing Qualitex Co. v. Jacobson Prod. Co., 514 U.S. 159, 165 (1995)). Under the

“competitive necessity” test, a product element is functional if “the exclusive use of . . . [it]

would put competitors at a significant non-reputation-related disadvantage.” 3 TrafFix, 532 U.S.

at 32. Functionality of a trade dress is a factual issue. Pebble Beach Co. v. Tour 18 I Ltd., 155

F.3d 526, 537 (5th Cir. 1998).

3
The primary test is the traditional test, and there is no need to consider the competitive necessity test where a
product element is functional under the traditional definition. See TrafFix, 532 U.S. at 32-35.

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Defendants argue that because the four panels allow the bridesmaid dresses to convert

into various configurations, they are essential to their use or purpose and hence ineligible for

trade dress protection. (Def. Br. at 10). However, courts must examine the functionality of the

trade dress as a whole. In focusing on individual elements of Plaintiff’s trade dress, Defendants

ignore that a particular combination of functional elements may be protected if configured in an

“arbitrary, fanciful, or distinctive” fashion. See Provident Precious Metals, LLC v. NW.

Territorial Mint, LLC, 117 F. Supp. 3d 879, 895 (N.D. Tex. 2015); Taco Cabana Int'l, Inc. v.

Two Pesos, Inc., 932 F.2d 1113, 1119 (5th Cir. 1991), aff’d Two Pesos, Inc. v. Taco Cabana,

Inc., 505 U.S. 763 (1992) (“[The defendants’] argument reduces to a fallacious syllogism: (1)

functional elements do not enjoy protection; (2) [the plaintiff’s] trade dress includes functional

elements; (3) therefore [the plaintiff’s] trade dress does not enjoy protection.”). 4

Here, it is at least plausible that the overall placement of the four panels in relation to the

bridesmaid dress identify Plaintiff as the manufacturer and distinguish the dress from those of

Plaintiff’s competitors. See also Primesource Bldg. Prod., Inc. v. Hillman Grp., Inc., 2015 WL

11120882, at *4 (N.D. Tex. Mar. 31, 2015) (finding that a plaintiff had pleaded sufficient facts

allowing the court to infer that its trade dress was nonfunctional even though several of the

articulated elements were functional in nature). Under the “competitive necessity test,” it is

plausible that there are sufficient alternative designs available to Plaintiff’s competitors, i.e.,

convertible dresses that do not use the four panels arranged at the front and back of the waist,

such that granting Plaintiff exclusive use of the trade dress would not put competitors at a

significant non-reputation-related disadvantage. (Cf. Compl. ¶ 25 (“[B]oth the Aidan and

4
See also MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 8:2 (5th ed. 2018) (“A defendant cannot avoid
liability for infringing a trade dress by segregating out individual elements of the trade dress as defined by plaintiff
and arguing that no one of these is valid and protectable in and of itself.”).

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Annabelle designs feature the same unique placement and configuration of the flaps . . . a

configuration that was a radical departure from prior convertible bridesmaid dress designs.”)).

Furthermore, because a design patent is granted only for non-functional designs, it can serve as

evidence that a plaintiff's trade dress is nonfunctional. 5 See, e.g., In re Morton–Norwich Prods.,

Inc., 671 F.2d 1332, 1342 n. 3 (C.C.P.A.1982) (Design patent, “at least presumptively, indicates

that the design is not de jure functional.”); In re R.M. Smith, Inc., 734 F.2d 1482, 1485 (Fed. Cir.

1984) (existence of design patent “may be some evidence of non-functionality”).

3. Secondary Meaning of the Trade Dress

Secondary meaning occurs “when, in the minds of the public, the primary significance of

a [trade dress] is to identify the source of the product rather than the product itself.” Bd. of

Supervisors for Louisiana State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465,

476 (5th Cir. 2008) (internal citations and quotation marks omitted). Determining whether a

trade dress has acquired secondary meaning is an empirical inquiry and is a question of fact. See

Amazing Spaces, 608 F.3d at 247-48. Courts consider seven factors to determine whether

secondary meaning has been shown:

(1) length and manner of use of the mark or trade dress, (2) volume of sales, (3)
amount and manner of advertising, (4) nature of use of the mark or trade dress in
newspapers and magazines, (5) consumer-survey evidence, (6) direct consumer
testimony, and (7) the defendant's intent in copying the trade dress.

Id. at 248.

Contrary to Defendants’ arguments otherwise, the Complaint includes sufficient

allegations from which the Court can infer that the trade dress has acquired secondary meaning.

5
Plaintiff also has pending utility patent applications covering elements of the alleged trade dress. (See Compl. ¶
31). A utility patent is “strong evidence that the [elements] therein claimed are functional,” TrafFix, 532 U.S. at 23,
but the pending applications do not bar Plaintiff, as a matter of law, from asserting the trade dress claim. See U.S.
Patent and Trademark Office, MANUAL OF PATENT EXAMINING PROCEDURE § 1502.01 (9th ed. 2018) (“Both design
and utility patents may be obtained on an article if invention resides both in its utility and ornamental appearance.”).

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The Complaint alleges that Plaintiff “exclusively used the trade dress from 2012 to 2015,” when

Defendants and other infringers began to copy the design. (Compl. ¶ 64). It further alleges that

Plaintiff has sold over 132,000 Aidan and Annabelle dresses embodying the trade dress and that

Plaintiff and other retailers have spent thousands of dollars advertising the Aiden and Annabelle

dresses through showrooms, press releases, catalogues, print advertisements, websites,

promotions, and social media. (Id. ¶¶ 16-18, 21-22). It even notes how “major publications

within the bridal gown and entertainment industries regularly feature” the Aiden and Annabelle

dresses, such as Martha Stewart, Martha Stewart Weddings, The Knot, and Brides Magazine.

(Id. ¶ 3, 20). The Complaint alleges how the trade dress has become “uniquely associated with

[Plaintiff] as its source” as a result. (Id. ¶ 14). Finally, the Complaint alleges that Defendants’

infringement “has been and continues to be intentional [and] willful,” which bolsters allegations

that the trade dress has achieved secondary meaning. 6 See Berg v. Symons, 393 F. Supp. 2d 525,

554 (S.D. Tex. 2005) (Courts have recognized that “evidence of intentional copying shows the

strong secondary meaning . . . because there is no logical reason for the precise copying save an

attempt to realize upon a secondary meaning that is in existence.”).

The allegations are sufficient to support an inference that the trade dress has achieved

secondary meaning. Although Plaintiff will eventually be required to offer actual evidence to

support its allegations, Plaintiff is not required to do so at this time.

6
Defendants emphasize that the Complaint has no allegations regarding consumer-survey and consumer testimony
evidence. While the Fifth Circuit has “consistently expressed a preference for an objective survey of the public's
perception of the [trade dress] at issue,” Amazing Spaces, 608 F.3d at 248, it has not held that a complaint alleging
trade dress infringement must include survey data or consumer testimony to state a claim for infringement.

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ii. Patent Infringement

To state a claim for patent infringement, a plaintiff must “(1) allege ownership of the

patent, (2) name each defendant, (3) cite the patent that is allegedly infringed, (4) state the means

by which the defendant allegedly infringes, and (5) point to the sections of the patent law

invoked.” Hall v. Bed Bath & Beyond, Inc., 705 F.3d 1357, 1362 (Fed. Cir. 2013). Plaintiff here

does so. It alleges that it owns the ‘723 and the ‘120 patents and that Defendants infringed by

selling dresses that copied the claimed designs, and it seeks damages pursuant to 35 U.S.C. §

284. (See, e.g., Compl. ¶¶ 30, 88-92). Furthermore, the Complaint includes diagrams that

compare the drawings in the patent to the infringing products, and points out the similarities. (Id.

¶¶ 88, 94).

Defendants argue that Plaintiff’s infringement claim for the ‘120 patent is barred by

prosecution history estoppel and that Plaintiff has failed to identify the ornamental elements of

the design covered by the ‘723 patent.

1. Prosecution History Estoppel

Prosecution history estoppel bars a patentee from “asserting as an equivalent subject

matter surrendered during prosecution of the patent application.” 7 Eagle Comtronics, Inc. v.

Arrow Commc'n Labs., Inc., 305 F.3d 1303, 1316 (Fed. Cir. 2002). The patentee may not

7
For utility patents, prosecution history estoppel limits a patentee’s ability to recover under the doctrine of
equivalents, but does not limit literal infringement. Pac. Coast, 739 F.3d at 700. For design patents, however, the
concepts of literal infringement and equivalents infringement are “intertwined.” Id. This is because the test for
design patent infringement is not identity, but rather sufficient similarity. See 35 U.S.C. § 289 (imposing liability on
anyone who “(1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for
the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable
imitation has been applied”) (emphasis added); see also Pac. Coast, 739 F.3d at 701 (noting that the “colorable
imitation” standard of the design patent statute includes the concept of equivalents). Accordingly, courts have noted
that prosecution history estoppel applies to bar all infringement claims of a design patent. See, e.g., Pac. Coast, 739
F.3d at 700; Luxembourg v. Home Expressions Inc., 2018 WL 340036, at *5 (D.N.J. Jan. 8, 2018); Jenny Yoo
Collection, Inc. v. David’s Bridal, Inc., 2017 WL 4997838, at *10 (S.D.N.Y. Oct. 20, 2017).

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attempt to recapture this surrendered ground during later infringement proceedings. See EMD

Millipore Corp. v. AllPure Techs., Inc., 768 F.3d 1196, 1203 (Fed. Cir. 2014). Determining

whether estoppel applies is a question of law and “turns on answers to three questions: (1)

whether there was a surrender; (2) whether it was for reasons of patentability; and (3) whether

the accused design is within the scope of the surrender.” Pac. Coast, 739 F.3d at 702.

Plaintiff’s infringement claim for the ‘120 patent is barred by prosecution history

estoppel. If an application for a design patent includes more than one patentable design, the PTO

may require the applicant to restrict the claims to a single inventive design. See 35 U.S.C. § 121.

Here, the patent examiner separated the application for the ‘120 patent into two “patentably

distinct groups” of designs: (1) embodiments covering “short-length dress[es]” and (2)

embodiments covering longer, floor-length dresses. (Def. App. at 34, ECF No. 17). 8 The

examiner found that the difference in dress length was a significant difference in “overall

ornamental appearance,” such that the two embodiments were “patentably distinct from one

another” and did not “constitute a single inventive concept” that could be “included in the same

design application.” (Id. at 34-35). The examiner required “an election of a single group for

prosecution on the merits” under 35 U.S.C. § 121. (Id. at 35). In response, Plaintiff elected to

proceed, without traverse, on the short-length dress embodiments, and cancelled the floor-length

dress embodiments, without prejudice to filing a continuing application. (Id. at 41). Plaintiff did

file a continuing application, which ultimately resulted in the ‘723 patent.

8
When reviewing a motion to dismiss, a court “must consider the complaint in its entirety, as well as other sources
courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated
into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Courts may take judicial notice of information found on agency
websites. See Coleman v. Dretke, 409 F.3d 665, 667 (5th Cir. 2005) (per curiam). Exhibits from the prosecution
history of the ‘120 patent are all available from the U.S. Patent and Trademark Office’s website, at www.uspto.gov.
The Court accordingly takes judicial notice of the prosecution history.

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By electing to proceed on the short-length dress embodiments and cancelling all other

embodiments, Plaintiff surrendered the floor-length dress designs. 9 See also Pac. Coast, 739

F.3d at 703 (“By cancelling figures showing corner posts with two holes and no holes, the

applicant surrendered such designs and conceded that the claim was limited to what the

remaining figure showed—a windshield with four holes in the corner post—and colorable

imitations thereof.”). This surrender was made to secure the patent, as required under 35 U.S.C.

§ 121. In fact, the examiner noted that any response failing to elect a single group of

embodiments would be deemed non-responsive. (Def. App. at 35). Finally, Defendants’

infringing products fall “within the scope of the surrendered subject matter.” Pac. Coast, 739

F.3d at 702. All of the infringing products here are undeniably floor-length dresses. (See

Compl. ¶ 88). Accordingly, prosecution history estoppel bars Plaintiff from asserting

infringement of the ‘120 patent. See also David’s Bridal, Inc., 2017 WL 4997838, at *10

(holding that Plaintiff surrendered floor-length dress designs during prosecution of the ‘120

patent and that prosecution history estoppel barred Plaintiff’s infringement claim against a

defendant’s floor-length dresses).

2. Scope of the Patent

“While a design may contain both functional and ornamental elements,” the scope of a

design patent “must be limited to the ornamental [elements] of the design.” Sport Dimension,

Inc. v. Coleman Co., 820 F.3d 1316, 1320 (Fed. Cir. 2016). The Complaint alleges that the

scope of the patented design is “the two front and two rear panels attached at the waist in a

9
Plaintiff argues that because the floor-length dress embodiments were cancelled “without prejudice to filing a
continuing application,” those embodiments were not surrendered. (Pl. Resp. at 13-14). Plaintiff provides no
relevant case law to support the proposition, and “this language cannot be considered a catchall ensuring that the
designs would not be surrendered for purposes of the ‘120 Patent.” David’s Bridal, Inc., 2017 WL 4997838, at *9
n.12.

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manner that allows them to seamlessly blend into the bottom of the dress.” (Compl. ¶ 13).

Plaintiff need not allege how the design is ornamental. See Hall, 705 F.3d at 1362 (rejecting a

district court’s requirement that a plaintiff allege in the complaint how the design is “new,

original and ornamental, meriting the protection of a design patent”). Actually determining the

scope of the design, including what is ornamental and what is functional, is reserved for the

claim construction stage. 10 See Coleman Co., 820 F.3d at 1320 (“[T]he scope of the claim must

be construed in order to identify the non-functional aspects of the design as shown in the

patent.”); see also Hall, 705 F.3d at 1362 (“[C]laim construction is not an essential element of a

patent infringement complaint.”). Accordingly, the Court declines to now dismiss Plaintiff’s

infringement claim for the ‘723 patent.

IV. Plaintiff’s Cross-Motion

a. Legal Standard

To preclude litigation of an issue under the doctrine of collateral estoppel, a party must

show that: “(1) the issue at stake must be identical to the one involved in the prior action, (2) the

issue must have been actually litigated in the prior action, and (3) the determination of the issue

in the prior action must have been a necessary part of the judgment in that earlier action.” See

Next Level Commc’ns LP v. DSC Commc'ns Corp., 179 F.3d 244, 250 (5th Cir. 1999). The party

against whom collateral estoppel would be applied generally must have been a party in the prior

10
Design patents, such as the ones asserted here, can only include a single claim comprised of the drawings of the
design. Pac. Coast, 739 F.3d at 703. Defendants raise the issue of whether the drawings in the ‘723 patent are
inconsistent and therefore indefinite. (Def. Br. at 19-20). A court must “first attempt to determine what a claim
means before it can determine whether the claim is invalid for indefiniteness.” Mannatech, Inc. v. Techmedia
Health, Inc., 2009 WL 3614359, at *15 (N.D. Tex. Oct. 29, 2009). “Whether the patents-in-suit are invalid because
the definition of [a claim term] fails to provide one skilled in the art with any objective standards for determining
[when a claim term is met] is a matter more appropriately addressed on summary judgment.” Id. Accordingly, the
Court defers the issue until after claim construction. Cf. Times Three Clothier, LLC v. Spanx, Inc., 2014 WL
1688130, at *1 (S.D.N.Y. Apr. 29, 2014) (holding, after a claim construction hearing, that design patents “are
invalid for indefiniteness due to inconsistencies in their drawing sheets”).

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action. See Taylor v. Sturgell, 553 U.S. 880, 892-93 (2008); see also Terrell v. DeConna, 877

F.2d 1267, 1270 (5th Cir. 1989) (“The imposition of a preclusive bar against a non-party to the

original adjudication is limited for obvious reasons: a non-party has had no day in court.”).

However, the Supreme Court has recognized six exceptions to the rule against nonparty

preclusion:

(1) when a nonparty “agrees to be bound by the determination of issues in an

action between others”; (2) when a nonparty is in one of “a variety of pre-existing
substantive legal relationships” with a party to the judgment; (3) when, “in certain
limited circumstances,” a nonparty was “adequately represented by someone with
the same interests who [wa]s a party”; (4) when a nonparty “assume[d] control”
over the prior litigation; (5) “when a person who did not participate in a litigation
later brings suit as the designated representative of a person who was a party to
the prior adjudication”; and (6) when a statutory scheme “expressly foreclose[s]
successive litigation by nonlitigants.”

Sturgell, 553 U.S. at 893–95 (internal citations and quotations marks omitted). An agency

decision can ground collateral estoppel so long as the ordinary requirements are met. See B & B

Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1297 (2015).

b. Analysis

Before this case was filed, David’s Bridal, Inc. sought post-grant review of the ‘723

patent. Post-grant review is available only for patents having at least one claim with a priority

date of March 16, 2013, or later. See Secure Axcess, LLC v. PNC Bank Nat'l Ass’n, 859 F.3d

998, 1006 (Fed. Cir. 2017). The PTAB found that the priority date of the ‘723 patent was

February 13, 2012, and thus declined to institute post-grant review. See David’s Bridal, Inc. v.

Jenny Yoo Collection, Inc., PGR2016-00041, Paper No. 11, at *18 (P.T.A.B. Feb. 22, 2017). 11

Plaintiff argues that the PTAB’s determination of the priority date and other related issues must

be given preclusive effect in this case under the doctrine of collateral estoppel.

11
The PTAB also denied rehearing of the decision. See David’s Bridal, Inc. v. Jenny Yoo Collection, Inc.,
PGR2016-00041, Paper No. 13, at *18 (P.T.A.B. June 15, 2017).

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Defendants were not parties to the PTAB proceedings. They did not agree to be bound

by the PTAB’s determination of the priority date. 12 There is no substantive legal relationship

between DBI and Defendants. See also Sturgell, 553 U.S. at 894 (noting that qualifying

relationships include “preceding and succeeding owners of property, bailee and bailor, and

assignee and assignor”). The circumstances where Defendants could have been adequately

represented by another party are limited to certain representative suits, such as “properly

conducted class actions, and suits brought by trustees, guardians, and other fiduciaries,” and are

not applicable here. Id. Nothing in the record suggests that Defendants exercised control over

DBI during the post-grant review proceeding. Nor are Defendants acting as the designated

representatives of DBI in this case. Finally, the parties have not identified any relevant statutory

scheme requiring preclusion.

Defendants were not parties to the post-grant review proceeding, and no exception to the

rule against nonparty preclusion applies. Accordingly, Defendants are not bound by the PTAB’s

decision.

V. Conclusion

For the reasons stated above, Defendants’ Motion to Dismiss is GRANTED IN PART

and DENIED IN PART, Plaintiff’s Motion on Collateral Estoppel is DENIED, and Plaintiff’s

Motion to Supplement is GRANTED. Plaintiff has leave to amend its pleading, addressing the

defects identified in this Order, by June 27, 2018. See Hart v. Bayer Corp., 199 F.3d 239, 248

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Plaintiff had previously sued Defendants in the Southern District of New York, asserting the same claims as here.
That case was ultimately dismissed for improper venue, and Plaintiff later refiled in this district. Prior to dismissal,
Defendants sought to stay the case in light of DBI’s petition for post-grant review, arguing that the Southern District
of New York “should rely on the [PTAB’s] expertise in resolving [the issue of the priority date of the ‘723 patent].”
See Jenny Yoo Collection, Inc. v. Watters Design Inc., Mem. in Support of Mot. to Stay at 3 (S.D.N.Y. Oct. 20,
2017) (emphasis added) (incorporating by reference language from a motion filed by DBI). This is not sufficient to
be considered a stipulation. Cf. California v. Texas, 459 U.S. 1096, 1097 (1983) (dismissing certain defendants
from a suit based on a stipulation “that each of said defendants . . . will be bound by a final judgment of this Court”
on a specified issue).

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 Case 3:17-cv-03197-M Document 33 Filed 06/06/18 Page 15 of 15 PageID 798

(5th Cir. 2000) (“Although a court may dismiss the claim, it should not do so without granting

leave to amend, unless the defect is simply incurable or the plaintiff has failed to plead with

particularity after being afforded repeated opportunities to do so.”).

SO ORDERED.

June 6, 2018

_________________________________
BARBARA M. G. LYNN
CHIEF JUDGE

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