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Jenny Yoo Collection, Inc. v. Essense of Australia, Inc.

United States District Court, D. Kansas

April 8, 2019

JENNY YOO COLLECTION, INC., Plaintiff,
v.
ESSENSE OF AUSTRALIA, INC., Defendant.

          MEMORANDUM AND ORDER

          JULIE A. ROBINSON CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff Jenny Yoo Collection, Inc. (“JY”) asserts claims against Defendant Essense of Australia, Inc. (“Essense”) for trade dress infringement in violation of section 43(a) of the Lanham Act[1], trade dress infringement and unfair competition under New York common law, unfair business practices under New York General Business Law § 349 (“NYGBL § 349”), unjust enrichment, and patent infringement of both its ‘723 Patent and ‘120 Patent. In an August 7, 2018 Memorandum and Order, the Court denied Essense's first motion to dismiss with respect to JY's patent infringement claims and granted JY leave to amend its Complaint.[2] JY filed its Amended Complaint on September 20, 2018.[3] This matter is before the Court on Essense's Second Motion to Dismiss for Failure to State a Claim (Doc. 31) as to JY's claims of trade dress infringement under the Lanham Act (Count I), common law trade dress infringement and unfair competition (Count II), unfair business practices (Count V), and unjust enrichment (Count VI).[4]As explained below, Essense's partial motion to dismiss is granted.

         I. Standard

         In order to pass muster under Rule 12(b)(6), “the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.”[5] The plausibility standard does not require a showing of probability that a defendant has acted unlawfully, but requires more than “a sheer possibility.”[6] “[M]ere ‘labels and conclusions,' and ‘a formulaic recitation of the elements of a cause of action' will not suffice; a plaintiff must offer specific factual allegations to support each claim.”[7] Finally, the Court must accept the nonmoving party's factual allegations as true and may not dismiss on the ground that it appears unlikely the allegations can be proven.[8]

         The Supreme Court has explained the analysis as a two-step process. For the purposes of a motion to dismiss, the court “must take all the factual allegations in the complaint as true, [but] we ‘are not bound to accept as true a legal conclusion couched as a factual allegation.'”[9] Thus, the court must first determine if the allegations are factual and entitled to an assumption of truth, or merely legal conclusions that are not entitled to an assumption of truth.[10] Second, the court must determine whether the factual allegations, when assumed true, “plausibly give rise to an entitlement to relief.”[11] “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”[12]

         II. Background and Procedural History

         The following facts are drawn from JY's Amended Complaint; the well pleaded facts alleged therein are assumed to be true, as required on a motion to dismiss under Fed.R.Civ.P. 12(b)(6).[13]

         JY's Convertible Bridesmaid Dresses

         JY designs and manufactures bridesmaid dresses, wedding gowns, and other wedding apparel, including the “wildly popular, convertible ‘Aidan' and ‘Annabelle' bridesmaid dress designs, ” which were introduced in 2012 and are the subject of this litigation.[14] JY introduced both short and floor-length versions of the convertible dresses. JY claims that “[r]eviewers, analysts and consumers immediately recognized the convertible dress as a ‘game changer, '” because prior versions of convertible bridesmaid dresses “were bulky, awkward and utilitarian, requiring that conversions be made by tying together components of the dress in different and often unattractive configurations.”[15] The JY convertible dress design was “radically different” in that

[i]t provided for use of lightweight material with two rear and two front loose panels attached and hung from the waist seam that blend seamlessly over the natural and soft drape and folds of the skirt, and could be easily raised by hand and rearranged for purposes of converting the dress into different neckline styles and inherently distinctive and sophisticated looks.[16]

         JY alleges that its “Aidan” and “Annabelle” bridesmaid dresses contain the JY Trade Dress, which is

that the dresses are made of lightweight material with: (i) a strapless upper garment (bodice) portion with a sweetheart shape neckline covering an area above the waist of the user having a front and rear portion; (ii) a skirt having a front and rear portion attached to the upper garment (bodice); and (iii) two front panels and two rear panels with a natural soft drape that seamlessly blend with the dress regardless of whether the panels are hanging in their natural position or raised over the bodice to create the different configurations of the dress.[17]

         The two front and the two back panels of the “Aidan” and “Annabelle” dresses seamlessly blend into the bodice of the dress, creating “the illusion that the panels smoothly blend uninterrupted with the bodice, skirt and/or entire dress to create a singular, integrated look.”[18] JY defines “seamless blending” as the concept that

from the point of view of the ordinary observer, it will be noticeable that the dress contains front and back panels separate from other components of the dress, which when integrated into the dress create looks that are smooth and continuous, with no apparent gaps or spaces between one part or the next, and without seams or obvious joints. Thus, while the front and rear panels are noticeable to the ordinary observer as distinct components of the dress, nonetheless, they create the impression of an integrated, natural, elegant, unified dress design.[19]

         JY alleges that at least six of Essense's bridesmaid dresses-Long Solid Chiffon, Style #8472; Short Solid Chiffon, Style #8471; Ombre Short Chiffon, Style # 8471OM; Ombre Long Chiffon, Style # 8472OM; Junior Short Chiffon Convertible, Style # J4009; and Junior Chiffon Convertible, Style # J40010 (collectively, the “Infringing Products”)-misappropriate the JY Trade Dress, constitute unfair competition, infringe on one or more of JY's intellectual property rights, and have resulted in NYGBL § 349 violations and unjust enrichment. JY contends that the Infringing Products appear to be actual JY dresses, with the same ornamental, nonfunctional and functional features, and that when worn in public, the Infringing Products would be viewed as JY products.[20] As proof of the alleged infringements, JY includes side-by-side photograph comparisons between its dresses and the Infringing Products.[21]

         Essense's alleged use of the JY Trade Dress “has caused, and is likely to cause, confusion or mistake, or to deceive consumers, purchasers, and others into thinking that Essense's dress designs shown [in the Amended Complaint] are JY dress designs, or that they are sponsored by or affiliated with JY, when they are not.”[22] According to JY, the dresses featuring the JY Trade Dress are used at public and social events “where third parties, who were not present when the products were purchased, will associate them the JY” because of the JY Trade Dress.[23] JY's designs are “premium-priced products, ” whereas Essense has a “more budget conscious client base, ” and as such, the alleged infringements threaten to diminish JY's goodwill and ability to sell its products at a premium price.[24]

         Litigation History

          In March 2016, JY filed complaints against Essense and two additional defendants, David's Bridal, Inc. (“DBI”) and Watters Designs, Inc., d/b/a Watters & Watters, and Wtoo Partners, L.P. (collectively, “Watters”), in the Southern District of New York, alleging claims for trade dress infringement in violation of section 43(a) of the Lanham Act, New York common law trade dress infringement and unfair competition, infringement of the ‘120 Patent and the ‘723 Patent, unfair business practices in violation of NYGBL § 349, and unjust enrichment (the “New York lawsuit”).[25] The New York court granted Watters' and Essense's motions to dismiss for improper venue, with leave for JY to refile its claims in the proper venue.[26] The court also granted DBI's partial motion to dismiss all but the ‘793 Patent infringement claim directed to the long dresses. With respect to the Lanham Act and common law trade dress and unfair competition claims, the court found that JY failed to allege sufficient facts to support a plausible inference that its alleged trade dress had “secondary meaning.”[27] The New York court further held that prosecution history estoppel barred JY from claiming the DBI infringing products infringed the ‘120 Patent.[28] Finally, the court dismissed the New York deceptive practices and unjust enrichment claims.[29] The New York lawsuit subsequently settled while JY's motion for reconsideration was pending.[30]

         In December 2017, JY filed this action against Essense in the District of Kansas, where Essense is incorporated and has its principal place of business. Essense subsequently moved to dismiss all of JY's claims for failure to state a claim.[31] On August 7, 2018, this Court denied Essense's first motion to dismiss with respect to the patent infringement claims and granted JY leave to amend its Complaint with respect to issues surrounding the trade dress infringement claim.[32] The Court granted Essense's motion to dismiss JY's cause of action brought under Kansas law without prejudice, allowing JY to amend its complaint to bring claims pursuant to New York state law.[33] JY filed its Amended Complaint on September 20, 2018, [34] and Essense followed with its second motion to dismiss.[35]

         JY also filed a similar complaint against Watters in the Northern District of Texas. The Texas court denied in part a motion to dismiss filed by Watters, which allegedly copied the JY Trade Dress that is also the subject of this litigation (the “Texas lawsuit”).[36] The complaint was nearly identical to JY's first complaint in this action, with a different defendant and allegedly infringing products.[37] The Texas court dismissed JY's ‘120 Patent claim under the doctrine of prosecution history estoppel, [38] but upheld in part as properly pled JY's trade dress and ‘723 Patent claims.[39] The court granted JY leave to amend to clarify what its trade dress covers beyond “two front panels and two rear panels attached to the waist.”[40] JY subsequently amended its complaint, and Watters again moved to dismiss for failure to state a claim, which the Texas court has not decided.[41]

         III. Discussion

         Essense seeks dismissal of four of JY's claims in its Amended Complaint. Specifically, Essense moves to dismiss JY's claims of trade dress infringement in violation of Lanham Act § 43(a) (Count I), trade dress infringement and unfair competition in violation of New York common law (Count II), unfair business practices in violation of NYGBL § 349 (Count V), and unjust enrichment under New York common law (Count VI).

         A. Trade Dress Infringement in Violation of Section 43 of the Lanham Act (Count I)

         JY's first cause of action is for alleged trade dress infringement under section 43(a) of the Lanham Act. The Lanham Act, 15 U.S.C. § 1125(a), provides a federal cause of action for trade dress infringement.[42] “A product's trade dress ‘is its overall image and appearance, and may include features such as size, shape, color or color combinations, texture, graphics, and even particular sales techniques.'”[43] To prevail on a trade dress infringement claim, a plaintiff must show: “(1) The trade dress is inherently distinctive or has become distinctive through secondary meaning; (2) There is a likelihood of confusion among consumers as to the source of the competing products; and (3) The trade dress is nonfunctional.”[44]

         Essense argues that the Amended Complaint fails to (1) sufficiently identify the alleged trade dress; (2) allege that the trade dress has secondary meaning; and (3) allege that the trade dress is nonfunctional. Essense makes no argument as to the likelihood of confusion, and therefore the Court determines it concedes this element.

         Although the Tenth Circuit has not directly addressed the issue, other circuits require that plaintiffs identify the alleged trade dress by describing the specific elements of their trade dress.[45] The Tenth Circuit approvingly cited the Second Circuit's Yurman Design, Inc. v. PAJ, Inc. decision for the requirement of articulating a trade dress with respect to determining whether the trade dress is inherently distinctive.[46] Yurman emphasized that the requirement of articulating the design elements that comprise a trade dress “applies with equal or greater force to any case in which a plaintiff seeks protection for a line of products, ” which requires the trade dress to have developed secondary meaning.[47] A plaintiff must identify and describe the elements of an asserted trade dress in a product design case because “[i]t is too easy for the question of design and configuration (‘overall look') to degenerate into a question of quality, beauty, or cachet.”[48]

         Essense does not argue that JY has not alleged the discrete elements of the JY Trade Dress. Indeed, JY has done so with its three-part list identifying the JY Trade Dress. Instead, Essense asserts that the phrase “seamless blending” is vague, ambiguous, and abstract, and that JY's description causes the trade dress analysis to impermissibly “degenerate into a question of quality, beauty, or cachet.”[49] It further argues that the “seamless blending” explanation is confusing because it relies on an ordinary observer finding it noticeable that the bridesmaid dresses contain panels separate from the other part of the dress, while also appearing smooth and continuous. JY does not argue that this Court should forgo the requirement of a trade dress being defined with reference to the specific elements comprising its distinct trade dress. Instead, JY asserts that it has adequately defined the JY Trade Dress with substantial particularity and articulated how the distinctive features appear in its line of convertible bridesmaid dresses. JY also asserts that the photographs included in the Amended Complaint help identify the JY Trade Dress, and that the Court may determine whether the verbal description, supplemented by the photographs, articulates a legally cognizable trade dress.

         Here, JY describes the distinct components that make up the alleged JY Trade Dress.[50] In its Amended Complaint, JY articulates the character and scope of the alleged JY Trade Dress as

the dresses are made of lightweight material with: (i) a strapless upper garment (bodice) portion with a sweetheart shape neckline covering an area above the waist of the user having a front and rear portion; (ii) a skirt having a front and rear portion attached to the upper garment (bodice); and (iii) two front panels and two rear panels with a natural soft drape that seamlessly blend with the dress regardless of whether the panels are hanging in their natural position or raised over the bodice to create the different configurations of the dress.[51]

         The Court finds, however, that JY's description necessarily relies on a determination of beauty or quality by describing the panels has having “a natural soft drape that seamlessly blend with the dress . . . .”

         In its Amended Complaint, JY elaborates on “seamless blending” with the description:

from the point of view of an ordinary observer, it will be noticeable that the dress contains front and back panels separate from other components of the dress, which when integrated into the dress create looks that are smooth and continuous, with no apparent gaps or spaces between one part or the next, and without obvious seams or joints.[52]

         This description of “seamless blending” is also vague and contradictory, and additionally poses a question of beauty or quality as it requires a determination of what makes “an integrated, natural, elegant, unified dress design.”[53] It therefore remains unclear what “seamless blending” refers to, and accordingly, distinctly what the alleged JY Trade Dress covers. Although JY includes drawings and photographs of the designs, these do not alleviate the deficiencies of JY's trade dress descriptions. As JY does not sufficiently allege a distinct trade dress, the Court need not consider whether the Amended Complaint sufficiently alleges secondary meaning and nonfunctionality. JY's trade dress infringement claim under section 43(a) the Lanham Act is dismissed for failure to state a claim.

         B. Trade Dress Infringement and Unfair Competition Under New York Common Law (Count II)

         Next, JY alleges trade dress infringement and unfair competition under New York common law.[54] As discussed, section 43(a) of the Lanham Act creates a federal cause of action for infringement of unregistered marks.[55] The New York common law tort of unfair competition allows a similar cause of action to prevent confusion between parties' products. Under New York law, “the essence of unfair competition . . . is the bad faith misappropriation of the labors and expenditures of another, likely to cause confusion or to deceive purchasers as to the origin of the goods.”[56] The elements of an unfair competition claim under New York law are essentially identical to the elements of an unfair competition claim under the Lanham Act, namely that a plaintiff must show (1) it owns a valid, protectable trade dress and (2) the defendant's actions are likely to cause confusion, [57] except the plaintiff must also show “bad faith by the infringing party.”[58] As previously discussed, JY identified the distinct elements of its alleged trade dress in a manner that requires a determination of “quality, beauty, or cachet.” Accordingly, JY fails to allege that it owns a valid, protectable trade dress, and therefore its claim for trade dress infringement and unfair competition under New York common law is dismissed.

         C. Unfair Business Practices Under NYGBL § 349 (Count V)

         NYGBL § 349(a) prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in [New York].”[59] Under New York law, “[t]o state a claim under § 349, a plaintiff must allege that: (1) the act or practice was consumer-oriented; (2) the act or practice was misleading in a material respect; and (3) the plaintiff was injured as a result.”[60] Essense asserts that JY's § 349 claim is precluded by res judicata and a three-year statute of limitations, and further that JY does not allege a sufficient public harm.

         1. Res Judicata

         Essense first argues that JY's § 349 claim is barred by the doctrine of res judicata because JY did not appeal the Southern District of New York's dismissal with prejudice of its § 349 claim, and that the decision is now final. In the New York lawsuit, the court dismissed JY's § 349 claim with prejudice against DBI, explaining that “the gravamen of [JY's] claim is harm to its own business interests . . . and that any amendment would be futile . . . .”[61]

         JY argues that the doctrine of res judicata does not apply because there was no final judgment in the Southern District of New York as the court's order was not appealable.

An order that adjudicates fewer than all of the claims in the action, or adjudicates the rights and liabilities of fewer than all of the remaining parties, is not a final order unless the court directs the entry of final judgment as to the dismissed claims or parties “upon an express determination that there is no just reason for delay.”[62]

         The Southern District of New York did not dismiss all of JY's claims and did not direct an entry of final judgment as to the dismissed claims.[63] Accordingly, the court's dismissal of JY's § 349 claim as to DBI was not appealable, and therefore not final.

         Essense does not argue why this Court should construe the Southern District of New York's partial dismissal as a final judgment, nor does it provide a non-conclusory argument as to why the Southern District of New York's decision satisfies the res judicata requirements. As res judicata is an affirmative defense for which Essense carries the burden of proof, the Court cannot find that Essense has carried its burden of showing it is clearly established that it is entitled to judgment as a matter of law on JY's § 349 claims. Accordingly, the doctrine of res judicata does not bar JY's § 349 claims.

         2. Statute of Limitations

         Essense next argues that JY's § 349 claim is barred by a three-year statute of limitations. When a federal court presides over supplemental state law claims, state substantive law controls.[64] Statutes of limitations are part of New York substantive law.[65] Under New York law, the statute of limitations for a claim under § 349 is three years, which accrues when a “plaintiff has been injured by a deceptive act or practice violating” the statute.[66]

         JY alleges that “Essense . . . began producing and selling infringing products” sometime “around 2015.”[67] Thus, as conceded by the parties, JY's cause of action for Essense's alleged § 349 violation accrued on or before April 15, 2015-the date JY first contacted Essense by letter regarding the alleged infringement of JY's intellectual property portfolio. Accordingly, the statute of limitations for JY's § 349 claim was April 15, 2018, prior to JY's filing of its Amended Complaint.[68]

         JY argues, however, that the doctrine of relation back under Fed.R.Civ.P. 15(c) applies to its claim. Under Fed.R.Civ.P. 15(c)(1)(B), an amendment to a pleading relates back to the date of the original pleading when “the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out-or attempted to be set out-in the original pleading.” “[A] party who has been notified of litigation concerning a particular occurrence has been given all the notice that statutes of limitations were intended to provide.”[69] Generally, “amendments will relate back if they amplify the facts previously alleged, correct a technical defect in the prior complaint, assert a new legal theory of relief, or add another claim arising out of the same facts.”[70]

         Here, JY filed its original complaint in the District of Kansas on November 22, 2017.[71]JY's § 349 claim arises out of the same conduct giving rise to Essense's alleged trade dress infringement, and moreover, JY pled an analogous claim under Kansas law in its original complaint. The Court finds that both original claims provided Essense with sufficient notice of the § 349 claim. Essense's sole argument against relation back is its flawed contention that JY asserts that its Amended Complaint relates back to its pleadings in the New York lawsuit. This, however, does not impact the Court's analysis-the relevant complaint for the relation back analysis is JY's original November 22, 2017 complaint filed in this Court.[72] Accordingly, JY's § 349 claim relates back to its November 22, 2017 complaint and is not barred by the three-year statute of limitations.

         3. Allegation of Public Harm

          While NYGBL § 349 is a consumer protection statute, commercial enterprises may bring § 349 claims if harm to the public at large at issue.[73] Courts routinely reject commercial claimants' § 349 claims where there are inadequate allegations of harm to the public interest, and thus “[c]ommercial claimants under § 349 must allege conduct that has ‘significant ramifications for the public at large' in order to properly state a claim.”[74] Where § 349 claims arise out of “disputes between competitors where the core of the claim is harm to another ...


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