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U.S. Supreme Court Rejects 'Defense Preclusion' in Trademark Suit
On May 14, 2020, the U.S. Supreme Court resolved a circuit split, finding that any preclusion of litigation defenses must comply with traditional res judicata principles, and ruling that Lucky Brand Dungarees, Inc. (Lucky Brand) was not precluded from asserting its defenses in its long-standing trademark litigation against Marcel Fashions Group, Inc. (Marcel). The Supreme Court's decision in Lucky Brand Dungarees, Inc., et al. v. Marcel Fashions Group, Inc., 590 U.S. ___ (2020), has substantial implications for all litigants, but, as the Court noted, it is particularly important in the trademark context, where the relevant facts supporting a claim or defense can change drastically in a short period of time.
Background
Marcel and Lucky Brand have been litigating against each other for nearly 20 years. Marcel first filed suit in 2001, alleging that Lucky Brand infringed Marcel's "Get Lucky" trademark. The parties settled in 2003, with Lucky Brand agreeing to refrain from using the phrase "Get Lucky," and Marcel releasing any claims regarding Lucky Brand's use of other trademarks that included the word "Lucky" without being preceded by "Get," including the "Lucky Brand" mark. In 2005, Lucky Brand brought suit, alleging that Marcel had unlawfully copied Lucky
Brand's designs and logos. Marcel counterclaimed, alleging that Lucky Brand had continued to use the phrase "Get Lucky" in violation of the settlement agreement. The U.S. District Court for the Southern District of New York denied Lucky Brand's motion to dismiss, rejecting the argument that Marcel had released its claims against Lucky Brand in the 2003 settlement agreement. The District Court ultimately granted partial summary judgment to Marcel in 2009, permanently enjoining Lucky Brand from using the Marcel's "Get Lucky" trademark. The 2009 order stated: "forbidding [it] from ever 'using in commerce any reproduction, counterfeit, copy or any colorable imitation of Marcel Fashion's GET LUCKY trademark on or in connection with men's and women's apparel, fragrances, and accessories. A jury subsequently found for Marcel on its remaining counterclaims.
In 2011, Marcel again sued Lucky Brand, alleging that Lucky Brand's trademarks including the word "Lucky" infringed on the "Get Lucky" mark and violated the District Court's order in the 2005 suit. Granting Lucky Brand's motion to dismiss, the District Court rejected Marcel's argument that Lucky Brand was precluded from invoking the release defense because it did not fully pursue this defense in the 2005 suit.
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