Almost 20 years after Marcel Fashions Group, a Florida-based fashion wholesaler, filed suit against Lucky Brand Dungarees for allegedly infringing its “Get Lucky” trademark by using the same phrase on its once-wildly-popular denim and other apparel, the nation’s highest court has unanimously sided with Lucky Brand in a case that asked whether a defendant (Lucky Brand, here) could be barred from raising a defense if it could have raised such a defense earlier but failed to do so.
In an opinion dated May 14, Justice Sonia Sotomayor, writing for a unanimous court, overturned the U.S. Court of Appeals for the Second Circuit’s 2018 decision that precluded Lucky Brand from raising a defense in the trademark infringement case, stating that because the trademark action at issue challenged different conduct – and thus, involved different claims – from an earlier action between the same two parties, Marcel cannot preclude Lucky Brand from raising new defenses, including a defense that Lucky Brand failed to present in an earlier proceeding.
“This Court is asked to determine whether Lucky Brand’s failure to litigate the defense in the earlier suit barred Lucky Brand from invoking it in the later suit,” Justice Sotomayor wrote, stating that “because the parties agree that, at a minimum, the preclusion of such a defense in this context requires that the two suits share the same claim to relief—and because we find that the two suits here did not—Lucky Brand was not barred from raising its defense in the later action.” In other words, “Marcel’s 2011 action challenged different conduct—and raised different claims—from the 2005 action,” according to the court. “Under those circumstances, Marcel cannot preclude Lucky Brand from raising new defenses.”
The case got its day before the Supreme Court following an initial strife between the two fashion companies back in 2001. While Marcel and Lucky Brand managed to settle that suit out of court in 2003, with Lucky Brand agreeing to stop using Marcel’s “Get Lucky” mark and Marcel releasing certain trademark-specific legal claims it might have against Lucky Brand in the future, the parties were back in court less than two years later. This time, Lucky Brand filed suit, accusing Marcel of granting another wholesaler a license for the “Get Lucky” mark, thereby infringing its own “Lucky” marks. Marcel countersuit, asserting that Lucky Brand’s continued use of “Get Lucky” violated their 2003 settlement.
Lucky Brand initially pointed to the terms of the 2003 settlement – including Marcel’s release of trademark-specific claims – in its motion to dismiss and its answer, but it did not raise the release defense again when the case made its way before a jury, which found in favor for Marcel, deciding that Lucky Brand had, in fact, infringed its “Get Lucky” trademark. By way of a final judgment issued in 2005, the district court permanently enjoined Lucky Brand from using the “Get Lucky” mark. The court’s judgment also included language from the jury verdict form, stating that “Lucky Brand infringed Marcel Fashion’s Get Lucky trademark … by using Get Lucky, the Lucky Brand trademarks, and any other trademarks including the word ‘Lucky.’”
The peace between the two parties in the wake of the trial and the court’s judgment did not last long. In 2011, Marcel filed yet another suit, this time seeking trademark infringement relief for Lucky Brand’s use of the “Lucky Brand” mark in light of the court’s 2005 judgment. Again, Lucky Brand did not initially raise the release defense. In fact, only on remand did it finally raise this defense in furtherance of a motion to dismiss. In response, Marcel argued that the defense should be barred by claim preclusion – the principle that a cause of action may not be relitigated once it has been judged on the merits.
The district court sided with Lucky Brand, and dismissed the case, determining that Marcel’s claims against Lucky Brand “are plainly foreclosed by the [2003] settlement agreement.” Marcel appealed the decision, and the Second Circuit, ruling in Marcel’s favor, stated that claim preclusion encompasses “defense preclusion,” and thus, barred Lucky Brand’s defense based on the release since Lucky Brand had opted not to properly raise the release defense in the 2005 suit, prompting the brand to seek Supreme Court intervention.
*The case is Lucky Brand Dungarees, Inc., et al., v. Marcel Fashions Group, Inc., 18-1086 (U.S.).
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