July 1, 2019
On June 28, the U.S. Supreme Court granted certiorari in Lucky Brand Dungarees, Inc. v. Marcel Fashion Group, Inc. This 18-year-old case involves issues of federal preclusion principles as they might apply to a trademark infringement action.
The case began in 2001 when Marcel filed a lawsuit against Lucky Brand alleging unfair competition and trademark infringement. This led to a settlement in May 2003, in which Lucky Brand agreed to stop using the “Get Lucky” mark. A series of suits and countersuits followed until 2017, when a district court held that Marcel’s latest allegations were barred due to the 2003 settlement agreement that released Lucky Brand from further liability.
The Second Circuit Court of Appeals, however, overturned that decision, ruling that because Lucky Brand did not previously raise its release of liability as a defense in the years of litigation since the settlement, the doctrine of res judicata barred it from doing so. When a plaintiff asserts new claims, federal preclusion principles can bar a defendant from raising defenses that were not actually litigated and resolved in any prior case between the parties. Such preclusion principles include the doctrine of res judicata, which states that once a lawsuit is decided, the parties are barred from raising the same issue again in the courts.
The Second Circuit’s ruling was the first time it had used the doctrine of res judicata to preclude such a defense. Specifically, the court held that “parties may be barred by claim preclusion from litigating defenses that they could have asserted in an earlier action.” On February 15, 2019, Lucky Brand petitioned the Supreme Court, claiming that the Second Circuit’s decision was inconsistent with “basic preclusion principles and basic common sense.”
The Court will consider this question: “Whether, when a plaintiff asserts new claims, federal preclusion principles can bar a defendant from raising defenses that were not actually litigated and resolved in any prior case between the parties.”
The Court’s decision will settle the question concerning the applicability of preclusion principles to defenses asserted in litigation.
Fitch Even attorneys are monitoring this case and will report once a decision is released.
--Written by Fitch Even attorney Kerianne A. Strachan.
Fitch Even IP Alert®