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Get Lucky: U.S. Supreme Court Sides With Lucky Brand in Overturning “Defense Preclusion” Ruling

May 15, 2020
Post by Nicholas J. Krob

The U.S. Supreme Court this week overturned a Second Circuit ruling prohibiting jean maker Lucky Brand from invoking a defense against competitor Marcel Fashions Group based on Lucky Brand’s failure to assert the same defense in prior litigation. The ruling followed nearly two decades of litigation between the parties.

In 2003, Lucky Brand entered into a settlement agreement with Marcel wherein Lucky Brand agreed to stop using Marcel’s “Get Lucky” trademark in return for Marcel releasing any claims regarding Lucky Brand’s other marks. Two years later, Marcel alleged that Lucky Brand was continuing to use the “Get Lucky” trademark. Lucky Brand did not ultimately invoke the defense that such claims were barred by the settlement agreement and the court permanently enjoined Lucky Brand from copying or imitating the “Get Lucky” trademark. The parties once more found themselves in court in 2011 when Marcel sued Lucky Brand for infringement based on Lucky Brand’s use of its own marks containing the word “Lucky.” Lucky Brand moved to dismiss on the basis Marcel’s release of claims in the settlement agreement. Marcel argued that Lucky Brand could not invoke the release defense because it could have pursued that defense in the prior litigation but did not. The district court granted the motion before the Second Circuit vacated and remanded on the basis that “defense preclusion” prohibited Lucky Brand from raising an unlitigated defense that it should have raised earlier.

In a unanimous decision, the Supreme Court ultimately overturned the Second Circuit on the basis that the two lawsuits in question were “grounded on different conduct, involving different marks, occurring at different times” and thus “did not share a common nucleus of operative facts.” Because of this, the Court ruled that Marcel “cannot preclude Lucky Brand from raising new defenses.”

In its ruling, the Court clarified that there was no standalone “defense preclusion” category of res judicata and that preclusion of defenses “must, at a minimum, satisfy the strictures of issue preclusion or claim preclusion.” The Court further indicated that such an approach was particularly important in the trademark context, “where the enforceability of a mark and likelihood of confusion between marks often turns on extrinsic facts that change over time.”

Nicholas J. Krob is an Associate Attorney in the TrademarkLicensing, and Litigation Practice Groups at McKee, Voorhees & Sease. For additional information, please visit www.ipmvs.com or contact Nicholas directly via email at nicholas.krob@ipmvs.com.


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