Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc.

Facts

Marcel and Lucky Brand both sell jeans and other apparel. In 1986, Marcel received a federal trademark registration for “Get Lucky”; a few years later, in 1990, Lucky Brand began selling apparel using the registered trademark “Lucky Brand” and other marks that include the word “Lucky.” There have been 20 years of litigation between the two companies. In 2001, Marcel sued Lucky Brand, alleging that Lucky Brand’s use of the phrase “Get Lucky” in advertisements infringed Marcel’s trademark. The parties signed a settlement agreement. Lucky Brand agreed to stop using the phrase “Get Lucky.” Marcel agreed to release any claims regarding Lucky Brand’s use of its own trademarks. In 2005, Lucky Brand filed suit, alleging that Marcel and its licensee violated its trademarks by copying its designs and logos in a new clothing line. Marcel filed several counterclaims that all turned, in large part, on Lucky Brand’s alleged continued use of “Get Lucky”: It claimed that Lucky Brand had continued to use Marcel’s “Get Lucky” mark in violation of the settlement agreement, while others alleged that Lucky Brand’s use of the phrase “Get Lucky” and “Lucky Brand” together was “confusingly similar to”-and thus infringed--Marcel’s “Get Lucky” mark. None of Marcel’s counterclaims alleged that Lucky Brand’s use of its own marks alone-i.e., independent of any alleged use of “Get Lucky”-infringed Marcel’s “Get Lucky” mark. Lucky Brand alleged that the counterclaims were barred by the release provision of the settlement agreement. The District Court denied the motion without prejudice. The District Court concluded that Lucky Brand violated the settlement agreement by continuing to use “Get Lucky” and permanently enjoined Lucky Brand from copying or imitating Marcel’s “Get Lucky” mark. The injunction did not enjoin, or even mention, Lucky Brand’s use of any other marks or phrases containing the word “Lucky.” The jury found against Lucky Brand on Marcel’s remaining counterclaims-those that alleged infringement from Lucky Brand’s continued use of the “Get Lucky” catchphrase alongside its own marks. In April 2011, Marcel filed an action against Lucky Brand maintaining that Lucky Brand continued to infringe Marcel’s “Get Lucky” mark and, in so doing, contravened the judgment issued in the 2005 Action. Marcel requested that the District Court enjoin Lucky Brand from using any of Lucky Brand’s marks containing the word “Lucky.” The District Court granted Lucky Brand summary judgment, concluding that Marcel’s claims in the 2011 Action were essentially the same as its counterclaims in the 2005 Action. But the Court of Appeals concluded that Marcel’s claims in the 2011 Action were distinct from those it had asserted in the 2005 Action because the claims at issue in the 2005 Action were “for earlier infringements.” The court further rejected Marcel’s request to hold Lucky Brand in contempt for violating the injunction issued in the 2005 Action. The 2005 injunction prohibited Lucky Brand from using the “Get Lucky” mark-not Lucky Brand’s own marks that happened to contain the word “Lucky.” On remand Lucky Brand moved to dismiss, arguing-for the first time since its motion to dismiss and answer in the 2005 Action-that Marcel had released its claims by entering the settlement agreement. Marcel claimed that Lucky Brand was precluded from invoking the release defense, because it could have pursued the defense fully in the 2005 Action but had neglected to do so. The District Court granted Lucky Brand’s motion to dismiss, holding that it could assert its release defense and that the settlement agreement barred Marcel’s claims. The Court of Appeals vacated and remanded, concluding that a doctrine it termed “defense preclusion” prohibited Lucky Brand from raising the release defense in the 2011 Action. It held that a defendant should be precluded from raising an unlitigated defense that it should have raised earlier. The panel then held that “defense preclusion” bars a party from raising a defense where: “(i) a previous action involved an adjudication on the merits”; “(ii) the previous action involved the same parties”; “(iii) the defense was either asserted or could have been asserted, in the prior action”; and “(iv) the district court, in its discretion, concludes that preclusion of the defense is appropriate.” The court vacated the District Court’s judgment. The Supreme Court granted certiorari to resolve if claim preclusion applies to defenses raised in a later suit.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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