Dunnington trademark team members Olivera Medenica, Raymond J. Dowd and Sixtine Bousquet-Lambert recently authored a Supreme Court brief on a trademark issue pertinent to the fashion industry. On June 20, the U.S. Supreme Court will decide whether to grant a petition for certiorari filed by Lucky Brand Dungarees in Lucky Brand Dungarees, Inc., et al., v. Marcel Fashions Group, Inc. Dunnington represents respondent Marcel Fashions Group, Inc. who is opposing the petition. At issue in the case is whether, in an action to enforce a trademark infringement judgment, a defendant who continues with the exact same infringements can collaterally attack a prior judgment with a defense that it raised in that prior action but deliberately chose not to prosecute.
The parties have been in litigation for the past two decades over the marks GET LUCKY, LUCKY BRANDS and the word LUCKY. In 2010, after ten years of litigation, the parties jointly drafted an order stating that Lucky Brands infringed upon Marcel’s GET LUCKY brand by using “GET LUCKY, the LUCKY BRAND trademarks, and any other marks including the word ‘Lucky’ after May 2003.” On May 28, 2010, the Southern District of New York entered this stipulated 2010 final order and judgment, including an express waiver by both parties of the right to appeal.
In 2011, Marcel again sued Lucky Brands to stop Lucky Brands from continuing with the same infringements post 2010 judgment. This led to the Second Circuit’s August 2, 2018 decision that is the subject of the petition for certiorari.
Lucky Brands argued before the Second Circuit, and now argues before the Supreme Court, that Marcel’s 2011 action constitutes a new claim that entitles Lucky Brands to raise a defense that it previously raised, but failed to prosecute, in the earlier infringement action (i.e the one that resulted in the 2010 judgment of infringement). In an opinion penned by Judge John M. Walker Jr., the Second Circuit rightfully disagreed.
Finding for Marcel, and thus precluding Lucky Brand’s defense, the Second Circuit articulated the following standard for defense preclusion:
In sum, we conclude 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 or those in privity with them; (iii) the defense was either asserted or could have been asserted, in the prior action; and (iv) the district court, in its discretion, includes that preclusion of the defense is appropriate because efficiency concerns outweigh any unfairness to the party whose defense should be precluded.
The Second Circuit was guided by the fourth factor’s considerations of fairness, efficiency and judicial economy. In ruling to preclude Lucky Brand’s release defense, the Second Circuit found the 2011 action to be a judgment enforcement action and that Lucky Brands should have raised and prosecuted its defense in the earlier action between the same parties.
Lucky Brand claims this creates a circuit split; Marcel disagrees. It is now up to the Supreme Court Justices to decide. You can follow the case here.