Presented by John Goodhue
In a unanimous opinion by Justice Sotomayor, the Supreme Court held that there is no standalone doctrine of "defense preclusion." Any preclusion of the defenses a litigant may raise must satisfy the ordinary requirements of either issue preclusion or claim preclusion. Because the parties' 2005 and 2011 trademark suits involved different marks, different legal theories, and different conduct occurring at different times, the two suits lacked a common nucleus of operative facts. Claim preclusion therefore did not and could not bar Lucky Brand from asserting a settlement-agreement defense it had raised but never litigated to judgment in the earlier action. The Court observed that this principle carries particular force in the trademark context, where the enforceability of a mark and the likelihood of confusion often turn on facts that change over time. The judgment was unanimous.
Lucky Brand Dungarees v. Marcel Fashions Group, decided May 14th, 2020. The Supreme Court reversed the Second Circuit and held that there is no freestanding doctrine of defense preclusion. Any bar on the defenses a litigant may raise must satisfy the ordinary requirements of either issue preclusion or claim preclusion. Because the parties' earlier and later suits did not share a common nucleus of operative facts, Lucky Brand was free to raise a settlement defense it had not litigated to judgment before. Justice Sotomayor wrote for a unanimous Court. Here's the brief.
Marcel and Lucky Brand both sell apparel, and both use the word "Lucky" in their marks. Marcel holds a registration for the phrase "Get Lucky." Lucky Brand uses the mark "Lucky Brand," along with other marks containing the word "Lucky." Their dispute runs nearly twenty years, across three rounds of litigation.
In the first round, the parties settled in 2003. Lucky Brand agreed to stop using "Get Lucky," and Marcel agreed to release certain claims regarding Lucky Brand's use of its own marks. In the second round — a 2005 suit — Lucky Brand raised that release in a motion to dismiss and again in its answer, but it never pressed the defense to judgment. The 2005 Action ended with an injunction against Lucky Brand's use of "Get Lucky" and a jury verdict for Marcel.
In the third round, filed in 2011, Marcel sued once more. This time it complained not about "Get Lucky," but about Lucky Brand's continued use of its own "Lucky" marks. Lucky Brand moved to dismiss, invoking the settlement release. The District Court allowed the defense. The Second Circuit reversed, holding that a doctrine it labeled defense preclusion barred Lucky Brand from raising a defense it should have litigated in the earlier suit. The Supreme Court granted cert to resolve a split among the circuits.
The question was whether so-called defense preclusion is a valid application of res judicata. The Court explained that res judicata today comprises two distinct doctrines.
Issue preclusion — sometimes called collateral estoppel — prevents a party from relitigating an issue that was actually decided in a prior case and necessary to that judgment. Claim preclusion reaches further. It bars issues that merely could have been raised in a prior action, whether or not they actually were — but only when the later suit advances the same claim as the earlier one. And two suits share the same claim only when they arise from a common nucleus of operative facts. Here, the parties agreed that issue preclusion did not apply. So everything turned on claim preclusion, and on whether the two suits shared the same claim.
Justice Sotomayor's reasoning was direct. The Court began by rejecting defense preclusion as an independent doctrine.
That framing was decisive. With issue preclusion conceded to be inapplicable, only claim preclusion could bar the defense — and claim preclusion depends on the two suits sharing the same claim.
They did not. The 2005 Action turned on Lucky Brand's use of "Get Lucky." The 2011 Action challenged something different — Lucky Brand's use of its own "Lucky" marks — in conduct that occurred after the earlier suit had concluded.
The Court noted that this reasoning carries special weight in trademark disputes.
The Court also rejected Marcel's argument that treatises and precedent supported a broader rule, distinguishing cases about enforcing or collaterally attacking a prior judgment, none of which was at issue here. The decision was unanimous, with no concurrences or dissents.
Lucky Brand is, in substance, a civil-procedure decision that happened to arise out of a trademark war. Its holding is about preclusion, not trademark doctrine: there is no standalone defense preclusion, and any preclusion of a defense must satisfy the ordinary strictures of issue or claim preclusion. The trademark setting mattered mainly by illustration — because infringement liability turns on marketplace facts that change over time, successive suits between the same parties will often rest on different operative facts, and so will not preclude one another. What the case settled was a procedural question the circuits had answered inconsistently — specifically, when, if ever, claim preclusion can bar a defense that a litigant failed to raise in an earlier suit.
Lucky Brand Dungarees v. Marcel Fashions Group, 590 U.S. 405, decided May 14th, 2020. I'm John Goodhue. Thanks for watching.
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