The always terrific Olivera Medenica sends along news, discussed on her Fashion Industry Law Blog, of her involvement in an interesting legal question: In an action to enforce a trademark infringement judgment, can a defendant who continues with the exact same infringements collaterally attack a prior judgment with a defense that it raised in that prior action but deliberately chose not to “prosecute,” i.e., really litigate?
The case is Lucky Brand Dungarees, Inc., et al., v. Marcel Fashions Group, Inc., and the opposition to the petition for certiorari that Olivera and her Dunnington Bartholow & Miller partners drafted is before the Supreme Court. As Olivera explains at her post:
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).
The Second Circuit disagreed — “rightfully,” as Olivera says! — based on considerations of “fairness, efficiency and judicial economy.”
Which does sound rightful, actually. The petition for cert, filed by our friend The Dale Cendali, argues that the Second Circuit erred by conflating issue preclusion and claim preclusion, thereby improperly barring the defendants “from litigating defenses that had never been adjudicated, in the context of claims that had never been litigated,” creating a “textbook split” among the circuits. As the petition says:
The Federal Circuit, Eleventh Circuit, and Ninth Circuit have all recently addressed successive-litigation situations mirroring this one. And they have all held that where a second case involves claims that postdate the first case between the parties, the defendant is not precluded from raising defenses that were not actually litigated and resolved in the first case
The Marcel team begs to differ, observing (convincingly in my little book) that this is not that case because
Petitioners now erroneously argue that Respondent’s 2011 judgment enforcement action constitutes a new claim that entitles Petitioners to shield infringing conduct by raising the 2003 Release and Settlement Agreement as a defense. However, in the 2005 Action, Petitioners raised this 2003 release, never pursued it, and ultimately waived it by stipulating to the 2010 Final Order and Judgment on the merits. The Second Circuit rightfully rejected as res judicata Petitioners’ attempt to relitigate the 2003 release that had been entirely adjudicated by the 2010 Final Order and Judgment.
So … it’s complicated.
And it’s hard to think the Supreme Court will pick this one up, precisely for that reason. This strikes me as a civil litigation question, not a trademark question. Can a defense in any case, technically preserved but not actually litigated, be deemed waived in subsequent litigation over “the same” or related facts? It is an interesting inquiry — what do you really accomplish by “preserving” a defense if you don’t really use it? — but in the face of the settlement agreement, you end up getting into the weeds, and…
That’s the kind of thing the Supreme Court pretty much leaves it to lower courts to handle. It also seems unlikely the policy implications of petitioner’s claims here rise to a level sufficient for the high court to second-guess the Second Circuit’s judgment regarding “fairness, efficiency and judicial economy.”
They say, in life, that you make your own luck. They certainly say it in litigation, and that applies to what you preserve and what you don’t — including in the language of a settlement agreement. While that old saw is probably a bit of an overstatement, and notwithstanding the (unsurprising) fine effort of the Kirkland team, I wouldn’t bet on Lucky Brand in this one.
Originally posted 2019-06-14 12:40:37. Republished by Blog Post Promoter