The U.S. Supreme Court appeared likely to nix the Second Circuit’s novel “defense preclusion,” which allowed Marcel Fashions to pursue trademark infringement claims against Lucky Brand Dungarees but prevented Lucky Brand from asserting defenses that it could have brought in earlier litigation between the two parties.
At issue is whether res judicata, or claim preclusion—which prevents a party from relitigating a claim that it did raise or could have raised in earlier litigation—applies to defenses asserted by defendants as opposed to offensive claims brought by plaintiffs.
The New York-based U.S. Court of Appeals for the Second Circuit said that Lucky Brand couldn’t raise a defense because it could have done so in an earlier case—a decision with which Justice Stephen Breyer said no other court had ever agreed.
Introduction of defense preclusion would have the potential to affect litigation not just in this nearly two decades-long trademark dispute over Marcel’s “Get Lucky” trademark, but across all civil cases.
Several of the justices seemed incredulous that the law allows defense preclusion.
Such a rule would be asymmetrical in that it would allow plaintiffs to sue for new claims but wouldn’t allow defendants to defend against them, Justice Neil Gorsuch said.
Moreover, it would require defense counsel to put forth every possible defense imaginable at the earliest possible opportunity—even if it doesn’t really makes sense in that particular litigation, Chief Justice John Roberts said.
That’s a “serious difficulty” with Marcel’s argument, Roberts said.
The case is Lucky Brands Dungarees, Inc. v. Marcel Fashions Grp., Inc., U.S., No. 18-1086, argued 1/13/20.