Supreme Court Limits and Questions Preclusion of Defenses in TM Case

by Dennis Crouch

Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (Supreme Court 2020)

This case makes me sad because it reminds me that my walk-able grocery store, Lucky’s Market, has closed down. Colorado based Lucky’s had its own trademark dispute with California based Lucky Supermarket.

The case before the supreme court involved two other uses of LUCKY:

The parties in this case have been fighting in federal court over trademark rights for almost 20 years; and in three separate actions.

The petition before the U.S. Supreme Court involves “defense preclusion” –asking when a defendant in a subsequent action will be precluded from raising a defense that was or could-have been raised in the prior action.  In its decision, the Supreme Court explained that there is no special doctrine of defense preclusion, but rather the courts should apply the general rules of claim preclusion and issue preclusion.

The first litigation ended in a settlement.  During the second litigation, Lucky Brand raised the prior settlement as a reason to dismiss, but the court denied the motion-to-dismiss without prejudice (thus not “on the merits”).  The second litigation was then decided on other grounds.  In the third litigation Lucky Brand again raised the prior settlement as a defense, and Marcel argued that it was precluded.  In its analysis, the Supreme Court focused on whether the third litigation involved the “same claim” as the second; and whether it mattered.

Claim preclusion bars relititgation of an already decided claim between two parties.  Our notice pleading system encourages parties to join together in a single lawsuit all the claims that the parties have against one another.  Once the lawsuit ends, our claim preclusion will step-in to bar any further litigation between the parties relating to that transaction or occurrence.  If, for example, a patentee sues a manufacturer for infringing claim 1 of its patent (and wins).  The patentee will be barred from later filing a lawsuit asserting claim 2 of the same patent against the same manufacturer for the same infringing behavior.

Claim preclusion is thought to also precludes defenses that were raised or that could have been raised in the the first lawsuit.  However, a key limiting factor that the court found today is the “same transaction” or “common nucleus of operative facts” test — and that test is defined by the well pled complaint.

Here, the Supreme Court explained that the two lawsuits did not involve the same claims: “Put simply, the two suits here were grounded on different conduct, involving different marks, occurring at different times.”  Thus, no claim preclusion. [I believe that both cases involved assertion of the “get lucky” mark, and so I don’t know what the court is talking about regarding “different marks.” – DC]

Note here that the court also suggested a possibility of eliminating claim preclusion to defenses altogether: “There may be good reasons to question any application of claim preclusion to defenses.” That issue though is saved for another day.

Issue preclusion bars relitigation of an already decided issue.  However, issue preclusion requires that the issue be actually decided. Although the defense was raised in the original lawsuit, it was not actually decided but rather dismissed without prejudice. Thus, no issue preclusion.

Trademark Law: In his short post on the case, Eric Moran notes:

The Court specifically pointed out the risk in barring such claims in trademark cases, when “liability for trademark infringement turns on marketplace realities that can change dramatically from year to year.”

The court could have allowed more conflation between these various cases, but drew a tight line on the “same claim” element of claim preclusion.  One ongoing debate on this topic in patent law is the extent that a patentee should be required to assert all of its patents related to a defendant’s accused infringing content at the risk of beinig precluded. Or, may a patentee file a first lawsuit with a first patent; then later a second lawsuit with a second patent; etc. Current Federal Circuit rule is that allegations of infringement of two different patents involve the “same claim” only if the claim scopes are “essentially the same.” SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1167 (Fed. Cir. 2018); See also Acumed LLC v. Stryker Corp., 525 F.3d 1319 (Fed. Cir. 2008) (same claim also requires infringing activity to be “essentially the same”).

Patent Infringement Claim Preclusion: Only When Accused Device is “Essentially the Same” as Prior Adjudicated Device


9 thoughts on “Supreme Court Limits and Questions Preclusion of Defenses in TM Case

  1. 2

    Question to anyone who is sympathetic to the administration’s immigration policies…

    Would you be comfortable with USCIS (a fee funded agency like the PTO) having a fee structure where most of the agency’s funding came from fees required after green-card/naturalization approval?

    1. 2.1

      Perhaps because I do not do immigration law, but I am not certain what it is that you are trying to make a point with.

      Are you drawing a parallel from post grant ascending fee to post-green card ascending fee? Is there such a thing?

      Would it make a similar sense in that the longer afterwards from grant, the “better off” the fee payor is expected to be, otherwise the fee payor can simply choose to not pay (and have rights revoked)?

      To perhaps complete the analogy, after a green card is issued, you have an ascending payment schedule that drives one to either obtain citizenship or become successful enough (a contributing member of society) that payment of the escalating amounts is “worth it,” or one is stripped of the green card and deported.

      Is that your point?

    2. 2.2

      This is a good point Ben. Perhaps your first.

      And I agree with you that the structure of the fees probably provide the wrong incentives to the PTO.

      1. 2.2.1

        I think that there are pros and cons to the current fee structure for patents.

        What do you see as the cons? Do you think these outweigh the pros?


          Too complex a question for a comment section. I did a talk on the fees at the USPTO and the incentives. Needs a whole post as it gets complicated as you suggest.

  2. 1

    The decision is absolutely correct, and the CAFC needs to change is practice on issue preclusion and claim preclusion. But what is more important and what is not discussed in the opinion is whether the “defense preclusion” doctrine is properly founded under res judicata principles. Most likely not, because res judicata is based on three important public polices: promoting efficiency, promoting fairness and avoiding inconsistent adjudication.

    1. 1.1

      First, this case, to the extent it offers any commentary of CAFC’s defense preclusion precedent, seems to be in line with it.

      Second, how does defense preclusion not promote efficiency and avoid inconsistent adjudication?

      Case 1 (2012): I’m sued for breaching a contract, and my defense is “I signed the contract under duress.” The court looks at it and concludes I was not under duress when I signed the contract.

      Case 2 (2015): I’m sued for breaching the exact same contract (different breach), and my defense is “I signed the contract under duress.”

      Precluding this defense certainly seems to “promote efficiency” and “avoid inconsistent adjudication.”

      1. 1.1.1

        But that would be issue preclusion – precluding the attempt to raise again the issue (including a defense) that was actually decided. In your hypothetical, there probably would be preclusion.

        Lucky Brand involved claim preclusion where the defense was never actually decided. Allowing the defense to be raised in a subsequent suit does not create a problem of inconsistent adjudication.

Comments are closed.