ILMA Compoundings - March 2020 - 35

WASHINGTON LANDSCAPE

Supreme Court Case May
Make Civil Litigants 'Unlucky'
By Matthew Levetown

I

n an odyssey 19 years in the
making, the U.S. Supreme Court
recently heard arguments over
Lucky Brand Dungarees' use of the
phrase "Get Lucky," in an underreported case in which the decision
could affect all civil litigation. The
case, Lucky Brand Dungarees Inc. v.
Marcel Fashion Group Inc., began as a
trademark dispute and morphed into a
challenge that could drive up the costs
and times of lawsuits themselves. At
the heart of the dispute is the issue of
whether a nonasserted legal defense
from a previously concluded case can
be argued in subsequent litigation, or
if it is barred under the legal principal
known as "claim preclusion" (sometimes referred to as res judicata).
BACKGROUND
As a quick summary, a trademark is
a type of intellectual property that
identifies a product or service as being
from a particular source and is usually
registered with the U.S. Patent and
Trademark Office. Trademarks are
distinct from novel idea protections in
the form of patents and from original
expressions of ideas as copyrights (very
roughly summarized).
In 2001, Marcel Fashion sued Lucky
Brand for infringement of Marcel's
trademarked phrase, "Get Lucky." The
parties settled in 2003, with Lucky
agreeing not to use the phrase and
Marcel releasing claims for infringement. Because of ambiguity over what
exactly was released, both parties dispute
what they can do under the settlement
agreement. Marcel argues that only

infringements before 2003 were released,
and Lucky claims that all infringement
of the phrase is covered due to the date
of trademark registration.
A few years later, Lucky Brand
sued Marcel for licensing "Get
Lucky" for clothes and gear similar to
its own offerings, effectively marketing on Lucky's success. Marcel,
in turn, claimed a violation of the
2003 settlement. Lucky relied on its
interpretation of the settlement when
it moved to dismiss the infringement
counterclaims but never reasserted it
as a defense during actual trial. Marcel
won $300,000 and a prohibition
against Lucky's use of "Get Lucky."
When your company name involves
the word "lucky," it is impossible to
imagine how an advertising team can
avoid its use. Nonetheless, Marcel
sued Lucky again in 2011 for other
uses of "lucky," including the phrase
"Lucky You." Lucky won the first
round on the defense that it was only
barred from the trademarked "Get
Lucky," but the 2nd Circuit Court of

Appeals disagreed. The 2nd Circuit's
decision stated that Lucky in 2005
must have raised and maintained that
use of the trademark phrase was covered by the settlement, and its failure
to do so means that it can't rely on it
during the third trial. If the Supreme
Court agrees with the 2nd Circuit, it
carries worrisome implications for how
lawsuits proceed, especially against
serial litigators.
THE CONSEQUENCES
The legalese for the 2nd Circuit's
theory is known as "claim preclusion."
Claim preclusion is the idea that
a party cannot sue the same party
endlessly for the same or similar
reason once a case has been completely
decided, the civil version of double
jeopardy. For example, if a court finds
that lazy quality assurance testers were
not to blame for an exploding widget,
the person injured by the exploding
widget can't sue again for that claim
or other similar ones, like that it was
actually the manager's fault. Instead,
Continued on page 37

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ILMA Compoundings - March 2020

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