Fildes & Outland, P.C.

The U.S. Supreme Court heard oral arguments this month in two trademark cases, Lucky Brand Dungarees Inc. v. Marcel Fashion Group Inc. (Supreme Court Docket No. 18-1086) and Romag Fasteners Inc. v. Fossil Inc. (Supreme Court Docket No. 18-1233).

In Lucky Brand, the Supreme Court is considering whether federal preclusion principles can bar a defendant from raising defenses that were not actually litigated and resolved in any prior case between the parties, when a plaintiff has asserted new claims in a new case involving the parties.  Petitioner Lucky Brand Dungarees and respondent Marcel Fashion Group entered into a settlement agreement in May of 2003 after Marcel Fashion had sued Lucky Brand for the use of Marcel Fashion’s GET LUCKY trademark.  The settlement agreement in part released any and all claims relating to Lucky Brand’s own trademarks as of the date of the agreement.  Subsequently, the parties again found themselves in litigation involving Marcel Fashion’s GET LUCKY trademark as well as Lucky Brand’s trademarks.  Lucky Brand moved to dismiss this litigation based on the settlement agreement, but the district court denied the motion because it could not at that stage determine whether all aspects of the claims relating to Lucky Brand’s trademarks could have been raised prior to the settlement agreement, because some of Lucky Brand’s trademarks postdated the settlement agreement.  Ultimately, a Final Order was issued in which Lucky Brand was permanently enjoined from using the GET LUCKY trademark, but nothing more.  Then, in 2011, Marcel Fashion again sued Lucky Brand for trademark infringement, this time seeking an injunction prohibiting Lucky Brand from using its LUCKY BRAND marks that specifically predated the May 2003 settlement agreement.  Lucky Brand moved to dismiss the case based upon the release in the settlement agreement, while Marcel Fashion argued that Lucky Brand was precluded from relying on the settlement agreement because Lucky Brand could have raised the same defense at trial in the prior litigation.  The district court sided with Lucky Brand, finding that the prior litigation did not bar raising the settlement agreement defense.  On appeal, the Second Circuit reversed and found that defense preclusion did preclude Lucky Brand from raising defenses in a second action that could have raised in the first case, but were not.  The Second Circuit’s position on this issue, however, is in stark contrast to that taken by the Federal Circuit, the Ninth Circuit, and the Eleventh Circuit.

The Lucky Brand petition may be accessed at https://www.supremecourt.gov/DocketPDF/18/18-1086/88627/20190215130231701_Lucky%20cert%20petition%20final.pdf and a transcript of the oral arguments may be accessed at https://www.supremecourt.gov/oral_arguments/argument_transcripts/2019/18-1086_1b7d.pdf.

In Romag Fasteners, the Supreme Court is considering whether a finding of willfulness is a prerequisite for an award of an infringer’s profits for trademark infringement, or if it is merely one factor to consider when determining a remedy.  Petitioner Romag sued respondent Fossil for trademark infringement under Section 1125(a) of the Lanham Act.  The Lanham Act provides that a plaintiff is entitled to an award of the infringer’s profits, subject to principles of equity, for a violation under Section 1125(a), or for a willful violation under Section 1125(c).  While Fossil was found to infringe Romag’s trademark under Section 1125(a), the District Court ultimately denied an award of profits because Fossil’s infringement was not shown to be willful.  The Federal Circuit, following Second Circuit precedent, affirmed that willfulness is required to obtain an infringer’s profits.  Other circuit courts, however, have held that willfulness is not a per se requirement.

The Romag petition may be accessed at https://www.supremecourt.gov/DocketPDF/18/18-1233/92520/20190320121338357_Romag%20Cert%20Petition.pdf and a transcript of the oral arguments may be accessed at https://www.supremecourt.gov/oral_arguments/argument_transcripts/2019/18-1233_8njq.pdf.

Decisions in both of these trademark cases should be issued in the coming months.

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