## Facts

- Marcel Fashions Group, Inc. (Marcel) and Lucky Brand Dungarees, Inc. (Lucky Brand) both sold apparel using marks that included the word “Lucky.”
- Marcel owned a trademark registration for the phrase “Get Lucky.”
- Lucky Brand owned the registered mark “Lucky Brand” and used other “Lucky”-formative marks; it also used “Get Lucky” in some advertising.
- In 2001, Marcel sued Lucky Brand alleging trademark infringement based on Lucky Brand’s use of “Get Lucky.”
- The parties settled in 2003: Lucky Brand agreed to stop using “Get Lucky,” and Marcel released claims concerning Lucky Brand’s use of its own trademarks.
- In 2005, Lucky Brand sued Marcel for trademark violations; Marcel counterclaimed, alleging Lucky Brand continued to use “Get Lucky” in violation of the settlement and that Lucky Brand’s use of “Get Lucky” and “Lucky Brand” together created confusion with Marcel’s mark.
- Early in the 2005 litigation, Lucky Brand raised the 2003 release as a defense to Marcel’s counterclaims (including in a motion to dismiss and in its answer) but did not press that defense through later stages of the case.
- Marcel ultimately prevailed in the 2005 action; the court entered a permanent injunction barring Lucky Brand from copying or imitating Marcel’s “Get Lucky” mark, and a jury found against Lucky Brand on Marcel’s remaining counterclaims.
- In 2011, Marcel sued Lucky Brand again, alleging that Lucky Brand’s continued use of its own “Lucky”-formative marks infringed Marcel’s “Get Lucky” mark; Marcel’s claims were based on conduct occurring after the 2005 action ended and did not repeat the earlier allegation that Lucky Brand was using the phrase “Get Lucky.”
- Lucky Brand moved to dismiss the 2011 suit based on the 2003 settlement release; the district court dismissed.
- The Second Circuit vacated and remanded, holding Lucky Brand was barred from asserting the release under a theory it called “defense preclusion,” because Lucky Brand could have litigated the release defense fully in the 2005 action.
- The Supreme Court granted certiorari.

## Issues

1. Whether res judicata bars a defendant in a later action from raising a defense that was available, but not fully litigated, in an earlier action between the same parties.
2. Whether Marcel’s 2011 trademark claims arose from the same “claim” or common nucleus of operative facts as the 2005 action such that claim preclusion could apply to bar Lucky Brand’s settlement-release defense.
3. Whether issue preclusion could apply when the scope or effect of the settlement release was not actually litigated and decided in the 2005 action.

## Decision

- The Supreme Court unanimously reversed the Second Circuit and remanded.
- The Court rejected the Second Circuit’s use of “defense preclusion” to bar Lucky Brand from invoking the 2003 settlement release in the 2011 action.
- Because the 2011 suit was based on different conduct occurring after the 2005 action, it did not involve the same claim as the 2005 action for claim-preclusion purposes; therefore, claim preclusion could not bar Lucky Brand’s defense.
- Issue preclusion did not apply because the release defense was not actually litigated and decided in the 2005 action.

## Legal Principles

- Res judicata operates through two main doctrines: claim preclusion (barring relitigation of the same claim) and issue preclusion (barring relitigation of issues actually decided).
- Claim preclusion generally applies only when the later suit involves the same claim between the same parties, commonly assessed by whether both suits arise from the same transaction or common nucleus of operative facts.
- When a later suit is based on events that occurred after the earlier action, it ordinarily is not treated as the same claim for claim-preclusion purposes.
- A court may not extend preclusion beyond the limits of claim and issue preclusion by barring defenses in later suits involving different claims and different conduct.
- Issue preclusion requires that the specific issue was actually litigated, determined, and necessary to the prior judgment; a defense mentioned early in a case but not carried through to decision is not “actually litigated” for this purpose.

## Conclusion

Because Marcel’s 2011 infringement claims targeted later-occurring, different alleged conduct than the claims resolved in the 2005 action, claim preclusion did not apply, and there was no prior determination of the settlement release that could trigger issue preclusion; therefore, Marcel could not use res judicata to block Lucky Brand from asserting the 2003 settlement-release defense on remand.


Lucky Brand Dungarees v. Marcel Fashions Group, 140 S. Ct. 1589 (2020)