The Supreme Court of the United States recently granted certiorari in two trademark cases. In Romag Fasteners v. Fossil, the Court will consider whether courts can order trademark infringers to disgorge their profits without a finding of “willful” infringement. In Lucky Brand Dungarees v. Marcel Fashion Group, the Court will consider whether claim preclusion may bar a defendant from raising a defense late in litigation.
In Romag Fasteners, a jury found that Fossil infringed Romag’s trademarks. Nevertheless, the district court refused to award $6.8 million of Fossil’s profits because Romag could not prove the company had infringed “willfully,” a prerequisite to those damages under Second Circuit case law. The circuits are split regarding this prerequisite, with the First, Second, Eighth, Ninth, Tenth, and D.C. circuits requiring willfulness, while the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh circuits do not. The Court’s determination will significantly affect trademark litigation because damages are often more difficult to obtain in trademark cases than in other intellectual property cases. Notably, the Court first heard the case in 2017, when the justices vacated certain rulings on the patent aspects of the case but did not weigh in on the trademark issues.
In Lucky Brand Dungarees, Lucky—the petitioner—seeks to overturn the Second Circuit’s ruling that claim preclusion barred Lucky from asserting a new defense because it could have asserted it in a previous action. The case follows more than 18 years of litigation between Lucky and Marcel Fashions Group, which has long accused Lucky of infringing its “Get Lucky” trademarks. In 2017, a federal judge held that a 2003 settlement agreement releasing Lucky from further liability barred Marcel’s most recent accusations. The Second Circuit overturned the decision because Lucky failed to litigate the same defense in a 2005 action, when it sued Marcel over a license agreement for use of the “Get Lucky” mark. Marcel counterclaimed, alleging that Lucky violated the 2003 agreement. Because Lucky could have litigated the defense at that time, but chose not to, the court held Lucky could not raise the defense in the current action. The Second Circuit noted the ruling was the first time the court applied claim preclusion to a defense; the doctrine of res judicata typically bars plaintiffs from bringing claims that the plaintiff could have brought in an earlier action.