Trademark
SCOTUS: Lucky Brand Dungarees, Inc. v. Marcel Fashions Group., Inc.
The U.S. Supreme Court ruled that claim preclusion, i.e., the doctrine of res judiciata, did not apply to a defense that Lucky Brand failed to fully adjudicate in a prior lawsuit, but is now raising in its current lawsuit against Marcel Fashions as the current lawsuit raised “different conduct” and “different claims.”
Specifically, Lucky Brand and Marcel Fashions have been stuck in trademark related litigation for almost 20 years as both brands use the word “Lucky” as part of their marks on jean and apparel. In 2003, Marcel sued Lucky Brand for using the phrase “Get Lucky” on its apparel as Marcel owned a trademark on that phrase. A settlement agreement was reached in which Lucky Brand agreed to stop using the phrase and Marcel agreed to release any claims regarding Lucky Brand’s use of its own trademarks.
In 2005, a Lucky Brand sued Marcel for infringing on its trademark and Marcel counter sued alleging that Lucky Brand continued to use the phrase “Get Lucky.” In both a motion to dismiss the counterclaims and an answer to them, Lucky Brand argued that the counterclaims were barred by the settlement agreement, but it did not invoke that defense later in the proceedings. The court in the 2005 Action permanently enjoined Lucky Brand from copying or imitating Marcel’s “Get Lucky” mark, and a jury found against Lucky Brand on Marcel’s remaining counterclaims.
Then in 2011, Marcel sued Lucky Brand for continuing to use the “Get Lucky” mark, i.e., violating the injunction, in Lucky Brand’s other marks containing the word “Lucky.” Lucky Brand counterclaimed and moved on a motion to dismiss based on the 2003 settlement, which the district court granted. The Second Circuit, however, held that Lucky was precluded from raising the release defense by the doctrine of “defense preclusion.” The court reasoned that Lucky should have raised that defense at some point in the years of litigation since the settlement. Given that Lucky had not inserted that defense prior, it was now barred from doing so by the doctrine of res judicata. On appeal to the SCOTUS, Lucky argued the ruling was "absurd," as it would force litigants to raise any and all conceivable potential defenses to avoid forgoing them later.
The SCOTUS, unanimously, overturned the Second Circuit’s ruling and held that “claim preclusion” did not preclude Lucky’s release defense because the two suits were not based on the “same claim.” The 2005 litigation arose out of allegations that Lucky infringed Marcel’s “Get Lucky” trademark. The 2011 litigation, on the other hand, arose out of allegations that Lucky committed infringement by using its own marks containing the word “Lucky.”
Although the Court did not specifically determine under what circumstances claim preclusion could apply to defenses specifically, the Court recognized that considerations “other than actual merits” may affect whether a litigant decides to assert a defense. In this case, however, given that the defense was inserted in a case with “different conduct” and “different claims,” claim preclusion did not apply to this case.
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Copyright
Copyright Damages Limited to Three Years in the Second Circuit
The Second Circuit has ruled that copyright infringement damages are limited to those damages incurred within three years prior to the commencement of a lawsuit.
Specifically, in the case In Sohm v. Scholastic Inc., No. 18-2110, 2020 WL 2375056 (2d. Cir. May 12, 2020), Joseph Sohm sued Scholastic Inc. for, among other things, infringing upon 89 of his photographs as the company did not obtain a license to use the photos appropriately. The district court granted in part and denied in part the parties’ cross-motions for summary judgement. On appeal, both Sohm and Scholastic raised multiple challenges to the district court order. In relevant part, Scholastic argued that the district court erred in allowing damages to accrue more than three years prior to the date that the copyright infringement suit was filed.
The Second Circuit reversed the district court findings and agreed with Scholastic that damages should be limited to three years prior to the date the suit was filed. Specifically, the Second Circuit cited Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S.663 (2014), which held that the Copyright Act limited a plaintiff’s recovery to damages incurred within three years prior to filing suit. There, the U.S. Supreme Court held that “[u]nder the Act’s three-year provision, an infringement is actionable within three years, and only three years, of its occurrence” and “the infringer is insulated from liability for earlier infringements of the same work.” Thus, “a successful plaintiff can gain retrospective relief only three years back from the time of suit” and that “[n]o recovery may be had for infringement in earlier years.”
Although this decision may favor defendants in copyright actions, not all circuits have interpreted the U.S. Supreme Court’s ruling the same way. Some district courts in the Ninth Circuit have since suggested that damages incurred more than three years prior to suit should be permitted so long as the plaintiff had no reason to know about the infringement prior to the three-year limitations period. See, e.g., Johnson v. UMG Recordings, Inc., 2019 U.S. Dist. LEXIS 184455 (C.D. Cal. Oct. 23, 2019).
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Patents
European Patent Office rules that Plants and Animals are not Patentable
In a 70 page opinion, the European Patent Office’s (EPO) Enlarged Board of Appeals has ruled that plants and animal that are produced only by “essentially biological processes” are not patentable as per the European Patent Convention (EPC).
In 2015, the EPO originally held that plants and animal products that are exclusively obtained by essentially biological processes were allowed to be patented under the EPC. The EPO's administrative council, however, later introduced a rule that barred such products from being patented, and that rule took effect in July 2017. This ruling does not apply to patents granted prior to July 2017 or patent applications that were filed prior to that date.
As reported by Law360, the EPO’s president has stated “We hope the new verdict will help to put an end to a decade of complete legal absurdity and chaotic decision-making at the EPO. However, there is still a huge risk that big corporations, such as Bayer (previously Monsanto) will try to abuse patent law to take control of our daily food."
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