Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc.

Citation779 F.3d 102,113 U.S.P.Q.2d 1957
Decision Date25 February 2015
Docket NumberDocket No. 12–4341–cv.
PartiesMARCEL FASHIONS GROUP, INC., Plaintiff–Appellant, v. LUCKY BRAND DUNGAREES, INC., Liz Claiborne, Inc., Lucky Brand Dungarees Stores, Inc., Defendant–Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Matthew A. Pek, Law Offices of Matthew A. Pek, Esq., New York, NY, for PlaintiffAppellant.

Leslie Gordon Fagen, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, (Darren W. Johnson, on the brief), for DefendantAppellees.

Before: LEVAL, CALABRESI, and LYNCH, Circuit Judges.

Opinion

LEVAL, Circuit Judge:

Plaintiff Marcel Fashions Group, Inc. (“Marcel” or Plaintiff) appeals from the judgment of the United States District Court for the Southern District of New York (Swain, J. ) in favor of Defendants Lucky Brand Dungarees, Inc., Liz Claiborne, Inc., and Lucky Brand Dungarees Stores, Inc. (collectively, “Lucky Brand” or Defendants). Marcel's suit sought damages and injunctive relief based on claims of trademark infringement, false designation of origin, and unfair competition under 15 U.S.C. §§ 1114, 1116, and 1125, as well as common law trademark infringement and unfair competition under Fla. Stat. § 495.151. The court granted Lucky Brand's motion for summary judgment and denied leave to replead on the ground that the action was barred by res judicata.

We conclude that a prior judgment in Plaintiff's favor awarding damages and an injunction did not bar Plaintiff from instituting a second suit seeking relief for alleged further infringements that occurred subsequent to the earlier judgment. We therefore vacate the grant of summary judgment and the denial of leave to amend the complaint. The district court also denied Marcel's motion to hold Defendants in contempt for violation of an injunction in the prior litigation. We affirm this ruling as Marcel did not show that Defendants' conduct violated the terms of the injunction.

BACKGROUND
I. Parties

Marcel, a Florida corporation, received a federal trademark registration in 1986 for “Get Lucky.”1 Marcel has since sold jeans under that mark. In 1990, Defendant Lucky Brand Dungarees, Inc., a Delaware corporation, began selling jeans and other casual apparel under the mark “Lucky Brand” and other marks that include the word “Lucky.” It has sold this merchandise in major department stores and, as of January 2012, had more than 180 retail stores in the United States, with sales of nearly $400 million in 2011. It owns registered trademarks, including “Lucky Brand” and “Lucky Brand Dungarees.” Defendant Liz Claiborne, also a Delaware corporation, is the parent corporation of Lucky Brand Dungarees, Inc.

II. Prior Litigation
A. 2001 Action and Settlement

In September 2001, Marcel filed suit alleging unfair competition and trademark infringement against the Lucky Brand Defendants and others (the 2001 Action”). In May 2003, the parties settled the 2001 Action pursuant to a Release and Settlement Agreement, which provided that the Lucky Brand Defendants “shall desist henceforth from use of ‘Get Lucky’ as a trademark,” while acknowledging the Defendants' “rights to use, license and/or register the trademark LUCKY BRAND and/or any other trademarks ... registered and/or used by Lucky Brand....” Joint App'x (“JA”) at 207–08.

B. 2005 Action

In 2004, Ally Apparel Resources LLC and/or Key Apparel Resources, Ltd. (collectively, “Ally”) launched a “Get Lucky” line of jeanswear and sportswear based on a license it received from Marcel. On July 27, 2005, Lucky Brand filed an action (the 2005 Action”) in the Southern District of New York (Swain, J. ) against Ally, Marcel, and Ezra Mizrachi (the president of Marcel) (collectively the 2005 Marcel Parties), alleging that they had engaged in unfair business practices and that the “Get Lucky” line infringed on Lucky Brand's trademarks.

The 2005 Marcel Parties counterclaimed against Lucky Brand's use of the “Get Lucky” mark, asserting infringement and breach of the 2003 Settlement Agreement, and seeking to enjoin Lucky Brand from using the “Get Lucky” trademark or any other similar trademark. Notwithstanding Marcel's acknowledgment of Lucky Brand's right to use the “Lucky Brand” marks in the parties' settlement of the 2001 Action, Marcel's counterclaims sought to enjoin Lucky Brand's use of “Lucky Brand” or “Lucky,” as confusingly similar to “Get Lucky.” See JA at 283.

On April 22, 2009, as a sanction for misconduct in discovery, the district court enjoined Lucky Brand from using Marcel's “Get Lucky” trademark (the 2009 Injunction”). In anticipation of a jury trial to resolve the remaining claims and counterclaims, the parties filed a Second Amended Joint Pre–Trial Statement, which identified the remaining issues to be resolved at trial. Marcel identified as a remaining issue, [w]hether Marcel is entitled to an injunction against Lucky Brand enjoining Lucky Brand from selling merchandise using GET LUCKY, LUCKY, LUCKY BRAND or any other mark incorporating Lucky.” JA at 296.

At the conclusion of trial, the jury answered in the affirmative to Question 8 of the Verdict Form, which asked whether Lucky Brand “infringed Marcel Fashion's ‘Get Lucky’ mark by using ‘Get Lucky,’ the ‘Lucky Brand’ marks and any other marks including the word ‘Lucky’ after May 2003.” JA at 355. For this infringement, the jury awarded the 2005 Marcel Parties compensatory and punitive damages.

Following the verdict, the parties negotiated and jointly drafted a Final Order and Judgment at the request of the district court. On May 13, 2010, Marcel's counsel sent an email to Lucky Brand's counsel attaching a draft, which proposed inclusion of a paragraph stating, “Lucky Brand Dungarees, Inc. and Liz Claiborne, Inc.... are permanently enjoined from further use of GET LUCKY, the LUCKY BRAND trademarks and any other trademarks using the word ‘Lucky.’ JA at 366. Lucky Brand refused to agree to the inclusion of this paragraph in the judgment. Marcel's counsel removed the paragraph and resubmitted the proposed order, without that paragraph. On May 28, 2010, the district court adopted the proposed judgment (the 2010 Final Order and Judgment”). The Final Order and Judgment includes the substance of the 2009 Injunction, prohibiting Lucky Brand from using the “Get Lucky” mark, as well as the language of Question 8 of the Verdict Form, stating that the “Lucky Brand Parties infringed Marcel Fashion's GET LUCKY trademark ... by using GET LUCKY, the LUCKY BRAND trademarks, and any other trademarks including the word ‘Lucky’ after May 2003.” JA at 26–27.

III. The Instant [2011] Action

On April 29, 2011, Marcel initiated the instant action by filing a complaint in the United States District Court for the Southern District of Florida seeking damages and injunctive relief prohibiting Lucky Brand from using the “Lucky Brand” trademarks (the Instant Action). The complaint alleges, inter alia, that Lucky Brand infringed Marcel's “Get Lucky” trademark “by using the Lucky Brand marks in the identical manner and form and on the same goods for which they were found liable for infringement [in the 2005 Action].” JA at 15. The complaint asserts causes of action for federal trademark infringement and false designation of origin, federal unfair competition law, and state common law trademark infringement. Lucky Brand moved to transfer the action to the Southern District of New York, where the 2005 Action was heard. The motion was granted, and the action was thereafter heard in the Southern District of New York before the judge who had heard the 2005 Action.

Lucky Brand moved for summary judgment. Among its asserted grounds were that: (1) Marcel's claims were precluded by the judgment in the 2005 Action; and (2) Marcel waived its right to seek injunctive relief against Defendants' use of “Lucky Brand” and damages for such use by failing to seek such relief in the 2005 Action.

On September 25, 2012, the district court granted Lucky Brand's motion for summary judgment, holding that Marcel's claims in the instant action were precluded by res judicata because they were essentially the same claims as the 2005 Action, for which the court had made a final disposition. See Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., No. 11 Civ. 5523(LTS), 2012 WL 4450992, at *4–6 (S.D.N.Y. Sept. 25, 2012). The district court reasoned that Marcel could have, and indeed did, seek injunctive relief directed against use of the “Lucky Brand” marks in the 2005 Action, but then abandoned any such demand. Furthermore, Marcel had been awarded damages for use of the marks “after May 2003,” which led the court to conclude that Marcel had already been compensated for any future infringing use of its marks.Id. at *5. The district court also denied Marcel's motion for leave to file an amended complaint as futile in light of the court's determination that the suit was barred by res judicata. Id. at *7.

On January 24, 2012, Marcel had moved to hold Lucky Brand in contempt for violating the injunction issued in the 2005 Action by continuing to use the “Lucky Brand” marks. The district court denied Marcel's motion on the ground that the injunction enjoined Lucky Brand “from using only reproductions, counterfeits and imitations of the GET LUCKY mark, and d[id] not prohibit use of the other Lucky Brand marks or the word Lucky.” Id.

DISCUSSION

On appeal, Marcel contends that the district court erred: (1) in awarding summary judgment to Lucky Brand; (ii) in denying Marcel's motion for leave to file an amended complaint; and (iii) in denying Marcel's motion to hold the Defendants in contempt for violating the terms of the injunction in the 2005 Action.

I. Summary Judgment 2

The district court granted summary judgment in favor of the Defendants, ruling that the suit was precluded by res judicata. Marcel contends this was error. We agree. Winning a judgment based on the defendant's violation of the plaintiff's rights does not deprive the...

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