Lucky Brand and Marcel had litigated trademark disputes for nearly twenty years. A prior settlement released some claims and enjoined Lucky Brand from using Marcel’s mark. In a later action, Marcel challenged continuing conduct, and Lucky Brand invoked the settlement as a defense even though it had not pressed that defense in the earlier litigation. The Supreme Court held that claim preclusion did not bar the defense. The later action involved different conduct and claims, and claim preclusion generally does not prevent a party from raising a defense in a later action merely because it could have raised that defense earlier. The Court reversed the Second Circuit and remanded for further proceedings.