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IP Alert: Supreme Court to Decide on Lanham Act's Extraterritorial Reach

March 20, 2023

On March 21, the U.S. Supreme Court will hear oral argument in Abitron Austria GmbH v. Hetronic International, Inc. to address an important question involving the exterritorial reach of federal trademark law under the Lanham Act. Petitioner Abitron, a European corporation, appeals a $96 million jury verdict awarded against it by a jury in the Western District of Oklahoma for Lanham Act violations of U.S. trademarks and trade dress for radio remote controls used to operate heavy equipment, such as cranes. The verdict was affirmed by the 10th Circuit Court of Appeals. The issue on appeal is whether the Lanham Act reaches extraterritorially to trademark infringement by a foreign entity’s conduct outside of the United States, including sales that never reached the U.S. and that were based on activities that never took place in the U.S. The vast majority of damages in the case were based on products that Abitron had sold abroad to foreign buyers that were not designated for use in the U.S. The Supreme Court docket and briefing may be accessed here.

Abitron argues that the Lanham Act gives no indication that it applies extraterritorially, and that the Act’s lack of guidance for imposing liability based on foreign conduct reinforces that it does not reach that far, even if the foreign conduct produces negative effects within the U.S. Abitron asserts that, because the “use” of trademarks in commerce establishes the foundation for obtaining, maintaining, and enforcing trademark protections under the Act, the Act’s focus is to regulate “uses” in the U.S. Abitron argues that any use that happens outside of the U.S. is beyond the Act’s scope. Abitron argues that if the Act could apply abroad, any such application must be limited to foreign uses likely to cause customer confusion in the U.S.

Hetronic argues that the Lanham Act reaches all commerce that may be regulated by Congress, and that Congress has the power to regulate conduct that substantially affects commerce in the U.S. Hetronic claims that Abitron’s infringement substantially affected U.S. commerce, and that Abitron’s diversion of $96 million in sales from Hetronic is a substantial effect on U.S. commerce. Hetronic further argued that Abitron’s infringement also implicated the Act because it was likely to confuse U.S. consumers. Hetronic argued that infringement occurs when a mark is used misleadingly, and all of Abitron’s uses of Hetronic’s marks were likely to cause confusion in the U.S. Looking to protect its damages verdict, Hetronic asserts that because all of Abitron’s sales resulted from those misleading uses, they were all subject to disgorgement.

The potential impact of this decision is highlighted in the numerous amici curiae that have filed briefs in the appeal, and the Court requested that the United States submit briefing on its position. The Supreme Court also granted the U.S. Solicitor General’s request to participate in the oral argument. The case has the potential to resolve a deepening split in various circuits on tests used to determine the limits of the Lanham Act’s reach.

Fitch Even will continue to monitor developments related to the Hetronic case and will report on how the Supreme Court’s awaited decision may affect the Lanham Act’s extraterritorial application and a trademark owner’s ability to enforce trademarks internationally.

For more information on this topic, please contact Fitch Even partner Joseph F. Marinelli, the author of this alert.

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