Proof Our Flag Is Still Here (But Only Here): U.S. Supreme Court Confirms Extraterritorial Limits on the Lanham ActJune 30, 2023
The Lanham Act, 15 U.S.C. §§ 1051 et seq., protects registered and unregistered trademark rights and prohibits unfair competition at the federal level. In events leading up to the U.S. Supreme Court’s June 29, 2023 decision in Abitron Austria GmbH et al. v. Hetronic Int'l, Inc., multiple nations implored the Supreme Court to restrict the reach of the Lanham Act to U.S. borders only, with the European Commission on behalf of the European Union stating that policing allegations of infringement in another country would be an “unseemly” act of “meddling in extraterritorial affairs.”
This week, the Supreme Court unanimously ruled the Lanham Act does not extend to conduct occurring outside of the United States, specifically holding that two key provisions of the Lanham Act (15 U.S.C. §§ 1114(1)(a) and 1125(a)(1)), are not extraterritorial and apply only to trademark infringement claims where the infringing use in commerce is domestic.
The Lanham Act prohibits the unauthorized use in commerce of a protected trademark when such use is likely to cause confusion. Through this Act, Congress gave trademark owners the right to bring a cause of action against anyone who improperly uses the owner’s protected mark, or a version thereof which is sufficiently similar, on sufficiently related goods or services in commerce, to cause confusion, deception or mistake.
A collection of six foreign defendants (collectively “Abitron”) initially were licensed distributors of plaintiff Hetronic International, Inc.’s (“Hetronic”) radio remote controls for construction equipment. The Abitron defendants subsequently reverse engineered and re-developed Hetronic’s products with parts sourced from third parties and then sold the products bearing Hetronic’s trademarks. Abitron’s infringing sales were mostly contained throughout Europe, although some direct sales were made in the United States. Hetronic sued Abitron in the United States District Court for the Western District of Oklahoma for trademark infringement, invoking the Lanham Act and sought damages for all of Abitron’s infringing acts worldwide. At trial, the jury awarded Hetronic approximately $96 million in damages related to Abitron’s direct sales to consumers in the United States, its foreign sales of products for which the United States was the ultimate destination, and its foreign sales of products that did not end up in the United States. The District Court also entered a permanent injunction restricting Abitron from using Hetronic’s trademarks anywhere in the world. On appeal, the 10th Circuit affirmed the jury’s award and concluded that the Lanham Act applied to Abitron’s overseas conduct. The Supreme Court granted certiorari to resolve a split among circuits regarding the extraterritorial reach of the relevant Lanham Act provisions.
The opening sentence of the Supreme Court’s analysis underscores the “longstanding principle of American law” that legislation of Congress is meant to apply solely within the boundaries of the United States, with narrow exceptions. The Supreme Court applied this presumption using a two-step framework. Step one is a determination whether a provision is extraterritorial, which turns on whether Congress has explicitly provided as such. Step two is a determination whether the lawsuit seeks a (permissible) domestic or (impermissible) foreign application of the provision, which turns on whether the relevant conduct occurred in the United States.
In step one, the Supreme Court expressly rejected Hetronic’s argument that Congress intended the Lanham Act to apply extraterritorially. The Supreme Court specifically rejected as insufficient the Lanham Act’s relatively broad definition of “commerce” as evidence of this intent and further noted that even statutes referring to foreign commerce have been held inapplicable extraterritorially.
In step two, the Supreme Court held the Lanham Act’s focus is Abitron’s unauthorized “use in commerce”, and therefore determined whether the suit was permissible or impermissible. In other words, the places where Abitron sold the products bearing the infringing trademarks provided the dividing line between a permissible and impermissible application of the Lanham Act provisions.
The Supreme Court concluded its analysis by quoting its previous opinion in Microsoft Corp. that “United States law governs domestically but does not rule the world,” emphasizing that the United States has control over, and may take action against, conduct in the United States, but solely here.
The result of the Supreme Court’s ruling in Abitron reiterates the importance of protecting your intellectual property, whether it be in products used globally, as in the Abitron case, food enjoyed around the world, or fashion trends sweeping the universe by surprise. Although acquiring a registration of your trademark with the United States Patent and Trademark Office provides protection in the United States, it may not protect you or your trademark(s) from infringing actions taken outside the United States. Lewis Rice has experienced lawyers focused on helping you protect your trademarks here in the United States and, with the help of our highly regarded foreign associates, around the world. If you want to explore the scope of your trademark registrations, are concerned about trademark infringement domestically or internationally, or simply wish to learn more about trademark protection, please reach out to one of our Intellectual Property attorneys or Design and Luxury attorneys.