Last week, the U.S. Supreme Court issued an opinion in Abitron Austria GmBH v. Hetronic Int’l, Inc., No. 21–1043 (June 29, 2023), holding that trademark infringement under the Lanham Act is not extraterritorial and extends only to infringing use in commerce that is domestic to the United States.
Hetronic manufactures remote controls in the U.S. used for construction equipment. Abitron, based in Germany and Austria, reversed engineered Hetronic’s products and began selling its own products, using the Hetronic brand, primarily in Europe but with a few sales directly to customers in the United States.
Hetronic sued Abitron under the Lanham Act for trademark infringement (§1114(1)(a)) and false designation of origin (§1125(a)(1)). Both provisions prohibit the unauthorized use of marks in commerce when that use is likely to cause confusion. Hetronic sought damages for Abitron’s infringing sales worldwide alleging all such use impacted Hetronic in the U.S. Abitron unsuccessfully argued that Hetronic’s damages demand was an impermissible extraterritorial application of the Lanham Act. The jury awarded Hetronic $96 million in damages, and the district court issued a worldwide permanent injunction. The Tenth Circuit affirmed but narrowed the scope of the injunction. The U.S. Supreme Court granted certiorari, vacated and remanded.
The Supreme Court applied a two-step framework in its review. Step one evaluated whether the presumption against extraterritoriality in U.S. laws was successfully rebutted, which turns on whether Congress affirmatively instructed that the provisions apply to foreign conduct. The Court concluded that neither §1114(1)(a) nor §1125(a)(1) include an express statement of extraterritorial application, failing to rebut the presumption.
At step two, the Court’s majority opinion evaluated whether the suit sought a permissible domestic application of the asserted Lanham Act provisions. The Court held that the domestic application of the Lanham Act, “use in commerce,” is premised on whether the actual infringing use occurred in commerce in the United States. Accordingly, the Court vacated and remanded for further proceedings consistent with its opinion.
Justice Jackson concurred but hypothesized that a foreign manufacturer may be liable for infringement if their products were resold domestically by a third party.
Justice Sotomayor, joined by Chief Justice Roberts and Justices Kagan and Barrett, concurred in the judgment but disagreed with the extraterritoriality framework of the majority, expressing the view that a likelihood of confusion in the United States would be satisfactory to incur Lanham Act liability— as opposed to actual infringing use in commerce.
Coauthored by Tony Zeuli & Henry Adebisi.