In Brief: The US Supreme Court held that, with some exceptions, US Trademark Law does not reach infringement outside the US.
Here’s What Happened:
Hetronic International, Inc. manufactures remote controls for construction equipment that uses the combination of black and yellow colors.
Hetronic sued Abitron Austria GmbH and five other companies for trademark infringement. Hetronic alleged that Abitron et al., reversed engineered its electronics and used the black and yellow colors in their goods. Hetronic wanted a world-wide injunction and damages for the infringements that occurred outside the US. Hetornic relied on two sections of the Lanham Act (the US trademark statute) that prohibited the sale of a production of a registered mark in connection with the sale, distribution or advertising of any goods in commerce.
Abitron et al., argued that the two sections of the Lanham cannot be applied to extraterritorial sales outside the US. The district court rejected this argument. The jury returned a verdict in Hetronic’s favor in the amount of $96 million. The district court later entered a worldwide permanent injunction against Abitron et al.
On appeal, the Tenth Circuit narrowed the injunction to cover only certain countries but otherwise affirmed the judgment.
The US Supreme Court granted certiorari to hear the case because of the jurisdictional issues.
The case was decided in a five Justice majority with Justice Alito writing the opinion. The Supreme Court held that the two sections of the Lanham Act at issue did not apply to acts of infringement outside the US. There is always a presumption against extraterritoriality. But the presumption can be overcome. The trademark infringement had occurred outside the territory of the US. So the presumption applied.
The Court used a two-step analysis to determine if Hetronic could overcome the presumption. First, the Court determined whether Congress had affirmatively and unmistakably instructed that the provision at issue should apply to foreign conduct. Congress did not. So the Court went to the second step which determines whether the suit seeks a permissible domestic or impermissible foreign application of the provision. This analysis relies on a determination focuses on the location of the conduct because “use in commerce” must be within the US.
The case was remanded back to the district court for reconsideration based on the presumption against the extraterritorial application of the Lanham Act.
Why You Should Know This: The fight against counterfeit goods should not be impacted by this decision. Basically counterfeit goods are produced overseas and then introduced into the US as the “real thing”. The key will be whether the sales take place fully outside the US or whether at least some sales occur in the US. If the counterfeit goods stay outside the US, the trademark owner will have to seek remedies in the non-US country. However, if the goods are put into the stream of commerce in the US, the trademark owner may seek remedies under the Lanham Act in a US court.
Case Information: Abitron Austria GmbH v. Hetronic Int'l, Inc., 600 U.S. 412, 143 S. Ct. 2522, 216 L. Ed. 2d 1013 (2023)