On June 29, 2023, the Supreme Court held, in Abitron Austria GmbH et al. v. Hetronic Int'l, Inc., No. 21-1043, that claims for infringement under the Lanham Act are limited to where the infringing use is domestic. Hetronic is a U.S.-based company that manufactures and sells remote controls for construction equipment. Abitron was a licensed distributor of Hetronic’s products but later concluded that it was the owner of much of Hetronic’s intellectual property. Hetronic disputed this conclusion. Abitron began selling Hetronic’s products under Hetronic’s trademark, mostly in Europe but with some direct sales into the United States.
Hetronic sued Abitron in the Western District of Oklahoma for trademark violations under the Lanham Act, the federal trademark statute, seeking damages for Abitron’s allegedly infringing acts worldwide. Abitron argued that Hetronic sought an impermissible extraterritorial application of the Lanham Act. The lower court rejected Abitron’s argument, awarded Hetronic approximately $96 million in damages, and entered a permanent injunction preventing Abitron from using Hetronic’s trademark anywhere in the world. The Tenth Circuit narrowed the injunction but affirmed the damages, concluding that the Lanham Act extended to “all of [Abitron’s] foreign infringing conduct.”
The Supreme Court disagreed, applying the “presumption against extraterritoriality” to conclude that the sections of the Lanham Act prohibiting trademark infringement extend only to claims where the infringing use is domestic. In order for a statute to capture extraterritorial conduct, Congress must “affirmatively and unmistakably” provide that the statute applies to foreign acts or omissions. Turning to the Lanham Act, the Court reasoned that the relevant sections use the phrase “in commerce” as meaning “commerce which may be lawfully regulated by Congress.” The five-justice majority held that this definition is not a “clear, affirmative indication” Congress intended to include foreign commerce within the jurisdiction of the Lanham Act. Therefore, the Lanham Act’s territorial reach is limited to a domestic infringing use in commerce of a trademark.
Abitron v. Hetronic is a significant ruling for businesses that use, license, or distribute intellectual property in a foreign country. Abitron makes clear that having U.S. trademark rights alone is insufficient to stop foreign infringement or to recover damages for foreign infringing activity in a U.S. court. Instead, a business that suffers foreign trademark infringement will need to appeal to the foreign jurisdiction where the infringing activity occurs. Building a brand protection strategy both domestically and abroad may help a business better position itself in the event it faces infringing activity outside the United States. Such a strategy may include taking steps to register the business’s trademarks in the foreign jurisdictions where the business uses or licenses those marks; monitoring use of potentially infringing marks abroad; and working with legal teams to develop a trademark protection and enforcement strategy that covers both the foreign and domestic markets in which the business operates, whether directly or through licensees.
For questions about your business’s domestic and foreign trademark protection and enforcement strategy, please contact your Michael Best brand protection attorney.
This Client Alert was written by Landon Glover and Emily Haas.