Article Credit

Supreme Court reins in extraterritorial reach of Lanham Act

Date: July 20, 2023

Publisher: The Journal Reocrd

In the United States, trademarks are governed on the federal level by the Lanham Act, 15 U.S.C. § 1051 et seq. Until recently, federal courts have been divided as to the extraterritorial scope of the Lanham Act. For example, the 10th Circuit Court of Appeals and other federal appeals courts have allowed a trademark to be enforced in the United States with respect to allegedly infringing conduct that occurs outside of the country if, for example, such conduct has a substantial impact on U.S. commerce.

In a case originally filed in federal court in Oklahoma City, the Supreme Court of the United States has now resolved the split among the courts. On June 29, 2023, in Abitron Austria GmbH v. Hetronic International, Inc. (No. 21-1043), the Supreme Court overturned a 10th Circuit decision that affirmed an award of $96 million in damages and other relief by the federal district court in Oklahoma City to Oklahoma City-based Hetronic International Inc. The damages award was based primarily on the sale by Abitron Austria GmbH of remote-control systems for industrial equipment in Europe. Arbitron, a former licensed distributor of Hetronic, had wrongfully decided that it could manufacture and sell such systems in association with the Hetronic brand on its own.

In an opinion written by Justice Alito and joined by Justices Thomas, Gorsuch, Kavanaugh and Jackson, the Supreme Court vacated and remanded the 10th Circuit’s decision, holding that the provisions are of the Lanham Act dealing with trademark infringement are not extraterritorial and “extend only to claims where the claimed infringing use in commerce is domestic.”

Justice Sotomayor, joined by Chief Justice Roberts and Justices Kagan and Barrett, concurred with the judgment but disagreed with the majority’s approach. Justice Jackson entered a separate concurring opinion.

Takeaways: For now, the focus should be on “use in commerce” of the mark in the United States as opposed to merely where resulting confusion has occurred. The decision emphasizes the need for U.S. trademark owners to proactively register their trademarks in all regions and countries in which the mark is now or may be used or licensed in the future. Finally, the court’s decision offers guidance when analyzing the extraterritorial reach of other statutes.

This article appeared in the July 20, 2023, issue of The Journal Record. It is reproduced with permission from the publisher. © The Journal Record Publishing Co.