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Supreme Court Arguments About Lanham Act Extraterritorial Scope

Posted by James Juo | Mar 23, 2023 | 0 Comments

On March 21, 2023, the U.S. Supreme Court heard oral arguments about the Tenth Circuit decision in Hetronic International, 10 F.4th 1016 (10th Cir. 2021), that the Lanham Act protections for U.S. trademarks extends to extraterritorial conduct involving foreign sales by foreign defendants. As discussed in a previous blog post, Hetronic, a U.S. company that manufactures and sells wireless Radio Remote Controls (RRC) for industrial equipment such as construction cranes, had entered into distribution and licensing agreements with foreign Defendants to distributed Hetronic's products in Europe. But Defendants later violated those agreements and continued to sell copycat products in Europe even after Hetronic terminated those distribution and licensing agreements. Among other claims, Hetronic asserted trademark infringement claims under the Lanham Act. Hetronic won a $90 million judgment based upon willful trademark infringement, which reflected the gross revenue of Defendant's knockoff sales, 97% of which were outside of the United States.

The prior U.S. Supreme Court's decision in Steele v. Bulova Watch Co., 344 U.S. 280 (1952) held that the Lanham Act encompassed alleged trademark infringement “consummated in a foreign country by a citizen and resident of the United States,” where the U.S. defendant took “essential steps” in the United States. Id. at 281, 285-287.

But Defendants argued that Steele rested on the defendant's U.S. citizenship and U.S. conduct, and did not address the Act's extraterritorial application to foreign defendants.

Justice Sonia Sotomayor questioned why the citizenship of the defendant should make a difference because a foreign business that purposely targets American customers is still competing with American trademark owners for those American customers.

Justice Ketanji Brown Jackson also posited a hypothetical involving U.S. college students buying knockoff Coach handbags from a German manufacturer, then bringing them back home to the U.S. and selling them. She also questioned whether foreseeability of such college students reselling knock-off products from Germany in the U.S. was relevant to whether there was proximate cause of consumer confusion from the German manufacturer's bags.

Professor Dennis Crouch later commented that “this level of extraterritorial application creates a sovereignty conflict, with the USA extending its reach unduly into the realm covered by trademark and competition laws of other nations.

The attorneys at Thomas P. Howard, LLC handle trademark cases nationwide including in Colorado.

UPDATE: On June 29, 2023, the Tenth Circuit's decision was vacated by U.S. Supreme Court, which held that §1114(1)(a) and §1125(a)(1) of the Lanham Act are not extraterritorial and extend only to claims where the infringing use in commerce is domestic. Abirton Austria GmbH v. Hetronic Int'l, Inc., No. 21-1043 (Jun. 29, 2023).

About the Author

James Juo

James Juo is an experienced intellectual property attorney. He has successfully litigated various intellectual property disputes involving patents, trademarks, copyrights, and trade secrets. He also has counseled clients on the scope and validity of patent and trademark rights.


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