In Abirton Austria GmbH v. Hetronic Int'l, Inc., No. 21-1043, 600 U.S. ___ (Jun. 29, 2023), the U.S. Supreme Court ruled that 15 U.S.C. §1114(1)(a) and §1125(a)(1) of the Lanham Act “are not extraterritorial and that they extend only to claims where the claimed infringing use in commerce is domestic.”

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 certain foreign companies to distribute Hetronic's products in Europe. But after Hetronic terminated those distribution and licensing agreements, they continued to sell copycat products in Europe. 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 Court noted that analyzing the presumption against extraterritoriality in statutes involves “a two-step framework.” RJR Nabisco, Inc. v. European Community, 579 U. S. 325, 335–336 (2016). First, whether Congress has affirmatively and unmistakably instructed that” the provision at issue should “apply to foreign conduct.” Id., at 336; Kiobel v. Royal Dutch Petroleum Co., 569 U. S. 108, 117 (2013). Second, whether the suit seeks a (permissible) domestic or (impermissible) foreign application of the provision, starting by identifying the focus of congressional concern underlying the provision at issue, including the conduct it seeks to “regulate,” as well as the parties and interests it ‘seeks to “protect”' or vindicate.” WesternGeco LLC v. ION Geophysical Corp., 585 U. S. ___, ___ (2018) (slip op., at 6).

The Court concluded that “use in commerce” provides the dividing line between foreign and domestic applications of the Lanham Act, “separating the activity that matters from the activity that does not” with respect to extraterritoriality under step two.

Under the Act, the “term ‘use in commerce' means the bona fide use of a mark in the ordinary course of trade,” where the mark serves to “identify and distinguish [the mark user's] goods . . . and to indicate the source of the goods.” [15 U.S.C.] §1127.

The Court vacated and remanded the case “for further proceedings consistent with this opinion.”

Concurring Opinions 

The concurrence by Justice Jackson noted that “[i]t is clear beyond cavil that what makes a trademark a trademark under the Lanham Act is its source-identifying function,” and that a “use in commerce” does not cease at the place the mark is first affixed or first sold.[1] “Rather, it can occur wherever the mark serves its source-identifying function.” Thus, the permissible-domestic-application inquiry would be as follows: “If a marked good is in domestic commerce, and the mark is serving a source-identifying function in the way Congress described, . . . may reach [that trademark use]. . . . But if the mark is not serving that function in domestic commerce, then the conduct Congress cared about is not occurring domestically, and these provisions' purely domestic sweep cannot touch that person.” Justice Jackson further noted that, “in the internet age, one could imagine a mark serving its critical source-identifying function in domestic commerce even absent the domestic physical presence of the items whose source it identifies.” Her concurrence also discussed a hypothetical similar to one she had raised during oral argument.

Justice Sotomayor wrote a concurrence asserting that step two of the extraterritoriality framework for the Lanham Act should have focused on consumer confusion, rather than on use in commerce, in the United States. And “purely foreign sales with no connection to the United States are unlikely to confuse consumers domestically.”

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

1. [Updated July 17, 2023] As noted by Professors Margaret Chon and Christine Haight Farley, there is reason to believe that Justice Jackson may have switched her vote. ↵