In a significant ruling on June 29, 2023, the U.S. Supreme Court addressed the case of Abitron Austria GMBH v. Hetronic International, Inc. (No. 21-1043). The Court’s decision clarified the extraterritorial reach of two provisions, sections 1114(1)(a) and 1125(a)(1), under the Lanham Act. This landmark case determined that these provisions, which prohibit trademark infringement, apply only to domestic claims involving the “use in commerce” of a trademark.
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Background of the Case
The respondent, Hetronic International, Inc., is a United States-based company engaged in the manufacture, sale, and servicing of products for use with construction equipment. The petitioners consisted of five foreign companies and an individual who had previously operated as a licensed distributor for Hetronic. A dispute arose when the petitioners started selling Hetronic-branded products as their own. Hetronic filed a lawsuit, alleging trademark violations under the Lanham Act and seeking damages worldwide. The petitioners contended that Hetronic’s application of the Lanham Act beyond U.S. borders was impermissible. Despite their argument, the District Court dismissed their claim, and that decision was subsequently affirmed by the Tenth Circuit.
Resolution of the Circuit Split
The Supreme Court granted certiorari to address the circuit split regarding the extraterritorial reach of sections 1114(1)(a) and 1125(a)(1) of the Lanham Act. To settle this issue, the Court employed a two-step framework, guided by its long-standing presumption against the extraterritorial application of federal statutes.
First, the Court concluded that neither provision contained a clear, affirmative indication of extraterritorial applicability. These sections simply prohibit the “use in commerce,” as defined by Congress, of protected trademarks when such use is likely to cause confusion. The fact that the Lanham Act defines “commerce” to include foreign commerce does not provide a sufficiently explicit statement.
Second, the Court elucidated the test for applying the presumption against extraterritoriality to claims involving both domestic and foreign activities. The appropriate approach involves determining the focus of the provision in question and then ascertaining whether the conduct relevant to that focus occurred within the United States. In the case of sections 1114(1)(a) and 1125(a)(1), the “use in commerce” constitutes the conduct relevant to their focus. As the prior proceedings did not align with this understanding of extraterritoriality, the Court vacated the judgment of the Court of Appeals and remanded the case for further proceedings.
As a practical matter, the decision means that owners of trademark registrations in the United States will be forced to initiate actions abroad if they wish to go after trademark infringement that takes place outside of the United States. It also increases the importance for those selling outside of the United States to apply to register their trademarks in those jurisdictions.
Opinions of the Justices
Justice Alito authored the opinion of the Court, joined by Justices Thomas, Gorsuch, Kavanaugh, and Jackson. Justice Jackson submitted a concurring opinion, while Justice Sotomayor filed an opinion concurring solely with the judgment.