By: Bailey Hopkins* and David G. Barker
The Supreme Court recently held Abitron Austria GmbH not liable for using Hetronic International, Inc.’s trademarks outside of the United States. Reversing the Tenth Circuit and resolving a circuit split, the Court held that Sections 1114(1)(a) and 1125(a)(1) of the Lanham Act do not apply extraterritorially and extend only to claims where the infringing use-in-commerce is domestic.
Hetronic manufactures and sells remote controls for construction equipment. Abitron had been a distributor in Europe for Hetronic but then decided it owned Hetronic’s trademark and the black and yellow color scheme of Hetronic’s products. Abitron reverse engineered the Hetronic-manufactured products and began selling them under the Hetronic trademark in Europe. Almost all of Abitron’s sales of Hetronic-branded products occurred in Europe.
Considering the presumption against extraterritoriality, the Court found no basis to conclude that Congress affirmatively and unmistakably intended that the Lanham Act apply to foreign conduct. When a statute does not apply extraterritorially the courts must identify the statute’s focus and ask whether the conduct relevant to that focus occurred in the United States, separating the critical domestic activities from any extraneous foreign activities. Here, the infringing use-in-commerce was in Europe and not the United States, and the Lanham Act could not proscribe Abitron’s use.
Justices Sotomayor, Roberts, Kagan, and Barrett concurred in the result but read the Lanham Act more broadly. In their view, the Lanham Act should extend to foreign activities when there is a likelihood of consumer confusion in the United States. In contrast, the majority reasoned that consumer confusion is simply a necessary component of an infringing use-in-commerce rather than a separate requirement. The majority found that the use of a mark in commerce even in just one country often will have effects in other countries; the judiciary should not assume the political task of navigating foreign policy to determine when consumer confusion is sufficient to give rise to a claim.
*Bailey Hopkins is a 2023 summer associate in Snell & Wilmer’s Phoenix office and is not admitted to practice law. He is anticipated to graduate from Arizona State University College of Law in May 2024.