[21-1043] Abitron Austria GmbH v. Hetronic International, Inc.

Abitron Austria GmbH v. Hetronic International, Inc.

Wikipedia · Justia (with opinion) · Docket · oyez.org

Argued on Mar 21, 2023.
Decided on Jun 29, 2023.

Petitioner: Abitron Austria GmbH, et al..
Respondent: Hetronic International, Inc..

Advocates:

• Lucas M. Walker (for the Petitioners)
• Masha G. Hansford (for the United States, as amicus curiae, supporting neither party)
• Matthew S. Hellman (for the Respondent)

Facts of the case (from oyez.org)

Hetronic International, Inc., a U.S. company, manufactures radio remote controls heavy-duty construction equipment. By agreement, Abitron, a foreign corporation, distributed Hetronic’s products, mostly in Europe.

The relationship deteriorated when Abitron decided that it, not Hetronic, owned the rights to Hetronic’s trademarks and other intellectual property. Abitron began manufacturing products identical to Hetronic’s and selling them under the Hetronic brand, mostly in Europe. Hetronic terminated their contractual relationship, but Abitron continued to manufacture and sell the products, making tens of millions of dollars.

Hetronic sued Abitron, and a jury sitting in the Western District of Oklahoma awarded Hetronic over $100 million in damages based on infringement of Hetronic’s trademarks. The district court entered a worldwide injunction barring Abitron from selling the infringing products. On appeal the U.S. Court of Appeals for the Tenth Circuit affirmed the court’s conclusion that the Lanham Act applies extraterritorially but limited the court’s injunction.

Question

Does the Lanham Act permit the owner of a U.S.-registered trademark to recover damages for the use of that trademark when the infringement occurred outside the United States and is not likely to cause confusion in the United States?

Conclusion

The Lanham Act extends trademark protection only to claims where the infringing “use in commerce” is domestic. Justice Samuel Alito authored the majority opinion of the Court.

Unless Congress explicitly states otherwise, U.S. laws are generally presumed to apply only within the territorial jurisdiction of the United States. This presumption helps avoid conflicts with other countries and is premised on the idea that Congress typically legislates with domestic matters in mind. To apply the presumption against extraterritoriality, courts apply a two-step framework. First, a court must ask whether Congress has explicitly indicated that the statute should apply to foreign conduct. If not, then the second step is to ask whether the lawsuit seeks a permissible domestic or impermissible foreign application of the law.

Applying that two-step framework here, the Court concluded that the Lanham Act applies only to claims where the infringing use is domestic. First, neither § 1114(1)(a) nor § 1125(a)(1) explicitly indicates that the statute should apply to foreign conduct. They prohibit the use “in commerce” of protected marks that are likely to cause confusion. A mere reference to “foreign commerce” does not make a statute extraterritorial. Second, the focus of the statute is on the “use in commerce” that is likely to cause confusion, which is domestic conduct.

Justice Ketanji Brown Jackson filed a concurring opinion to elaborate on what it means to “use a trademark in commerce.”

Justice Sonia Sotomayor filed an opinion concurring in the judgment, in which Chief Justice John Roberts and Justices Elena Kagan and Amy Coney Barrett joined, arguing that while the majority reached the correct conclusion, in her view the Lanham Act extends to activities carried out abroad when there is a likelihood of consumer confusion in the United States.