On June 29, the U.S. Supreme Court issued its decision in Abitron Austria GmbH v. Hetronic International, Inc. concerning whether trademark plaintiffs can recover damages for sales made outside of the United States. The decision is a mixed bag for rights owners. SCOTUS narrowly held that Congress did not explicitly intend for the Lanham Act to apply extraterritorially and therefore, in every case, courts must examine the "location" of the infringing use in commerce to determine if they have a Lanham Act claim and can recover damages for the same (although the Court did not explicitly address damages).
The highly academic opinion provides minimal practical guidance for rights owners and practitioners. However, it is clear that all businesses, brands, and individuals offering goods and services under their marks overseas should register their marks in all jurisdictions in which they conduct business.
Key Question Before SCOTUS
The critical question before the Court was: Does the Lanham Act allow a trademark owner to recover damages for infringement that takes place outside the U.S. (i.e., extraterritorial infringement)?
SCOTUS's Answer
The Court did not really answer the question. It simply identified a two-step framework for determining the application of the Lanham Act to extraterritorial conduct:
- Determining whether Congress "unmistakably instructed" that the relevant Lanham Act provisions applied outside the U.S. The Court held that Congress did not.
- Determining the location of the relevant infringing use of a mark in commerce which is likely to cause consumer confusion. The Court remanded the case for determination of this step of the inquiry.
The Court did not provide definitive guidance about the recovery of damages under the Lanham Act for infringement that occurs both in the U.S. and in foreign jurisdictions. The decision suggests that the Lanham Act likely applies only to domestic conduct, but the holding is not clear. As Justice Sotomayor wrote, "the majority does not take a stance on the focus of the Act" — going even further to describe the majority opinion as "confusing."
What Does the Decision Mean for Trademark Owners and Litigants?
While the decision is open to interpretation, let's focus on what is clear. First, unsurprisingly, the Lanham Act protects U.S. trademark owners from acts of domestic infringement. Second, unsurprisingly, purely foreign infringing conduct is not covered by the Lanham Act.
After Abitron, it remains unclear how courts will deal with infringing conduct falling in the middle of these two scenarios (i.e., where there is combination between U.S. and foreign infringing conduct). One key takeaway from the decision, which should be standard practice for brand owners conducting business outside the United States, is to register their marks in all foreign jurisdictions in which they offer, or might offer, their goods and services. If they fail to do so, the Lanham Act may not provide the ability to enforce such marks or collect damages arising from infringing conduct outside the United States.
Resources
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