In the U.S., at the federal level, the Lanham Act is the main statute that governs trademark rights. Among the most important trademark rights that are protected is the right to exclusive use. That is, the Lanham Act prohibits infringement of a valid trademark by others.
There has long been a legal debate about the international reach of the Lanham Act and, in particular, about whether the Lanham Act reaches acts of infringement that occur outside of the borders of the U.S. Many U.S. Circuit Courts of Appeal have held that the Lanham Act DOES reach such international conduct. Further, the courts have held that, based on such infringing acts, U.S. plaintiffs are entitled to damages from such international-based infringement and that injunctions can be issued that cover the international behavior of infringing defendants.
However, in June 2023, the U.S. Supreme Court issued an opinion that rejected many of the decisions of the Courts of Appeals and limited the international reach of the Lanham Act. See Abitron Austria GmbH v. Hetronic International, Inc., Case No. 21–1043 (2023). The case involved alleged infringement by a German company against an American company involving industrial equipment remote control devices sold under the trademark HETRONIC.
Under the court’s analysis, deciding whether a U.S. statute applies extraterritorially involves a two-step process. The first step is to see if the statute explicitly and clearly indicates Congress’ intent to have the statute apply overseas. In this case, the U.S. Supreme Court held that Congress had made no such clear indication in the Lanham Act. Thus, as a general matter, the Lanham Act has no international reach.
However, any domestic-focused statute can reach foreign defendants under certain circumstances. Thus, in step two of the court’s analysis, the court must determine the “focus” of the applicable statute and then evaluate claims involving both domestic and foreign conduct, separating the activity that matters to the “focus” from the activity that does not. Put another way, as the court stated, “[t]he ultimate question regarding permissible domestic application turns on the location of the conduct relevant to the focus.”
The parties to the case and the amicus curiae offered various suggested “focus” points of the Lanham Act, including preventing infringing use of trademarks, protecting the goodwill of mark owners, and preventing consumer confusion. The Supreme Court rejected these and, taking words directly from the Lanham Act, stated that the proper focus is “use in commerce.” As the court concluded, “‘use in commerce’ provides the dividing line between foreign and domestic applications of these Lanham Act provisions.”
It should be noted that, despite the seeming simplicity, the court made clear that “use in commerce” DOES contain an attached requirement that infringing use in commerce must also cause confusion among consumers. That is the basic definition of infringement in the Lanham Act.
In any event, Abitron’s rule will, in theory, severely limit the international reach of the Lanham Act. The Lanham Act will not reach trademark infringement if all of the “use in commerce” is/was located overseas. Of course, with clever litigation strategies and argumentation, in given cases, it might not be too difficult to convince a U.S. judge that “use in commerce” occurred domestically, given the international reach of the internet and the connectedness of the global marketplace.
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