Abitron Austria GmbH v. Hetronic International, Inc.

Abitron Austria against Hetronic International, decided June 29th, 2023. The Supreme Court, in an opinion by Justice Alito, vacated the Tenth Circuit and held that sections 1114(1)(a) and 1125(a)(1) of the Lanham Act are not extraterritorial and extend only to claims where the claimed infringing use in commerce is domestic. All nine Justices agreed on the judgment, but the Court divided five to four on the governing test. Here's the brief.

Hetronic International is a United States company that manufactures radio remote controls for construction equipment, sold in a distinctive black-and-yellow color scheme in more than forty-five countries. Abitron — six foreign parties, once licensed distributors for Hetronic — concluded that it held the rights to much of Hetronic's intellectual property, reverse-engineered Hetronic's products, and began selling Hetronic-branded products built with third-party parts, mostly in Europe but with some direct sales into the United States.

Hetronic sued in the Western District of Oklahoma, seeking damages for Abitron's infringing acts worldwide. A jury awarded roughly ninety-six million dollars tied to Abitron's global use of the marks — including foreign sales of products that never entered the United States — and the district court entered a worldwide injunction. The Tenth Circuit narrowed the injunction but otherwise affirmed, reasoning that the Lanham Act reached all of Abitron's foreign infringing conduct because the impacts within the United States gave it a reasonably strong interest in the litigation. The Court granted cert to resolve a circuit split over the Lanham Act's extraterritorial reach.

The question presented: do these two provisions apply to infringing conduct that occurs abroad?

Both provisions prohibit the unauthorized use in commerce of a protected mark when that use is likely to cause confusion — section 1114(1)(a) for registered marks, section 1125(a)(1) whether the mark is registered or not.

whether the conduct relevant to that focus occurred in United States territory" — *WesternGeco LLC v. ION Geophysical Corp.*, 585 U.S. ___ (2018). Slip op. at 3–4]

The governing framework is the presumption against extraterritoriality: unless a contrary intent appears, legislation of Congress applies only within the territorial jurisdiction of the United States. Applying it involves two steps. Step one asks whether Congress has affirmatively and unmistakably instructed that the provision applies to foreign conduct. If not, step two asks whether the suit is a permissible domestic application or an impermissible foreign one — courts identify the provision's focus and ask whether the conduct relevant to that focus occurred in United States territory.

At step one, the Court held that neither provision is extraterritorial. Neither contains an express statement of extraterritorial application, and the Lanham Act's broad definition of commerce — all commerce which may lawfully be regulated by Congress — does not rebut the presumption; under Morrison, even statutes that expressly refer to foreign commerce when defining commerce are not extraterritorial.

At step two, the parties disputed the provisions' focus. Abitron said preventing infringing use of marks; Hetronic said protecting goodwill and preventing confusion; the United States, as amicus, said likely consumer confusion alone. The Court found Steele against Bulova Watch, from nineteen fifty-two, of little assistance, because it involved both domestic conduct and domestic confusion. And it declined to resolve the focus debate in the abstract: because Congress premised liability on a specific action — a particular sort of use in commerce — that conduct is what matters at step two.

Justice Jackson joined the majority in full but wrote separately: a use in commerce occurs wherever the mark serves its source-identifying function, so marked goods resold in domestic commerce can still trigger the Act. Justice Sotomayor, joined by the Chief Justice and Justices Kagan and Barrett, concurred only in the judgment. She would have held that step two turns on the statute's focus — consumer confusion — so the Act would reach foreign activities likely to confuse consumers in the United States.

The majority answered that this focus-only test would give the Act an untenably broad reach. The Court vacated and remanded.

Abitron resolved a circuit split over the Lanham Act's foreign reach and recast the inquiry in the Court's modern two-step framework. Doctrinally, the decision anchors the Act's reach in the location of the infringing use in commerce rather than in domestic effects, reflecting what the Court called the territorial premise of trademark law. And for extraterritoriality doctrine generally, it confirms that step two turns on where the conduct relevant to the statute's focus occurred. The Court expressly reserved the precise contours of use in commerce, so the location of that use is now the dispositive question under both provisions.

Abitron Austria against Hetronic International, 600 U.S. 412, decided June 29th, 2023. I'm John Goodhue. Thanks for watching.