Abitron Austria GmbH v. Hetronic Int'l, Inc.

Supreme Court of the United States
600 U.S. 412 (2023)

ELI5:

Rule of Law:

The trademark infringement provisions of the Lanham Act, §§ 1114(1)(a) and 1125(a)(1), do not apply extraterritorially and extend only to claims where the infringing 'use in commerce' occurs within the territorial jurisdiction of the United States.

Facts:

Hetronic International, Inc. (Hetronic), a U.S. company, manufactures radio remote controls for construction equipment, which it sells globally.
Abitron, a group of foreign entities, initially served as a licensed distributor for Hetronic in Europe.
Abitron subsequently claimed ownership of Hetronic's intellectual property, reverse-engineered its products, and began manufacturing and selling its own products under Hetronic's trademarks.
These infringing products incorporated parts sourced from third parties but were branded with Hetronic's distinctive black-and-yellow color scheme and marks.
Abitron sold the infringing products predominantly in Europe, but made some direct sales to customers in the United States.
Some of Abitron's foreign sales were for products that the foreign purchasers designated would ultimately be shipped to or used in the United States.

Procedural Posture:

Hetronic International, Inc. sued Abitron in the U.S. District Court for the Western District of Oklahoma for trademark infringement under the Lanham Act.
The District Court rejected Abitron's argument that the Lanham Act could not be applied to its conduct outside the U.S.
A jury found for Hetronic and awarded it approximately $96 million in damages based on Abitron's worldwide sales.
The District Court subsequently issued a permanent injunction prohibiting Abitron from using Hetronic's marks anywhere in the world.
Abitron, as appellant, appealed to the U.S. Court of Appeals for the Tenth Circuit.
The Tenth Circuit affirmed the damages award against Abitron, the appellee, concluding the Lanham Act reached all of Abitron's foreign infringing conduct, though it narrowed the injunction's geographic scope.
The U.S. Supreme Court granted certiorari to resolve a circuit split over the extraterritorial reach of the Lanham Act.

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Issue:

Do the Lanham Act's trademark infringement provisions extend to foreign conduct that causes a likelihood of consumer confusion within the United States?

Opinions:

Majority - Justice Alito

No, the Lanham Act's trademark infringement provisions extend only to claims where the infringing 'use in commerce' is domestic, not to foreign conduct that merely causes effects in the United States. Applying the two-step presumption against extraterritoriality, the Court first found no clear congressional instruction in the Act's text, including its broad definition of 'commerce,' to apply the provisions abroad. At step two, the Court determined the proper inquiry is not just the statute's 'focus' (e.g., consumer confusion), but the location of the 'conduct relevant to that focus.' For §§ 1114(1)(a) and 1125(a)(1), the conduct Congress proscribed is the infringing 'use in commerce' of a trademark. Therefore, for the statute to apply, that conduct must occur domestically. An effects-based test would create international discord and undermine the territorial nature of trademark law, in which each sovereign nation governs the rights within its own borders.

Concurring - Justice Jackson

Yes, while agreeing with the majority that the domestic 'use in commerce' is the dividing line, this opinion elaborates that such a use is not confined to the initial sale. A 'use in commerce' occurs wherever the trademark serves its source-identifying function in the ordinary course of trade. Therefore, if a product is sold abroad but subsequently enters the stream of domestic commerce in the United States (e.g., through resale), the infringer's mark continues to be 'used in commerce' domestically, potentially triggering liability under the Lanham Act even if the infringer never directly sold the product into the U.S.

Concurring in the judgment - Justice Sotomayor

Yes, the Lanham Act's provisions should extend to activities carried out abroad when there is a likelihood of consumer confusion in the United States. This opinion agrees that the judgment should be vacated but disagrees with the majority's creation of a rigid, conduct-only test at step two of the extraterritoriality framework. The proper focus of the statute is the protection of consumers from confusion. Consistent with the Court's precedent in Steele v. Bulova Watch Co., where the focus occurs is dispositive. Thus, if a likelihood of consumer confusion occurs in the United States, the Act's application is permissibly domestic, even if the defendant's infringing conduct occurred entirely abroad. The majority’s new test improperly narrows the Act’s reach and departs from precedent by making domestic conduct a necessary requirement in all cases.

Analysis:

This decision significantly restricts the global reach of U.S. trademark law, resolving a circuit split by rejecting the previously common 'effects' test in favor of a stricter, conduct-based territorial standard. The ruling establishes that the location of the infringing 'use in commerce,' not the location of the resulting consumer confusion, is the dispositive factor for Lanham Act claims. This aligns trademark law with the Court's recent trend of narrowly interpreting the extraterritorial scope of federal statutes, forcing U.S. brand owners to rely more heavily on foreign legal systems and international treaties to combat infringement that occurs outside the U.S. but harms them domestically.

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