In the United States, the legal landscape of intellectual properties has long been shaped by a commitment to safeguarding artists’ creations while simultaneously nurturing the progress of arts and sciences. For years, intellectual property laws have been developed to reward innovators with a property right in their creation in order to incentivize innovation and creativity.[i] Throughout the years, federal laws, such as the Lanham Act, have played a pivotal role in this endeavor, particularly in the realm of trademark protection.
The Lanham Act is a United States federal statute that governs trademark law, including registration, maintenance, and protection of trademarks.[ii] A trademark can be any word, phrase, symbol, design, or combination of these that identify a good or service.[iii] Today, one of the most iconic trademarks is the distinctive ‘M’ symbol associated with McDonald’s, complemented by its signature colors, vibrant red and bright yellow.
For decades, courts have interpreted and applied the Lanham Act beyond U.S. borders, allowing it to have extraterritorial reach.[iv] This expansion has been allowed when evidence of U.S. consumer confusion, a material connection to the United States, or other substantial harm suffered by U.S. trademark owners is found in international trademark infringement cases. This approach recognized that in a globally interconnected marketplace, harm to U.S. brands could occur anywhere in the world, affecting not only the rights of American trademark owners but also consumers and international trade as a whole.
However, a recent legal development, particularly the United States Supreme Court’s ruling in Abitron Austria GmbH v. Hetronic International Inc., has signaled a notable shift in this long-standing practice. In Abitron, Hetronic owned a U.S. trademark for distinguished features of its remote controls. Abitron served as Hetronic’s distributor in Europe and was authorized to assemble and sell the controls under Hetronic’s brand.[v] Hetronic alleged that Abitron used confidential information accessed through their licensing agreement to reverse-engineer Hetronic’s products and sold them to customers as if they were Hetronic products.[vi] Hetronic tried to recover damages for the alleged misconduct in Europe under the Lanham Act; in turn, Abitron argued that Congress did not intend for the Lanham Act to extend beyond the U.S. and, therefore, could not be applied to their conduct in Europe.
In modern statutory interpretation, courts employ a two-step analysis to determine the applicability of a statute to actions conducted outside the borders of the United States. The initial inquiry involves establishing whether there exists a “clear, affirmative indication” that the statute was intended to have extraterritorial reach. In the absence of such a clear intent, a presumption arises against applying the statute beyond U.S. territory. In the case at hand, the Court reached a unanimous consensus that the language of the statute did not provide this requisite clear statement, leading to the conclusion that the Lanham Act’s provisions do not extend extraterritorially.[vii]
The second aspect of the analysis looks to whether the claims at issue can be viewed as a permissible “domestic application” of the statute. This yielded different opinions among the justices, resulting in three distinct perspectives: a majority opinion by Justice Alito, and two concurring opinions by Justice Sotomayor and Justice Jackson. In a 5-4 decision, the majority held that these statutory provisions are only applicable when the infringing “use in commerce” transpires within the territorial confines of the United States. In simpler terms, a legal claim may proceed under these provisions if the relevant “commercial use” occurred within the United States.[viii] However, the precise scope of “using the trademark in commerce” within the United States remains undefined, as the Court intentionally left this aspect unaddressed.[ix]
The decision in Abitron raises pivotal questions about the extraterritorial application of the Lanham Act and its implications for brand owners seeking protection against infringers operating outside of U.S. jurisdiction. While it underscores the importance of the principle that U.S. laws should primarily govern conduct within the United States, it also challenges the ability of American brands to effectively combat trademark infringements with international dimensions.
As courts continue to navigate the evolving legal landscape of intellectual property, it becomes increasingly important to balance protecting the rights of American trademark owners and respecting the sovereignty of foreign jurisdictions. The Abitron decision has undoubtedly introduced complexities into the realm of trademark law, prompting discussions about the scope and reach of the Lanham Act in a globalized world.
[i] See generally Intellectual Property Basics, Smith Gambrell Russell, https://www.sgrlaw.com/ttl-articles/919/ (last visited Sept. 8, 2023) (discussing intellectual property policies).
[ii] See Lanham Act, Cornell Law School Legal Info. Inst., https://www.law.cornell.edu/wex/lanham_act (last visited Sep. 8, 2023).
[iii] See What is a Trademark?, U.S. Pat. & Trademark Office, https://www.uspto.gov/trademarks/basics/what-trademark (last visited Sep. 8, 2023).
[iv] See generally James C. Gracey, Thou Shalt Not Steele: Reexamining the Extraterritorial Reach of the Lanham Act, 21Vanderbilt Journal of Entm’t & Tech. Law, https://scholarship.law.vanderbilt.edu/jetlaw/vol21/iss3/4 (last visited Sept. 8, 2023) (discussing how courts have applied the Lanham Act to cases involving conduct outside of the United States).
[v] See Anna B Naydonov & Tejaswini Gupta, Does the Lanham Act Extend Internationally?, White & Case (Mar. 22, 2023) https://www.whitecase.com/insight-our-thinking/does-lanham-act-extend-internationally.
[vi] See id.
[vii] See generally Abitron Austria GMBH v. Hetronic Int’l., 142 S. Ct. 2673 (2022) (addressing whether the Lanham Act applies to conduct outside of the United States).
[viii] See Naydonov & Gupta, supra note v.
[ix] Jessica Cunning & Nina Webb-Lawton, U.S. Supreme Court Provides Further Guidance on International Reach of the Lanham Act – But What Does it Mean for Brands?, VORYS (Aug. 23, 2023) https://www.vorys.com/publication-u-s-supreme-court-provides-further-guidance-on-international-reach-of-the-lanham-act-but-what-does-it-mean-for-brands#.
