INTA Amicus Brief: the Trademark Law Applies when Foreign Conduct Has a Substantial Impact in the US
28-Dec-2022
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Source : The International Trademark Association (INTA)
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NEW YORK - The International Trademark Association (INTA) announced in a press release that it has filed an amicus brief in the United States Supreme Court in Abitron Austria GmbH v. Hetronic Int’l, Inc., No. 21-1043, urging the Court to adhere to its ruling in Steele v. Bulova Watch Co., 344 U.S. 280, 285-86 (1952) and reaffirm that “[t]he Lanham Act may be applied to stop foreign conduct that causes substantial impact in the United States within the focus of the Lanham Act.”
Hetronic Int’l, Inc. (Hetronic), an Oklahoma-based producer of radio remote controls for construction equipment, sued Abitron Austria GmbH (Abitron), its former Austrian distributor, which allegedly sold its own reverse-engineered controls under Hetronic’s trademark. Finding that Abitron willfully infringed Hetronic’s mark, a US District Court jury awarded Hetronic US $90 million, despite the fact that 97 percent of the challenged sales never returned to the US. The US Court of Appeals for the 10th Circuit affirmed the award on two grounds: (1) Three percent of sales reaching the US allows recovery for all the damage caused, and (2) diversion of foreign sales from a U.S. mark owner justified damages under the Lanham Trademark Act.
Abitron sought review in the US Supreme Court, arguing the Court of Appeals erred in holding that the Act applied its foreign sales. The Court granted review, and the US Solicitor General filed an amicus brief arguing that the Act only applies to a foreign defendant’s use of a US plaintiff’s trademark if it is likely to cause confusion in the US.
In its brief, INTA argued that foreign conduct that causes substantial impact in the US could be deemed either “extraterritorial” or “domestic,” and should be reachable whether or not the Court holds that the Lanham Act applies extraterritorially. INTA noted that the Lanham Act’s focus extends well beyond point-of-sale confusion, including pre-sale and post-sale confusion, reverse confusion, and confusion as to affiliation, connection, or sponsorship, injury to brand owners’ reputations, as well as dilution. Although no US citizens are defendants in this case, INTA cautioned the Court not to disturb Steele’s holding that the US has broad authority to regulate US citizens who infringe US trademarks in foreign countries.
Recognizing the Lanham Act’s reach has limits, INTA endorsed cases holding that Steele requires a “substantial impact on US commerce,” criticizing cases saying “some” effect suffices. INTA concluded that the Tenth Circuit erred to hold that it was irrelevant what proportion of Abitron’s global sales entered the U.S. and urged the Court to remand the case to allow the parties to prove “the relative quantity and character of domestic versus foreign confusion or damage to reputation.” “It is fundamental that trademark rights are territorial,” INTA’s brief continues. The Tenth Circuit’s decision “risks globalizing American trademark law” and, if upheld by the US Supreme Court, “could prompt other foreign nations to assert equally expansive claims regarding the extraterritorial scope of their trademark laws.”