In 2023, the U.S. Supreme Court (SCOTUS) will take up what could prove a landmark case on the reach of U.S. courts in awarding damages based on extraterritorial sales in trademark disputes. The case is Abitron Austria GmbH, et al. v. Hetronic International, Inc., Docket 21-1043.
Hetronic manufactures construction equipment components. By agreement, Arbitron and other foreign partners distributed Hetronic’s products outside the United States. In due time, claiming they owned the rights to Hetronic’s trademarks for such sales, Abitron and others began manufacturing and selling competitive products using the Hetronic marks. Hetronic sued and won a nine-figure award upheld by the Tenth Circuit Court of Appeals. Abitron now questions whether that court “erred in applying the Lanham Act extraterritorially” to “purely foreign sales that never reached the [U.S.] or confused U.S. consumers.”
The case brings to the fore a unique aspect of trademark law. Unlike patent cases which are appealed exclusively to the federal circuit court of appeals, trademark and other Lanham Act disputes may be appealed to alternative circuit courts of appeal. The result has been divergence between circuits on several issues impacting awards in trademark disputes. Various circuits have adopted no fewer than six different “tests” for deciding the territorial reach question. The Tenth Circuit standard arguably most expansive for U.S. businesses but not widely followed in other circuits. (Notably, similarly divergent circuit positions have developed with respect to extraterritorial reach of U.S. trade secrets protection; see Extraterritorial Application of the Defend Trade Secrets Act). The Biden Administration encouraged SCOTUS to review this case, arguing the circuit appeals courts have failed to sufficiently consider whether appropriations of U.S. trademarks for foreign sales are likely to cause consumer confusion in the U.S., prevention of which is a key goal of the Lanham Act.
Cate Elsten, CMA, CLP, MAB is an accounting, marketing, and finance professional. With over 35 years of professional experience, Ms. Elsten is the senior testifying and consulting expert in the west coast practice of Ocean Tomo, a part of J.S. Held. Ms. Elsten’s services to clients include expert testimony in complex commercial litigation, business and intellectual property valuations, and strategic and operational consulting.
For further information contact Cate Elsten at Cate.Elsten@jsheld.com or +1 415 388 0368.