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Tenth Circuit Adds to Split on Lanham Act's International Applicability
In a recent published decision, the U.S. Court of Appeals for the Tenth Circuit confronted for the first time the question of whether the Lanham Act's scope extends outside of the United States. Reviewing decisions from other circuits, the appellate court held that the Act can have extraterritorial application, if certain conditions are met. In doing so, the Tenth Circuit recognized — and further deepened — an ongoing circuit split.
Case Background
Hetronic International, the plaintiff in the case, is an American company that manufactures remote ratio controls used to operate heavy-duty construction equipment. Hetronic International v. Hetronic Germany, GmbH, Nos. 20-6057 & 20-6100, 2021 U.S. App. LEXIS 25354, at 1 (10th Cir. Aug. 24, 2021). In the mid-2000s Hetronic entered into licensing and distribution contracts with a few foreign companies (the defendants below) under which those foreign companies would distribute Hetronic's products, mostly in Europe. Id. The relationship worked well for several years, until one of the defendants "embrac[ed] a creative legal interpretation" of one of the parties' agreements and asserted that they, and not Hetronic, owned the rights to Hetronic's intellectual property. Id. at 2. The defendants began manufacturing their own products and selling them under the Hetronic brand — again mostly in Europe.
Hetronic filed suit in the Western District of Oklahoma, asserting a number of claims, including ones for trademark infringement under the Lanham Act. The case went to trial and a jury awarded Hetronic over $115 million in damages. Id. The district court also entered a worldwide injunction barring the defendants from selling their infringing products in any country. Id. The defendants appealed, claiming among other things that while the Lanham Act can apply extraterritorially in some cases, it cannot reach their conduct — i.e., foreign defendants selling products to foreign customers. Id. Weighing in on an ongoing circuit split, the Tenth Circuit held that the Lanham Act did cover the defendants' conduct, but that the district court's "expansive injunction" had to be narrowed. Id.
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