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Should Foreign Companies Face Lanham Act Sanctions for Trademark Infringement Occurring Abroad?
The U.S. Supreme Court is considering whether the federal Lanham Act should be interpreted so broadly that domestic companies can leverage it to bar trademark infringement by — and seek significant damage awards against — foreign entities operating almost entirely overseas.
The question has come to a head as companies seeking to protect their trademarks in an increasingly global economy confront an international patchwork of intellectual property laws that vary from country to country. Although it is well-established that the Lanham Act, 15 U.S.C. §§1051 et seq., has extraterritorial reach, the Court has never articulated a definitive test for its application abroad. Its decision in Hetronic Int'l, Inc. v. Hetronic Germany GmbH, 10 F.4th 1016 (10th Cir. 2021), cert. granted sub nom. Abitron Austria GmbH v. Hetronic Int'l, Inc., No. 21-1043 (U.S. Nov. 4, 2022), concerns a recent Tenth Circuit decision upholding a nearly $90 million damage award against a European entity and to settle the debate among various other circuits regarding the Act's scope. In Hetronic, nearly 97% of the sales found to be infringing occurred abroad, but the Tenth Circuit upheld the award on the basis that they had a "substantial effect" on U.S. commerce.
During oral argument held on March 21, 2023, the Court grappled with how to treat its 70-year-old decision in Steele v. Bulova Watch Co., 344 U.S. 280, 287 (1952). Steele was the Court's original pronouncement that the Lanham Act has "sweeping reach into 'all commerce which may lawfully be regulated by Congress,'" including activity occurring abroad. Should the case be overruled altogether, the justices asked? Or is there a way to square it with more recent jurisprudence addressing extraterritorial application of other federal statutes?
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