The United States Supreme Court has a new opportunity to look at whether a U.S. trademark owner can recover damages for infringing uses of the owner’s mark occurring outside the United States.
In Abitron Austria GmbH v. Hetronic International, Inc., Oklahoma-based Hetronic, maker of radio remote controls for heavy duty construction equipment, sued its former distributor Abitron for using the Hetronic trademark to market and sell Abitron’s own reverse-engineered remote controls. The district court jury returned a verdict to the tune of $90 million, finding that Abitron had willfully infringed the Hetronic mark— even though 97% of the infringing sales were made in Europe. The district court entered a final judgment in line with the jury’s verdict as well as a worldwide permanent injunction.
Abitron appealed, but the Tenth Circuit agreed with the trial result, holding Abitron liable for all of the infringing sales on grounds that if a foreign defendant’s conduct has a substantial effect on U.S. commerce, it warrants damages under the Lanham Act. Abitron petitioned the U.S. Supreme Court for a writ of certiorari, and last week the Solicitor General of the United States urged the Supreme Court to grant cert, arguing that Abitron’s case is a suitable vehicle for clarifying the geographic scope of the Lanham Act.
This approach arises at a time of heightened interest in the issue of trademark territoriality. Early this year the Supreme Court denied cert in Belmora v. Bayer, which sought to clarify whether international pharma giant Bayer was entitled to damages from sales in the United States made under a trademark identical to a brand Bayer uses on similar products in Mexico. More recently Coca-Cola suffered early-stage dismissal of its suit against a U.S. company’s sale of soft drinks under trademarks Coke owns for products it sells exclusively in India.
Increased globalism brings with it a need to re-examine and clarify the territorial limitations traditionally applied to trademark rights. Should U.S. users of foreign trademarks and foreign users of U.S. trademarks be subject to the provisions and remedies of the Lanham Act irrespective of where sales—and damages—occur? Much depends on whether—and how —the Supreme Court addresses this growing issue.
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