Today's post is about the first of five US trademark cases that I will be discussing as part of a Case Law wrap-up for 2024. Stay tuned for the others as well.
This case, Arbitron Austria GmbH v Hetronic International, Incorporated, is about territoriality and its application to the Lanham Act. More specifically, it is case about use in commerce in the United States versus use in commerce overseas. A U.S. company, Hetronic makes, sells and services radio controls in more than 45 countries. A trademark dispute arose when six foreign parties (five companies and one individual) who were previously licensing partners reverse engineered Hetronic products and then sold them as Hetronic branded products in the EU and in the US.
The QUESTION here is whether or not there is foreign reach for the Lanham act, which prohibits trademark infringement.
In 2015, the District Court in Oklahoma said Yes the Lanham Act does extend beyond the U.S. border and awarded $96 million in damages and later issued an injunction against use of the Hetronic mark anywhere in world.
On appeal, the 10th circuit (2021) agreed. They held that Yes, the Lanham Act does extend extraterritorially, but it narrowed the injunction to only some countries. The court held that the Lanham Act covered all foreign infringement because the impact in the U.S. was of a sufficient character and magnitude to give the U.S. a reasonably strong interest in the litigation.
In 2023, the case went to the U.S. Supreme Court. There, the court applied the presumption against extraterritoriality. The Court stated that laws written by the U.S. Congress are domestic in nature unless there is a clear contrary intent present.
The Court applied a 2-prong test:
1) did Congress clearly state the law is extraterritorial?
2) If not, is this a permissible or impermissible application of the law?
For the second prong, the Court asked:
1) What is the focus of the congressional concern (e.g., what does the law regulate or who does it protect?) AND
2) did the conduct relevant to the focus occur here in the US?
The Supreme Court determined that the Lanham Act is not extraterritorial and only applies to use that is domestic.
This case highlights the value of a worldwide IP strategy. KPIP Law and our network of associates stands ready to help you and/or your client implement an IP strategy that best fits the situation.
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