There have been many newsworthy rulings coming out of the Supreme Court in the last two weeks, so it is understandable if you missed this one. On Thursday, June 29, 2023, the U.S. Supreme Court ruled the Tenth Circuit wrongly upheld a $96 million jury verdict, limiting the international reach of U.S. Trademark law.

Abitron Austria GmbH, et al. v. Hetronic International, Inc. (known as Abitron v. Hetronic) was the original case, a trademark dispute between plaintiff Hetronic, an American company, and Abitron, et. al., several European defendant companies who were accused of infringing on Hetronic’s trademarks.

A jury in the Western District of Oklahoma awarded Hetronic approximately $96 million for the infringement, an award that represented nearly all of Abitron, et. al.’s worldwide sales under the trademarks that infringed on Hetronic’s mark. The U.S. jury made this award even though the vast majority of the sales at issue were sales made abroad to foreign customers. Up to 97% of the sales did not expose American consumers to the infringing marks.

The Tenth Circuit then affirmed the award, which the U.S. Supreme Court vacated.

Justice Alito’s opinion noted the Lanham Act prohibits the use of a trademark in commerce when its use “is likely to cause confusion.” The presumption that American laws do not apply outside the U.S. involves a two-pronged analysis. The first step was to determine the legislative intent – did Congress intend for the provision to be applied outside borders. The second step was to determine if the conduct at issue was of the same type that Congress wished to address.

The opinion notes that § 1114(1)(a) and § 1125(a)(1) of the Lanham Act are not extraterritorial and extend only to claims where the infringing use in commerce is domestic. This means that the Lanham Act, which protects against trademark infringement, does not apply outside the United States. This ruling will make it even more critical for American companies doing business internationally to understand the trademark law of the foreign countries in which they do business. Plans for maximum protection of trademarks abroad will likely be necessary.

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