On June 29, the United States Supreme Court issued its highly anticipated decision regarding the foreign reach of the Lanham Act, the federal statute that prohibits trademark infringement. The decision confirms the territorial nature of trademarks, and as a result, significantly underscores the importance of securing foreign trademark registrations where trademarks are being used abroad.

U.S.-based Hetronic International, Inc. (“Hetronic”) sued its former German distributor and its affiliates (collectively, “Abitron”) for trademark infringement related to sales of remote control construction products bearing the Hetronic trademarks. Of the infringing sales at issue, only 3% were made directly into the U.S. A federal jury in the Western District of Oklahoma awarded Hetronic $96 million in damages, based on all of the Defendants’ sales in Europe and other physical locations outside the U.S., and the district court judge issued a permanent injunction ordering Abitron to cease use of the Hetronic marks anywhere in the world. The 10th Circuit affirmed, albeit narrowing the terms of the injunction. Reversing the 10th Circuit, the Supreme Court held that the Lanham Act only applies to trademark infringement where the infringing acts are domestic.

There is a long-standing presumption against the extraterritorial application of a U.S. statute as it relates to conduct purely outside the U.S. In keeping with that presumption, the Court held that the Lanham Act is not extraterritorial in its reach and that use in commerce within the territorial limits of the United States is the dividing line on whether the Lanham Act can be used to remedy infringing conduct that occurs outside the U.S.

This means that if an infringement occurs outside of the U.S., the trademark holder will have to rely on rights and enforcement mechanisms provided by the foreign country where the infringement actually occurs. For the trademark holder to avail itself of those mechanisms, the trademark needs to be recognized and enforceable in that foreign jurisdiction.  Foreign registration is advisable to establish and/or enhance your trademark rights in jurisdictions outside the United States where the trademark holder is, or anticipates, doing business.