In Abitron Austria GmbH v. Hetronic Int’l, Inc., the Supreme Court placed limits on the reach of federal trademark laws to claims where the infringing use in commerce is within the U.S. market, holding that Sections 1114(1)(a) and 1125(a)(1) of the Lanham Act are not extraterritorial and that “‘use in commerce’ provides the dividing line between foreign and domestic applications of these provisions.”
Abitron claimed rights to Hetronic’s brand and began selling products using Hetronic’s marks almost entirely outside the United States. Hetronic successfully sued Abitron under the Lanham Act receiving a substantial award. Abitron appealed, arguing that Hectronic sought an impermissible extraterritotiral application of the Lanham Act, but the Tenth Circuit affirmed the judgment.
The Supreme Court ruled that the Lanham Act’s application is primarily domestic, and foreign uses of trademarks do not qualify. The decision emphasized the presumption that U.S. law applies within its territories and that “neither provision [of the Lanham Act] at issue provides an express statement of extraterritorial application or any other clear indication that it is one of the ‘rare’ provisions that nonetheless applies abroad.” Under the two-step test for applying the presumption against extraterritoriality, courts must first “determine whether a provision is extraterritorial,” which involves evaluating whether “‘Congress has affirmatively and unmistakably instructed that’ the provision at issue should ‘apply to foreign conduct,’” and then, if it is not extraterritorial, “move to step two, which resolves whether the suit seeks a (permissible) domestic or (impermissible) foreign application of the provision.” Accordingly, under the proper test, the ultimate question regarding permissible domestic application of the Lanham Act must turn on the location of the conduct relevant to the focus of the statutory provisions, i.e., the “use in commerce.” Ultimately, since the use in commerce at issue in this case was not in the U.S., the decision of the Tenth Circuit was vacated.