Trademarks: Two Landmark Decisions From 2023 Will Continue to Raise Questions in 2024 and Beyond

A 2023 U.S. Supreme Court decision limiting the reach of U.S. trademark law outside of the country could lead to further litigation by trademark holders looking to push back on those boundaries, says Crowell & Moring partner Preetha Chakrabarti, a member of the firm’s Technology & Intellectual Property Department and the Advertising & Brand Protection Group.

In Abitron v. Hetronic, the high court vacated $96 million of a $115 million jury award for an American manufacturer that had sued former distributors who sold knockoff versions of its industrial radio remote controls—using its distinctive yellow-and-black design—primarily in foreign countries.

The overall decision was a unanimous one, with all justices agreeing that Congress did not intend the U.S. trademark statute—the Lanham Act— to apply extraterritorially. That’s consistent with the court’s recent holdings that, in general, statutes should only apply domestically, absent explicit instruction by Congress that they should apply overseas.

However, the justices split on exactly how to determine whether trademark infringement occurred domestically or overseas. The majority opinion held that the U.S. statute applies to a trademark’s unauthorized “use in commerce” in the U.S.

A concurrence, signed by three justices, said the Lanham Act should apply whenever “there is a likelihood of consumer confusion in the U.S.”

Finally, Justice Ketanji Brown Jackson issued her own opinion, agreeing with the majority but raising the issue of how to determine where the “use in commerce” occurred, which can be complicated in today’s global marketplace, where a single good could be manufactured, sold, purchased, used, and resold, all in different countries.

When the Supreme Court first agreed in late 2022 to take up Abitron v. Hetronic, there was hope that its decision would finally clear up the issue of how U.S. trademark law applies in an international context, says Chakrabarti. At the time, federal appeals courts were deeply split, with at least three different tests being applied to determine extraterritorial application among the circuits.

“In some ways, though, the Supreme Court’s decision leaves some important, unresolved questions,” Chakrabarti says. “I think we’re going to see more litigation over the phrase ‘use in commerce’ going forward.”

Trademark holders with global footprints can still seek protection under foreign trademark laws. But registering, maintaining, and enforcing a trademark around the world can be burdensome and expensive, especially for small and medium-size companies. Additionally, damages under the Lanham Act are generally much more favorable to trademark holders than those available under foreign laws, says Chakrabarti.

So while Abitron v. Hetronic certainly reins in application of the Lanham Act overseas, it’s likely that trademark holders will try to argue for an expansive interpretation of what it means to “use [a mark] in commerce” in the United States.

For example, they could assert that a defendant that manufactured a counterfeit product overseas should be liable under the Lanham Act even though they did not sell the product in the U.S., but a third party did. Whether the manufacturer knew or should have known the third party was going to sell the product in the U.S. might—or might not—be a relevant factor.