Foreign Sales Trademark Case ‘Ripe for SCOTUS Appeal’ to Fix Split

In a recent decision, the U.S. Court of Appeals for the Tenth Circuit upheld a $113 million damages award in Hetronic International v. Hetronic Germany, a case in which Hetronic Germany manufactured and sold products under the Hetronic brand in Europe that were identical to Hetronic International’s products. Hetronic Germany claimed they owned the rights to Hetronic International’s trademarks and other intellectual property. On appeal, the Tenth Circuit ruled that the scope of the Lanham Act extended to the defendant’s extraterritorial conduct and that the foreign activity had a substantial effect on U.S. commerce. Other circuit courts have different interpretations of the substantial effect test and for this reason, practitioners believe this case could go to the Supreme Court of the United States.

Finnegan partner Douglas Rettew said, “[Whether the case goes to the Supreme Court] depends on whether the court considers this to be enough of a divergence, but I certainly think it’s fair grounds for some much-needed clarity. Extraterritorial activity doesn’t apply in a lot of cases, but when it does apply, it’s quite important.”

Some practitioners believe this decision could lead plaintiffs to file cases in other circuits if they’re dealing with extraterritorial infringing conduct. Doug believes the Fifth Circuit might be a better court for plaintiffs because litigants there only need to show some effect on U.S. commerce, rather than a substantial impact as required by the Tenth Circuit. However, he believes the Tenth Circuit’s broad interpretation of the substantial effect test can be a powerful tool for plaintiffs.

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