High Court Case on US Trademark Law’s Limits Stretches Beyond IP

In Hetronic International Inc. v. Abitron Germany GmbH, Hetronic persuaded the district and appeals courts that a small portion of Abitron’s infringing radio remote control sales that appeared in US markets opened the door to liability within the US. Abitron’s foreign infringing sales also injured the US company just as sales into the US did. This argument prevailed at the US Court of Appeals for the Tenth Circuit, however, it sparked concerns from the US Justice Department and European Union governments in addition to some of the US Supreme court justices.

The issue is the extraterritorial reach of the Lanham Act, the federal trademark statue, and when conduct outside the US can result in federal liability and damages. Speaking to Bloomberg Law, Finnegan partner Mark Sommers suggested that the apparent tension between foreign conduct and domestic trademark rights stems from conflating two issues: jurisdiction and damages. But establishing jurisdiction, and ultimately liability for goods placed in US commerce, opens a wider door to damages.

“Hetronic convinced a jury that it would have secured the foreign sales if not for Abitron’s infringement. Injury caused by foreign infringement proven to cause injury within US commerce should be reachable by US law,” Mark said. “Such injury could include sales diverted from a US entity or improper profits from goods that a counterfeiter—even a foreign one who sold to a middleman abroad—knew would be put into US commerce.”

“The diverted sales are a part of the damage that was felt by the US company who owned the rights to that trademark in the US, even though there is no confusion for those sales which occurred outside of the US,” Mark said.

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