Abitron Austria GmbH v. Hetronic International, Inc.

by Supreme Court of the United States

Note: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

ABITRON AUSTRIA GMBH ET AL. v. HETRONIC INTERNATIONAL, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT
No. 21–1043. Argued March 21, 2023—Decided June 29, 2023

This case requires the Court to decide the foreign reach of 15 U. S. C. §1114(1)(a) and §1125(a)(1), two provisions of the Lanham Act that prohibit trademark infringement. The case concerns a trademark dispute between Hetronic (a U. S. company) and six foreign parties (collectively Abitron). Hetronic manufactures remote controls for construction equipment. Abitron, once a licensed distributor for Hetronic, claimed ownership of the rights to much of Hetronic’s intellectual property and began employing Hetronic’s marks on products it sold.

Hetronic sued Abitron in the Western District of Oklahoma for trademark violations under two related provisions of the Lanham Act, both of which prohibit the unauthorized use in commerce of protected marks when, inter alia, that use is likely to cause confusion. See §§1114(1)(a), 1125(a)(1). Hetronic sought damages for Abitron’s infringing acts worldwide. Abitron argued that Hetronic sought an impermissible extraterritorial application of the Lanham Act. The District Court rejected Abitron’s argument, and a jury later awarded Hetronic approximately $96 million in damages related to Abitron’s global employment of Hetronic’s marks. The District Court also entered a permanent injunction preventing Abitron from using Hetronic’s marks anywhere in the world. On appeal, the Tenth Circuit narrowed the injunction, but otherwise affirmed the judgment, concluding that the Lanham Act extended to “all of [Abitron’s] foreign infringing conduct.”

Held: Applying the presumption against extraterritoriality, §1114(1)(a) and §1125(a)(1) of the Lanham Act are not extraterritorial and extend only to claims where the infringing use in commerce is domestic. Pp. 3–15.

(a) The presumption against extraterritoriality reflects the longstanding principle “that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” Morrison v. National Australia Bank Ltd., 561 U. S. 247, 255. The presumption “serves to avoid the international discord that can result when U. S. law is applied to conduct in foreign countries” and reflects the “commonsense notion that Congress generally legislates with domestic concerns in mind.” RJR Nabisco, Inc. v. European Community, 579 U. S. 325, 335–336.

Applying the presumption involves a two-step framework, which asks at step one whether the statute is extraterritorial. This step turns on whether “Congress has affirmatively and unmistakably instructed that” the provision at issue should “apply to foreign conduct.” Id., at 335. If Congress has provided such an instruction, then the provision is extraterritorial. If not, then the provision is not extraterritorial and step two applies. That step resolves whether a suit seeks a (permissible) domestic or (impermissible) foreign application of the provision. That determination requires courts to identify the “focus” of congressional concern underlying the provision at issue, id., at 336, and then “as[k] whether the conduct relevant to that focus occurred in United States territory,” WesternGeco LLC v. ION Geophysical Corp., 585 U. S. ___, ___. Thus, to prove that a claim involves a domestic application of a statute, “plaintiffs must establish that ‘the conduct relevant to the statute’s focus occurred in the United States.’ ” Nestlé USA, Inc. v. Doe, 593 U. S. ___, ___ (emphasis added). Step two is designed to apply the presumption to claims that involve both domestic and foreign conduct, separating the activity that matters from the activity that does not. After all, the Court has long recognized that the presumption would be meaningless if any domestic conduct could defeat it. See Morrison, 561 U. S., at 266. Pp. 3–5.

(b) Neither provision 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. Both simply prohibit the use “in commerce” of protected trademarks when that use “is likely to cause confusion.” §§1114(1)(a), 1125(a)(1). Hetronic maintains that the Lanham Act’s definition of “commerce”—“all commerce which may lawfully be regulated by Congress,” §1127—rebuts the presumption against extraterritoriality. But this Court’s repeated holding that “ ‘even statutes … that expressly refer to “foreign commerce’ ” when defining “commerce” are not extraterritorial, Morrison, 561 U. S., at 262–263, dooms Hetronic’s arguments. Pp. 5–7.

(c) Because §1114(1)(a) and §1125(a)(1) are not extraterritorial, the Court must consider at step two when claims involve “domestic” applications of these provisions. Under the proper test, the ultimate question regarding permissible domestic application turns on the location of the conduct relevant to the focus of the statutory provisions. But much of the parties’ dispute in this case misses this critical point and centers on the “focus” of the relevant provisions without regard to the “conduct relevant to that focus.” WesternGeco, 585 U. S., at ___. Abitron contends that §1114(1)(a) and §1125(a)(1) focus on preventing infringing use of trademarks, while Hetronic argues that they focus both on protecting the goodwill of mark owners and on preventing consumer confusion. The United States as amicus curiae argues that the provisions focus only on likely consumer confusion. The parties all seek support for their positions in Steele v. Bulova Watch Co., 344 U. S. 280, but because Steele implicated both domestic conduct and a likelihood of domestic confusion, Steele does not answer which one determines the domestic applications of the provisions here.

The ultimate question regarding permissible domestic application turns on the location of the conduct relevant to the focus. See, e.g., RJR Nabisco, 579 U. S., at 337. And the conduct relevant to any focus the parties have proffered is infringing use in commerce, as defined by the Act. This conclusion follows from the text and context of both provisions. Both provisions prohibit the unauthorized “use in commerce” of a protected trademark when that use “is likely to cause confusion.” In other words, Congress proscribed the use of a mark in commerce under certain conditions. This conduct, to be sure, must create a sufficient risk of confusion, but confusion is not a separate requirement; rather, it is simply a necessary characteristic of an offending use. Because Congress has premised liability on a specific action (a particular sort of use in commerce), that specific action would be the conduct relevant to any focus on offer today. WesternGeco, 585 U. S., at ___–___.

In sum, §1114(1)(a) and §1125(a)(1) are not extraterritorial, and “use in commerce” provides the dividing line between foreign and domestic applications of these provisions. The proceedings below were not in accord with this understanding of extraterritoriality. Pp. 7–10, 14–15.

10 F. 4th 1016, vacated and remanded.

Alito, J., delivered the opinion of the Court, in which Thomas, Gorsuch, Kavanaugh, and Jackson, JJ., joined. Jackson, J., filed a concurring opinion. Sotomayor, J., filed an opinion concurring in the judgment, in which Roberts, C. J., and Kagan and Barrett, JJ., joined.

The current edition of this document derives from the electronic version of the "slip opinion" posted online by the Supreme Court of the United States the day the decision was handed down. It is not the final or most authoritative version. It is subject to further revision by the Court and should be replaced with the final edition when it is published in a print volume of the United States Reports. The Court's full disclaimer regarding slip opinions follows:

The "slip" opinion is the second version of an opinion. It is sent to the printer later in the day on which the "bench" opinion is released by the Court. Each slip opinion has the same elements as the bench opinion—majority or plurality opinion, concurrences or dissents, and a prefatory syllabus—but may contain corrections not appearing in the bench opinion. Caution: These electronic opinions may contain computer-generated errors or other deviations from the official printed slip opinion pamphlets. Moreover, a slip opinion is replaced within a few months by a paginated version of the case in the preliminary print, and—one year after the issuance of that print—by the final version of the case in a U. S. Reports bound volume. In case of discrepancies between the print and electronic versions of a slip opinion, the print version controls. In case of discrepancies between the slip opinion and any later official version of the opinion, the later version controls. (source: http://www.supremecourt.gov/opinions/slipopinions.aspx)