U.S. intellectual property has lost protection at the international level. Amidst a handful of controversial opinions handed down this summer, the Supreme Court addressed the Lanham Act’s applicability to foreign trademark infringements in Abitron Austria GmbH v. Hetronic International, Inc. Abitron involved trademark infringement by a group of Austrian companies (Abitron). The group used marks from a U.S. company (Hetronic) for products they were selling outside of the United States. The key inquiry was whether the Lanham Act applies when a U.S. mark is infringed, but the infringer uses the mark in foreign commerce. The Court unanimously decided that the Lanham Act’s protections do not apply extraterritorially—they are only applicable when an infringed mark is used in U.S. commerce.
The Lanham Act is the legal basis for U.S. trademark protection and includes two provisions prohibiting trademark infringement: 15 U.S.C. §1114(1)(a) and §1125(a)(1). These provisions require there be a use “in commerce” by the infringing party for protection to be granted—where that use in commerce occurs was the point of contention in Abitron. For the past 70 years, the leading case concerning this question was Steel v. Bulova Watch Co. Prior to the Supreme Court granting cert for Abitron, the Tenth Circuit relied on Steel to hold that the Lanham Act applied to all of Abitron’s conduct, even when it occurred outside of the U.S. The Tenth Circuit emphasized that the foreign infringement negatively impacted potential sales for Hetronic. The Supreme Court vacated and remanded this holding, declaring that the use in commerce must be in the U.S., despite the negative indirect impacts U.S. companies may experience from infringements in foreign commerce.
In deciding Abitron, the Court used the presumption against extraterritoriality (an interpretive principle that U.S. statutes pertain to U.S. soil only, unless clearly indicated otherwise by Congress). The Court concluded that the Lanham Act ought not apply to foreign claims because Congress failed to expressly indicate so when drafting the Act. While this decision was sound in its logic, it is open to criticism. The Lanham Act was passed in 1946, and the presumption against extraterritoriality was not used between 1949 and 1991, and only came into its current form in 2010. While the Roberts Court was justified in using this interpretive tool, the Lanham Act evolved during several decades in which the Court did not use it. Congress had no reason to update the Lanham Act during this period because the common law set out in Steel allowed the Act to reach foreign commerce, and Congress was not concerned about the Court using the presumption against extraterritoriality.
The consequences of this decision are significant—in an increasingly globalized society, U.S. companies are no longer offered protection against foreign companies that benefit from U.S. trademarks. Foreign companies can appropriate U.S. marks for knockoff brands in their markets to profit off U.S. intellectual property while simultaneously pulling sales away from U.S. companies. By restricting the Lanham Act to U.S. commerce, the Court is disregarding the omnipresence of global U.S. brands—these companies have cultivated global recognition, and the internet has propelled many to exist in the minds of consumers throughout the world. These brands are subject to the most dramatic impacts because their global reputations may be tarnished by infringers in foreign markets.
This decision is particularly concerning because it follows a surge in trademark filings and scams. From 2020–2021, there was a 63% increase in trademark filings from U.S. and foreign applicants. Furthermore, sanctions have increased since and concern over fraud is high—there have been countless reports of scams involving U.S. trademarks in recent years, many of which were orchestrated outside of the United States. Trademark fraud is on the rise, and the Abitron decision pulls back protections for U.S. marks. This conundrum must now be resolved by Congress, or U.S. marks will continue to lose their strength at the international level.
Ultimately, Abitron fails to serve the fundamental goal of trademark law: minimize consumer confusion. The lack of protection for U.S. marks against foreign infringers means that, for globally recognized U.S. brands, foreign consumers are susceptible to confusion by an infringer’s product. Consumers in foreign markets will be confused when they see knockoffs of iconic U.S. brands because these brands have gained international recognition from the internet. And there lies the problem—while Abitron was judicially sound, it goes against the purpose of trademark law and its policy impacts are concerning in an increasingly fraudulent global market.