How Far is the Effective Legal Reach of the Lanham Act for Trademark Protection?

Trademark law in the United States grants trademark owners the exclusive right to use their mark and protects them against the likelihood of consumer confusion caused by another entity’s use of the mark. This aspect is regulated by the Lanham Act, and to prove a violation, the plaintiff must demonstrate ownership, legality of the mark, and that the defendant’s use causes likely confusion.

In the case of A&H Sportswear, Inc., v. Victoria’s Secret Stores, Inc., the criteria were explained further, but another critical question arose regarding the Lanham Act’s jurisdiction over infringements outside U.S. territory.

This question became the central issue in the Supreme Court case of Abitron Austria GmbH et al. v. Hetronic International, Inc. For the first time since 1952, the Court had to determine the Lanham Act’s extraterritorial reach. The ruling clarified that the Act only applied to domestic infringement claims.

The case originated in Oklahoma, where Hetronic sued Abitron for using identical product names and designs. The district court awarded $96 million to Hetronic and prohibited Abitron from using the marks globally. However, Abitron’s appeal led to a limitation on the injunction to specific countries.

The Supreme Court unanimously overturned the Tenth Circuit’s decision, focusing on a presumption against extraterritoriality. A two-step analysis was required to overcome this presumption. While the justices agreed on the need for the two-step process, they disagreed on how to measure the domestic application of the Lanham Act at the second step.

Justice Sotomayor believed that a domestic application could involve foreign conduct if there was a likelihood of consumer confusion within the U.S. However, the majority looked to the location of the infringing use in commerce as the decisive factor. Justice Jackson also wrote a concurrence, suggesting that the mark’s role as a source designator could be a more determinant factor.

The ruling’s implications for future trademark cases remain somewhat uncertain, as the location of infringing uses in commerce can still be argued. The decision highlights a continuous struggle to define what constitutes domestic versus international use in commerce, particularly as global trade continues to expand.

However, where an extraterritorial violation of a U.S. registered trademark can be designated as a use in U.S. commerce, the plaintiff will have the rights and benefits of bringing suit in U.S. federal court.

Give us your thoughts and comments on this blog; and we invite discussion of Justice Jackson’s dicta on a trademark’s role as a “source designator.”  Her example of the “Coache” bag from Germany infringing the U.S. Coach trademark (when sold in the U.S. under what appears to be a ‘right of first sale’ by a traveling student) as a “source designator” seems a tenuous argument for Lanham Act jurisdiction.  What do you think?  We provide a link to a copy of the judgment here.