Global trademark spat before Supreme Court leaves attorneys conflicted
2023 IPDBRF 0039
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By Patrick H.J. Hughes
WESTLAW Intellectual Property Daily Briefing
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March 23, 2023
(March 23, 2023) - Following the March 21 oral argument before the U.S. Supreme Court over the circumstances that allow U.S. courts to find trademark defendants liable for foreign conduct, attorneys offered varying opinions about what could result.
It was undisputed that most of the sales were made outside of the U.S. to foreign customers. So, why should a U.S. law apply to the dispute at all?
Abitron Austria GmbH, Abitron Germany GmbH and the other accused infringers were represented by MoloLamken LLP attorney Lucas M. Walker, who said the answer lies in the words of the trademark laws embodied in the Lanham Act.
"Both the text and the focus of the Lanham Act require a domestic use of the mark in commerce," Walker told the justices.
But Matthew S. Hellman of Jenner & Block LLP, who argued for Hetronic, said in reaction to a hypothetical posed by Justice Ketanji Brown Jackson that liability can be found not only in domestic confusion caused by foreign conduct, but also in diverted sales. "That is an effect on U.S. commerce," Hellman said. "It absolutely is."
Affirm?
William Manske, a partner at Robins Kaplan LLP who is not involved in the dispute, said there was "significant engagement" with Justice Jackson's hypotheticals during the oral argument.
"One in particular stands out: Would a foreign manufacturer be liable for acts of a downstream purchaser — entrepreneurial U.S. students in Justice Jackson's hypothetical — that cause confusion in the U.S. and dilute a famous U.S. brand? There seemed to be a majority agreement that the Lanham Act applies to this scenario, which is telling," Manske said.
Howard Michael, a partner at Crowell & Moring who also is not involved in the case, predicts the justices will affirm the 10th Circuit's ruling.
"While the [Supreme] Court has recently expressed its reluctance to read statutes to extend beyond U.S. borders, the Lanham Act's unique commerce provision, together with Supreme Court precedent confirming the extraterritorial scope of the Lanham Act in the past, and Congress' unwillingness to narrow the Lanham Act's scope, will likely be the deciding factors favoring the respondent," he said.
Or reverse?
In contrast, Jonah Knobler of Patterson Belknap Webb & Tyler LLP said that, given what was said at oral argument, a reversal seems "highly likely — perhaps almost certain."
Knobler described several possible scenarios, each of which he said would narrow the 10th Circuit's "relatively permissive approach to extraterritorial Lanham Act claims."
"Five or more conservative justices could write an opinion endorsing Abitron's 'conduct' approach, which would severely limit the Lanham Act's application to conduct abroad, even when it foreseeably results in confusion of U.S. consumers," he said.
The high court could also reach a decision in which "no single test garners five votes, but the justices agree that the 10th Circuit got it wrong," Knobler said.
Michael A. McArthur of Haynes Boone LLP said a "middle-ground approach" is a possibility. Given the diversity of concerns that the justices raised, however, "this case remains very much up in the air," he said.
By Patrick H.J. Hughes
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