Tag: supreme court

Trademark Ruling by US Supreme Court

Trademark Infringement: US Supreme Court Case

US Supreme Court Case – Abitron Austria GmbH v. Hetronic Int’l, Inc., 600 U.S. 412 (U.S. 2023)

The Facts

The case is a trademark dispute between a United States company (Hetronic International, Inc.) and six foreign parties (five companies and one individual (collectively Abitron)).  Hetronic manufactures radio remote controls for construction equipment. It sells and services these products, which employ “a distinctive black-and-yellow color scheme to distinguish them from those of its competitors,” in more than 45 countries.

Abitron originally operated as a licensed distributor for Hetronic, but it later concluded that it held the rights to much of Hetronic’s intellectual property, including the marks on the products at issue in this suit. After reverse engineering Hetronic’s products, Abitron began to sell Hetronic-branded products that incorporated parts sourced from third parties. Abitron mostly sold its products in Europe, but it also made some direct sales into the United States.

Hetronic sued Abitron in the Western District of Oklahoma for the unauthorized “use in commerce [of] any reproduction . . . of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services” when “such use is likely to cause confusion” and Hetronic also invoked §1125(a)(1), which prohibits the “us[e] in commerce” of a protected mark, whether registered or not, that “is likely to cause confusion.”

Abitron argued that Hetronic sought an impermissible extraterritorial application of the Lanham Act. However, the District Court rejected this argument, and a jury later awarded Hetronic approximately $96 million in damages related to Abitron’s global employment of Hetronic’s marks.

This amount thus included damages from Abitron’s direct sales to consumers in the United States, its foreign sales of products for which the foreign buyers designated the United States as the ultimate destination, and its foreign sales of products that did not end up in the United States. The District Court also entered a permanent injunction preventing Abitron from using the marks anywhere in the world.

On appeal, the Tenth Circuit narrowed the injunction to cover only certain countries but otherwise affirmed the judgment. It concluded that the Lanham Act extended to “all of [Abitron’s] foreign infringing conduct” because the “impacts within the United States [were] of a sufficient character and magnitude as would give the United States a reasonably strong interest in the litigation.”

The ruling of the US Supreme Court

On page 415 of Abitron Austria GmbH, Mr. Justice Alito, for the US Supreme Court, wrote, “This case requires us to decide the foreign reach of 15 U.S.C. §1114(1)(a) and §1125(a)(1), two provisions of the Lanham Act prohibit trademark infringement. Applying the presumption against extraterritoriality, we hold that these provisions are not extraterritorial and that they extend only to claims where the claimed infringing use in commerce is domestic.”

How the US Supreme Court reached the Conclusion

“It is a ‘longstanding principle of American law “that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” Abitron Austria GmbH at 417.

“Applying the presumption against extraterritoriality involves “a two-step framework.” Id., at 337, 136 S. Ct. 2090, 195 L. Ed. 2d 476. At step one, we determine whether a provision is extraterritorial, and that determination turns on whether “Congress has affirmatively and unmistakably instructed that” the provision at issue should “apply to foreign conduct.” “If Congress has provided an unmistakable instruction that the provision is extraterritorial, then claims alleging exclusively foreign conduct may proceed, subject to the limits Congress has (or has not) imposed on the statute’s foreign application.” Abitron Austria GmbH, 417, 418.

“If a provision is not extraterritorial, we move to step two, which resolves whether the suit seeks a (permissible) domestic or (impermissible) foreign application of the provision.” Abitron Austria GmbH, 418.

“Step two is designed to apply the presumption against extraterritoriality to claims that involve both domestic and foreign activity, separating the activity that matters from the activity that does not. After all, we have long recognized that the presumption would be meaningless if any domestic conduct could defeat it. Thus, “‘[i]f the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application’ of the statute, ‘even if other conduct occurred abroad.’” And “if the relevant conduct occurred in another country, ‘then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in US territory.’”

Of course, if all the conduct “‘regarding [the] violations ‘took place outside the United States,” then courts do “not need to determine . . . the statute’s ‘focus’” at all. In that circumstance, there would be no domestic conduct that could be relevant to any focus, so the focus test has no filtering role to play. Abitron Austria GmbH, 419.

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Trademark case in Supreme Court

Whiskey vs. Dog Toys – A Supreme Court Case about Trademark Infringement

Jack Daniel’s Whiskey Trademark vs A Dog Toys Trademark

Jack Daniels objects to Bad Spaniels Trademark. The Supreme Court Case – Jack Daniel’s Props. v. VIP Prods. LLC, 143 S. Ct. 1578, 216 L. Ed. 2d 161, 599 U.S. 140 (U.S.).

The Facts

On page 1582 of the Jack Daniel’s Props. Supreme Court case, Justice Kagan wrote, “This case is about dog toys and whiskey, two items seldom appearing in the same sentence. Respondent VIP Products makes a squeaky, chewable dog toy designed to look like a bottle of Jack Daniel’s whiskey. Though not entirely. On the toy, for example, the words “Jack Daniel’s” become “Bad Spaniels.” And the descriptive phrase “Old No. 7 Brand Tennessee Sour Mash Whiskey” turns into “The Old No. 2 On Your Tennessee Carpet.” The jokes did not impress petitioner Jack Daniel’s Properties. It owns trademarks in the distinctive Jack Daniel’s bottle and in many of the words and graphics on the label. And it believed Bad Spaniels had both infringed and diluted those trademarks. Bad Spaniels had infringed the marks, the argument ran, by leading consumers to think that Jack Daniel’s had created, or was otherwise responsible for, the dog toy. And Bad Spaniels had diluted the marks, the argument went on, by associating the famed whiskey with, well, dog excrement.”

The Court of Appeals, in the decision we review [953 F.3d 1170 (2020)], saw things differently. Though the federal trademark statute makes infringement turn on the likelihood of consumer confusion, the Court of Appeals never got to that issue. On the court’s view, the First Amendment compels a stringent threshold test when an infringement suit challenges a so-called expressive work—here (so said the court), the Bad Spaniels toy. And that test knocked out Jack Daniel’s claim, whatever the likelihood of confusion. Likewise, Jack’s dilution claim failed—though on that issue the problem was statutory. The trademark law provides that the “noncommercial” use of a mark cannot count as dilution. 15 U.S.C. §1125(c)(3)(C). The Bad Spaniels marks, the court held, fell within that exemption because the toy communicated a message—a kind of parody—about Jack Daniel’s.

Supreme Court Legal Principles from the Jack Daniel’s Props. Decision

  • A trademark is not a trademark unless it identifies a product’s source and distinguishes that source from others. In other words, a mark tells the public who is responsible for a product.
  • A source-identifying mark enables customers to select “the goods and services that they wish to purchase, as well as those they want to avoid.
  • The mark “quickly and easily assures a potential customer that this item—the item with this mark—is made by the same producer as other similarly marked items that he or she liked or disliked in the past. Because that is so, the producer of a quality product may derive significant value from its marks.
  • The Lanham Act creates a federal cause of action for the plaintiff when the defendant’s actions are “likely to cause confusion, or to cause mistake, or to deceive.”
  • The Lanham Act also creates a cause of action for the defendant’s dilution of famous marks, where the plaintiff does not need to prove “likelihood of confusion.”

 The Supreme Court’s Conclusions

  • A parody must “conjure up” “enough of [an] original to make the object of its critical wit recognizable.” The parody must also create contrasts, so that its message of ridicule or pointed humor comes clear. And once that is done, a parody is not often likely to create confusion.
  • The fair-use exclusion has its own exclusion: It does not apply when the use is “as a designation of source for the person’s own goods or services.” In that event, no parody, criticism, or commentary will rescue the alleged dilutor. It will be subject to liability regardless.
  • On infringement, we hold only that Rogers v. Grimalidi, 875 F. 2d 994, 999 (2nd Second 1989) does not apply when the challenged use of a mark is as a mark.
  • On dilution, we hold only that the noncommercial exclusion does not shield parody or other commentary when its use of a mark is similarly source-identifying.

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If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.