Amicus Curiae Brief — Abitron Austria GmbH, et al., Petitioners v. Hetronic International, Inc.
Supreme Court briefDec 27, 2022
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No. 21-1043
In the Supreme Court of the United States
ABITRON AUSTRIA GMBH, ET AL., PETITIONERS
v.
HETRONIC INTERNATIONAL, INC.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
BRIEF FOR THE UNITED STATES AS AMICUS CURIAE
SUPPORTING NEITHER PARTY
ELIZABETH B. PRELOGAR
Solicitor General
Counsel of Record
BRIAN M. BOYNTON
Principal Deputy Assistant
Attorney General
MALCOLM L. STEWART
Deputy Solicitor General
MASHA G. HANSFORD
Assistant to the Solicitor
General
DANIEL TENNY
JOSEPH F. BUSA
Attorneys
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217
QUESTION PRESENTED
Sections 32(1)(a) and 43(a)(1)(A) of the Lanham Act
impose civil liability on any person who “use[s] in
commerce” a trademark in a manner that “is likely to
cause confusion, or to cause mistake, or to deceive.” 15
U.S.C. 1114(1)(a), 1125(a)(1). The question presented
is as follows:
Whether the court of appeals erred in applying Sections 32(1)(a) and 43(a)(1)(A) of the Lanham Act to petitioners’ foreign sales, which included foreign sales of
goods that never reached the United States and that
were not found to have created a likelihood of consumer confusion in the United States.
(I)
TABLE OF CONTENTS
Page
Interest of the United States....................................................... 1
Statement ...................................................................................... 2
Summary of argument ................................................................. 8
Argument:
Sections 32(1)(a) and 43(a)(1)(A) of the Lanham Act
provide a remedy for use of a plaintiff’s U.S. trademark
abroad only if that use is likely to cause consumer
confusion in the United States ............................................. 10
A. Under this Court’s modern two-step framework
for assessing the territorial reach of federal
statutes, application of the Lanham Act provisions
at issue here turns on the likelihood of consumer
confusion within the United States .............................. 10
1. Congress is ordinarily presumed to legislate
with domestic concerns in mind ...................... 10
2. The relevant Lanham Act provisions do not
clearly manifest a congressional intent that
the Act should apply extraterritorially .......... 12
3. At step two of the Court’s modern
framework, the focus of the relevant
Lanham Act provisions is consumer
confusion ............................................................ 14
B. Treating consumer confusion as the focus of the
Lanham Act provisions at issue here is consistent
with this Court’s disposition of Steele .......................... 18
C. Petitioners’ criticisms of the government’s position
are unsound .................................................................... 19
D. Treating consumer confusion as the focus of the
pertinent Lanham Act provisions accords with
fundamental trademark principles and with
international agreements to which the United
States is a party ............................................................. 23
(III)
IV
Table of Contents—Continued:
Page
E.
The court of appeals and respondent are mistaken
in their broader view of the Lanham Act’s
application to foreign sales ........................................... 26
Conclusion ................................................................................... 34
TABLE OF AUTHORITIES
Cases:
A. Bourjois & Co. v. Katzel, 260 U.S. 689 (1923) ................ 23
Belmora LLC v. Bayer Consumer Care AG,
819 F.3d 697 (4th Cir. 2016), cert. denied,
137 S. Ct. 1202 (2017) ......................................................... 24
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
489 U.S. 141 (1989).............................................................. 24
Dastar Corp. v. Twentieth Century Fox Film Corp.,
539 U.S. 23 (2003) ............................................................... 24
EEOC v. Arabian Am. Oil Co., 499 U.S. 244
(1991) .................................................................. 11, 12, 13, 31
F. Hof fmann-La Roche Ltd. v. Empagran S. A.,
542 U.S. 155 (2004)........................................................ 29, 32
Foley Bros. v. Filardo, 336 U.S. 281 (1949) .................. 10, 16
Fuji Photo Film Co. v. Shinohara Shoji Kabushiki
Kaisha, 754 F.2d 591 (5th Cir. 1985) ................................ 23
Hanover Star Milling Co. v. Metcalf,
240 U.S. 403 (1916)................................................................ 3
Hartford Fire Ins. Co. v. California,
509 U.S. 764 (1993)........................................................ 19, 29
ITC Ltd. v. Punchgini, Inc., 482 F.3d 135
(2d Cir.), cert. denied, 552 U.S. 827 (2007) ................. 23, 24
Ingenohl v. Olsen & Co., 273 U.S. 541 (1927) ..................... 23
Inwood Labs., Inc. v. Ives Labs., Inc.,
456 U.S. 844 (1982).............................................................. 15
V
Cases—Continued:
Page
James Burrough Ltd. v. Sign of the Beefeater, Inc.,
540 F.2d 266 (7th Cir. 1976) ............................................... 15
KP Permanent Make-Up, Inc. v. Lasting
Impression I, Inc., 543 U.S. 111 (2004) ............................ 15
Kirtsaeng v. John Wiley & Sons, Inc.,
568 U.S. 519 (2013).............................................................. 14
Lexmark Int’l, Inc. v. Static Control Components,
Inc., 572 U.S. 118 (2014) ..................................................... 27
Matal v. Tam, 137 S. Ct. 1744 (2017)................................. 2, 3
McBee v. Delica Co., 417 F.3d 107 (1st Cir. 2005) .............. 30
Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007)......... 27
Morrison v. National Australia Bank Ltd.,
561 U.S. 247 (2010)..................................................... passim
Moseley v. V Secret Catalogue, Inc.,
537 U.S. 418 (2003)................................................................ 2
New York Cent. R.R. v. Chisholm,
268 U.S. 29 (1925) ............................................................... 12
Park ’ N Fly, Inc. v. Dollar Park & Fly, Inc.,
469 U.S. 189 (1985).............................................................. 31
Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159
(1995) ...................................................................................... 3
RJR Nabisco, Inc. v. European Cmty.,
579 U.S. 325 (2016).......................................10, 11, 12, 13, 28
SEC v. Rana Research, Inc.,
8 F.3d 1358 (9th Cir. 1993) ................................................. 20
SEC v. Zandford, 535 U.S. 813 (2002) ................................. 20
Smith v. United States, 507 U.S. 197 (1993) ....................... 11
Steele v. Bulova Watch Co., 344 U.S. 280 (1952) ....... passim
Stoyas v. Toshiba Corp., 896 F.3d 933
(9th Cir. 2018), cert. denied, 139 S. Ct. 2766 (2019)......... 17
Trade-Mark Cases, In re, 100 U.S. 82 (1879) ....................... 2
VI
Cases—Continued:
Page
Web Printing Controls Co. v. Oxy-Dry Corp.,
906 F.2d 1202 (7th Cir. 1990) ............................................. 28
WesternGeco LLC v. ION Geophysical Corp.,
138 S. Ct. 2129 (2018) ............................................. 11, 28, 29
Constitution, treaties, and statutes:
U.S. Const. Art. I, § 8, Cl. 3 .................................................. 12
Paris Convention for the Protection of Industrial
Property, done July 14, 1967, 21 U.S.T. 1583,
828 U.N.T.S. 305:
art. 2, 21 U.S.T. 1631, 828 U.N.T.S. 313 ........................ 25
art. 3, 21 U.S.T. 1631, 828 U.N.T.S. 313 ........................ 25
art. 6(1), 21 U.S.T. 1639, 828 U.N.T.S. 325 ................... 25
art. 6(3), 21 U.S.T. 1639, 828 U.N.T.S. 325 ................... 25
Protocol Relating to the Madrid Agreement
Concerning the International Registration of
Marks, adopted June 27, 1989, S. Treaty Doc.
No. 41, 106th Cong., 2d Sess. (2000),
T.I.A.S. 03-112..................................................................... 25
Federal Trade Commission Act,
15 U.S.C. 41 et seq............................................................... 29
15 U.S.C. 45(a)(3)............................................................. 29
Foreign Trade Antitrust Improvements Act of 1982,
Pub. L. No. 97-290, Tit. IV, § 402,
96 Stat. 1246 ........................................................................ 29
Lanham Act, 15 U.S.C. 1051 et seq. ....................................... 2
15 U.S.C. 1114(1)(a) (§ 32(1)(a)) ............................ passim
15 U.S.C. 1116(a) ............................................................... 2
15 U.S.C. 1117(a) ............................................................... 2
15 U.S.C. 1117(b) ............................................................. 22
15 U.S.C. 1117(c)(2) ......................................................... 22
15 U.S.C. 1125(a) (§ 43(a)) .............................................. 24
VII
Statutes—Continued:
Page
15 U.S.C. 1125(a)(1) ............................................... 2, 12, 24
15 U.S.C. 1125(a)(1)(A) (§ 43(a)(1)(A)) ................. passim
15 U.S.C. 1126 .................................................................. 25
15 U.S.C. 1127 .............................................................. 2, 12
Sherman Act, 15 U.S.C. 1 et seq. .......................................... 29
15 U.S.C. 6a ...................................................................... 29
Securities Exchange Act of 1934, § 10(b),
15 U.S.C. 78j(b) ................................................................... 16
Miscellaneous:
J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition (5th ed. 2022):
Vol. 1 ........................................................................... 15, 32
Vol. 4 ................................................................................. 15
Vol. 5 ..................................................................... 23, 25, 28
S. Rep. No. 1333, 79th Cong., 2d Sess. (1946) ..................... 31
In the Supreme Court of the United States
No. 21-1043
ABITRON AUSTRIA GMBH, ET AL., PETITIONERS
v.
HETRONIC INTERNATIONAL, INC.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
BRIEF FOR THE UNITED STATES AS AMICUS CURIAE
SUPPORTING NEITHER PARTY
INTEREST OF THE UNITED STATES
This case presents the question whether and under
what circumstances a plaintiff may obtain relief under
Sections 32(1)(a) and 43(a)(1)(A) of the Lanham Act for
uses of a trademark that occurred outside the United
States. The United States has a substantial interest in
the resolution of that question, since it concerns the
scope of liability for infringing a trademark that is registered with the United States Patent and Trademark
Office (USPTO). See 15 U.S.C. 1114(1)(a). In addition, the government has an interest in the proper application of the presumption against extraterritorial
application of U.S. law. At the invitation of the Court,
the United States filed a brief as amicus curiae at the
petition stage of this case.
(1)
2
STATEMENT
1. a. A trademark is a “word, name, symbol, or device” used by a person “to identify and distinguish his
or her goods” in commerce and “to indicate the source
of the goods.” 15 U.S.C. 1127; see In re Trade-Mark
Cases, 100 U.S. 82, 92 (1879). The Lanham Act, 15
U.S.C. 1051 et seq., is the “foundation of current federal trademark law.” Matal v. Tam, 137 S. Ct. 1744,
1752 (2017).
Section 32(1)(a) of the Lanham Act imposes civil liability upon any person who “use[s] in commerce” a
“reproduction, counterfeit, copy, or colorable imitation” of a mark registered with the USPTO where
“such use is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. 1114(1)(a). Section
43(a)(1)(A) provides a cause of action to the owner of a
mark, whether registered or unregistered, against any
person who “uses in commerce” a mark, description, or
representation that “is likely to cause confusion, or to
cause mistake, or to deceive.” 15 U.S.C. 1125(a)(1).
The Act defines “commerce” to include “all commerce
which may lawfully be regulated by Congress.” 15
U.S.C. 1127. A trademark owner may obtain an injunction “to prevent” a “violation” of certain Lanham
Act provisions. 15 U.S.C. 1116(a). An owner may also
recover “any damages sustained” from “a violation” of
certain provisions of the Act, as well as the infringing
defendant’s “profits.” 15 U.S.C. 1117(a).
“Infringement law protects consumers from being
misled by the use of infringing marks and also protects
producers from unfair practices by an imitating competitor.” Moseley v. V Secret Catalogue, Inc., 537 U.S.
418, 428 (2003) (citation and internal quotation marks
omitted). By identifying the source of particular
3
goods, a trademark “helps consumers identify goods
and services that they wish to purchase, as well as
those they want to avoid.” Tam, 137 S. Ct. at 1751.
Use of infringing trademarks impedes consumers’ ability to make informed purchasing decisions based on
their prior experiences with particular sources.
“At the same time, [trademark] law helps assure a
producer that it (and not an imitating competitor) will
reap the financial, reputation-related rewards associated with a desirable product.” Qualitex Co. v. Jacobson
Prods. Co., 514 U.S. 159, 164 (1995). Where a particular mark has come to be associated with a specific
source, allowing others to use the same mark “would in
effect represent their goods to be of [the mark owner’s] production and would tend to deprive him of the
profit he might make through the sale of the goods
which the purchaser intended to buy.” Hanover Star
Milling Co. v. Metcalf, 240 U.S. 403, 412 (1916). A
competitor’s use of infringing trademarks can also subject the mark owner to reputational harm if the infringing marks are placed on inferior goods. See p. 18,
infra.
b. In Steele v. Bulova Watch Co., 344 U.S. 280
(1952), this Court considered the Lanham Act’s application to foreign sales of goods marked with a copy of
a U.S.-registered mark. The Bulova Watch Company,
which marketed watches under the registered U.S.
mark “Bulova,” sued defendant Sidney Steele, a U.S.
citizen residing in Texas. Id. at 281. Using component
parts he had procured from the United States and
Switzerland, Steele assembled watches in Mexico City.
Id. at 281, 285. Acting “without Bulova’s authorization
and with the purpose of deceiving the buying public,
[Steele] stamped the name ‘Bulova’ on watches there
4
assembled and sold.” Id. at 281. As a result of Steele’s
conduct, “Bulova Watch Company’s Texas sales representative received numerous complaints from retail
jewelers in the Mexican border area [of Texas] whose
customers brought in for repair defective ‘Bulovas’
which upon inspection often turned out not to be products of that company.” Id. at 285.
The Court held that Steele’s activities were covered
by the Lanham Act. Steele, 344 U.S. at 285. The Court
“d[id] not deem material that [Steele] affixed the mark
‘Bulova’ in Mexico City rather than here.” Id. at 287.
The Court explained that Steele had bought components for his watches in the United States. Id. at 286.
In addition, “spurious ‘Bulovas’ filtered through the
Mexican border into this country,” with potential adverse effects on Bulova’s “trade reputation in markets
cultivated by advertising here as well as abroad.”
Ibid. The Court further noted that, because Steele did
not have Mexican-law trademark rights to the “Bulova” mark, applying the Lanham Act to his conduct
would not create any conflict with foreign law. Id. at
289. The Court also appeared to give weight to the
fact that Steele was a U.S. citizen. Id. at 285-286.
Steele reached this Court at a preliminary stage of
the case, 344 U.S. at 282, and the Court held only that
the suit could go forward, id. at 285, 289, without determining the scope of the relief that would be appropriate if Bulova ultimately prevailed at trial.
2. Respondent Hetronic International, Inc. is a
U.S. company headquartered in Oklahoma. Pet. App.
88a. It “manufactures radio remote controls” for
“heavy-duty construction equipment,” which it sells
and services in dozens of countries around the world.
Id. at 2a; see id. at 3a. Respondent’s remote controls
5
feature a distinctive appearance. Id. at 3a. In this
Court, it is undisputed that respondent is the sole owner of U.S. trademarks and trade dress associated with
those distinguishing features, including marks registered under the Lanham Act. See id. at 53a-61a, 115a;
Pet. i.
Petitioners are five German and Austrian companies and their Austrian owner. Pet. App. 4a-5a, 88a.
Pursuant to contracts between the parties, petitioners
initially acted as distributors of respondent’s remote
controls abroad, mostly in Europe. Id. at 2a, 4a. The
relationship subsequently soured. Id. at 2a. Petitioners reverse-engineered respondent’s products and
“began manufacturing their own products—identical to
[respondent’s]—and selling them under [respondent’s]
brand.” Ibid.; see id. at 5a. Through these practices,
petitioners made “tens of millions of dollars.” Id. at
2a.
Respondent sued petitioners under the Lanham
Act, alleging, as relevant here, infringement of registered trademarks in violation of Section 32(1)(a), 15
U.S.C. 1114(1)(a), and unfair competition and infringement of unregistered trademarks and trade dress in violation of Section 43(a)(1)(A), 15 U.S.C. 1125(a)(1)(A).
See Pet. App. 114a. A jury returned a verdict for respondent, finding that petitioners had willfully infringed respondent’s trademarks. Id. at 8a. The jury
awarded respondent more than $90 million for petitioners’ Lanham Act violations. Id. at 8a, 114a.
The district court entered final judgment consistent
with the jury’s verdict. See Pet. App. 134a-137a. The
monetary award included: (i) approximately $240,000
for products that petitioners had sold from abroad “directly into the United States,” id. at 40a n.8; (ii) ap-
6
proximately $2 million, or about 3% of the total award,
for products that petitioners had sold abroad to foreign buyers who designated the United States as “the
ultimate location where the product was intended to be
used,” and that ultimately entered the United States,
id. at 71a n.2 (brackets and citation omitted); see id. at
40a-41a; and (iii) approximately $87 million, or almost
97% of the total award, for other products that petitioners had sold abroad to foreign buyers, see id. at
32a, 40a, 43a.
The district court also entered a worldwide permanent injunction that barred petitioners from using respondent’s marks “both within and outside of the
United States.” Pet. App. 121a; see id. at 8a, 122a132a.
3. The court of appeals affirmed in relevant part.
Pet. App. 1a-67a.
a. The court of appeals first observed that, under
this Court’s decision in Steele, supra, the Lanham Act
“could apply abroad at least in some circumstances.”
Pet. App. 21a. After surveying “various tests” developed by courts of appeals after Steele, the court concluded that where (as in this case) a defendant is “a
foreign national,” “the plaintiff must show that the defendant’s conduct has a substantial effect on U.S.
commerce.” Id. at 23a, 29a.1
b. Applying that test, the court of appeals held that
the Lanham Act “reach[es] all of [petitioners’] foreign
infringing conduct.” Pet. App. 47a; see id. at 39a-47a.
By contrast, the court stated that where the defendant is a U.S.
citizen, “the Lanham Act reaches that defendant’s extraterritorial
conduct even when the effect on U.S. commerce isn’t substantial.”
Pet. App. 28a.
1
7
The court of appeals first determined that holding
petitioners liable for direct sales into the United States
“isn’t an extraterritorial application of the Act.” Pet.
App. 41a. The court next concluded that petitioners
were liable for “foreign sales [that] ended up in the
United States,” ibid., because exposing “American
consumers” to infringing products was likely to (and
did) cause “confusion and reputational harm” in this
country. Id. at 41a-42a (citation omitted).
Relying on a combination of two rationales, the
court of appeals further held that respondent was entitled to recover damages for the remaining 97% of petitioners’ sales as well. See Pet. App. 43a, 47a. First,
the court explained that petitioners’ sales of goods that
entered the United States and caused confusion here
gave “the United States a reasonably strong interest
in the litigation.” Id. at 43a. It construed this Court’s
precedents to establish that, “once a court determines
that a statute applies extraterritorially to a defendant’s conduct, * * * that statute captures all the defendant’s illicit conduct.” Id. at 44a.
Second, the court of appeals endorsed a “diversionof-sales theory,” Pet. App. 44a, premised on record evidence that petitioners’ conduct had deprived respondent of “tens of millions of dollars in” foreign sales that
respondent otherwise would have made, id. at 45a.
The court stated that, because respondent is a U.S.
company, “this monetary injury to [respondent] also
caused substantial effects on U.S. commerce.” Ibid.
c. The court of appeals narrowed the district
court’s injunction “to the countries in which [respondent] currently markets or sells its products,” and it
remanded to the district court to identify those countries. Pet. App. 50a; see id. at 48a-50a.
8
SUMMARY OF ARGUMENT
To determine the territorial reach of federal statutes, this Court has articulated a two-step framework
that reflects the background presumption that Congress is primarily concerned with domestic conditions.
Under step one of that framework, the language of the
pertinent Lanham Act provisions provides no clear,
affirmative indication that Congress intended those
provisions to apply extraterritorially. At step two, the
“focus” of the provisions is consumer confusion, the
sine qua non of trademark law. Sales of trademarked
goods abroad therefore can violate those provisions if,
but only if, those sales are likely to cause consumer
confusion within the United States.
That interpretation is consistent with this Court’s
holding in Steele v. Bulova Watch Co., 344 U.S. 280
(1952), that the Act applied to a course of conduct in
which foreign sales of goods bearing a mark identical
to one registered in the United States had caused consumer confusion in this country. Interpreting the relevant Lanham Act provisions to reach only those foreign acts that are likely to cause consumer confusion in
the United States best reflects the fundamental
trademark-law principle that trademark rights have a
separate existence under each country’s law. This approach is also consistent with international agreements
to which the United States is a party.
Petitioners contend that use of a mark in commerce, rather than a likelihood of consumer confusion,
is the focus of the relevant Lanham Act provisions. In
Morrison v. National Australia Bank Ltd., 561 U.S.
247 (2010), however, the Court made clear that the focus of particular federal statutes can be markets or
transactions that Congress seeks to protect, rather
9
than the conduct that the statute proscribes. That approach is warranted here, especially given the centrality of consumer confusion to the traditional purposes
and contours of trademark protection.
The court of appeals held that petitioners could be
found liable in damages for all of their foreign uses of
respondent’s trademark. The court based that conclusion on its determinations that (a) petitioners’ overall
course of conduct substantially affected U.S. commerce and (b) all of petitioners’ foreign sales diverted
funds that would otherwise have flowed to respondent,
a U.S. company. Those rationales are not appropriate
bases for extending Lanham Act liability to foreign uses that did not cause a likelihood of confusion in the
United States.
Respondent’s contrary arguments are unavailing.
Respondent contends that the government’s interpretation requires overruling Steele. But the approach we
advocate here is consistent with the Steele Court’s
holding that Bulova’s suit could proceed, as well as
with the modern two-step framework this Court has
recently articulated for determining the territorial
reach of federal statutes. Respondent also argues that
some additional uses of its trademarks abroad, beyond
the 3% of petitioners’ sales that were shown to have
reached the United States, were likely to cause consumer confusion in this country. Those arguments are
best addressed by the lower courts on remand.
10
ARGUMENT
SECTIONS 32(1)(A) AND 43(A)(1)(A) OF THE LANHAM
ACT PROVIDE A REMEDY FOR USE OF A PLAINTIFF’S
U.S. TRADEMARK ABROAD ONLY IF THAT USE IS
LIKELY TO CAUSE CONSUMER CONFUSION IN THE
UNITED STATES
Consistent with the presumption that “Congress is
primarily concerned with domestic conditions,” Foley
Bros. v. Filardo, 336 U.S. 281, 285 (1949), a foreign use
of another’s trademark can violate the Lanham Act if,
but only if, it creates a likelihood of consumer confusion in this country. Petitioners are wrong in arguing
that the Act is limited to domestic uses of trademarks.
But the court of appeals erred by extending Lanham
Act liability to all of petitioners’ foreign uses without
determining which of those uses created a likelihood of
consumer confusion in the United States.
A. Under This Court’s Modern Two-Step Framework For
Assessing The Territorial Reach Of Federal Statutes,
Application Of The Lanham Act Provisions At Issue
Here Turns On The Likelihood Of Consumer Confusion Within The United States
1. Congress is ordinarily presumed to legislate with
domestic concerns in mind
“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.” Morrison v. National
Australia Bank Ltd., 561 U.S. 247, 255 (2010) (citations and internal quotation marks omitted). That
presumption reflects the “commonsense notion that
Congress generally legislates with domestic concerns
in mind.” RJR Nabisco, Inc. v. European Cmty., 579
11
U.S. 325, 336 (2016) (quoting Smith v. United States,
507 U.S. 197, 204 n.5 (1993)). It also “protect[s]
against unintended clashes between our laws and those
of other nations which could result in international discord.” EEOC v. Arabian Am. Oil Co., 499 U.S. 244,
248 (1991) (Aramco); see RJR Nabisco, 579 U.S. at
347.
In recent decisions, this Court has articulated a
two-step framework for determining the territorial
reach of an Act of Congress. See RJR Nabisco, 579
U.S. at 337. First, the Court asks “whether the presumption against extraterritoriality has been rebutted” by “a clear, affirmative indication that [the statute] applies extraterritorially.” Ibid. “[W]hen a statute provides for some extraterritorial application, the
presumption against extraterritoriality operates to
limit that provision to its terms.” Morrison, 561 U.S.
at 265.
If the presumption against extraterritorial application is unrebutted, the Court “look[s] to the statute’s
‘focus’ ” to determine “whether the case involves a domestic application of the statute.” RJR Nabisco, 579
U.S. at 337. A statute’s focus “is the object of its solicitude, which can include the conduct it seeks to regulate, as well as the parties and interests it seeks to protect or vindicate.” WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct. 2129, 2137 (2018) (brackets, citations, and internal quotation marks omitted). At step
two of the framework, a court asks whether the statute’s focus occurred within the United States. See
ibid. Under that approach, Sections 32(1)(a) and
43(a)(1)(A) of the Lanham Act are best construed to
make actionable those uses of a trademark in commerce, whether in the United States or abroad, that
12
are likely to have the ultimate effect of confusing or
deceiving consumers in the United States.
2. The relevant Lanham Act provisions do not clearly
manifest a congressional intent that the Act should
apply extraterritorially
At step one of the two-step framework, the Court
asks “whether the presumption against extraterritoriality has been rebutted.” RJR Nabisco, 579 U.S. at
337. Sections 32(1)(a) and 43(a)(1)(A) of the Lanham
Act prohibit a “use[] in commerce” of a protected mark
where “such use is likely to cause confusion, or to
cause mistake, or to deceive.” 15 U.S.C. 1114(1)(a),
1125(a)(1)(A). Those provisions contain no “clear, affirmative indication that [the statute] applies extraterritorially.” RJR Nabisco, 579 U.S. at 337.
The only language in Sections 32(1)(a) and 43(a)(1)
that references conduct outside the United States is
each provision’s prohibition on certain “use[s] in commerce,” 15 U.S.C. 1114(1)(a), 1125(a)(1). The Lanham
Act’s broad definition of “commerce” as “all commerce
which may lawfully be regulated by Congress,” 15
U.S.C. 1127, unambiguously encompasses some foreign
transactions with a particular effect in the United
States. U.S. Const. Art. I, § 8, Cl. 3. But this Court
has repeatedly rejected arguments that a “general reference to foreign commerce in the definition of ‘interstate commerce’ ” “defeat[s] the presumption against
extraterritoriality.” Morrison, 561 U.S. at 263; see
Aramco, 499 U.S. at 251 (citing New York Cent. R.R. v.
Chisholm, 268 U.S. 29, 31 (1925)). For that reason, the
Lanham Act’s definition of “commerce” cannot establish extraterritorial reach at step one merely because
it encompasses some foreign commerce. 15 U.S.C.
1127.
13
In distinguishing the Lanham Act from another
federal statute, this Court in Aramco described Steele
v. Bulova Watch Co., 344 U.S. 280 (1952), as construing the Lanham Act to “apply abroad.” 499 U.S. at
252; see Morrison, 561 U.S. at 271 n.11 (stating that
the Court in Aramco “read [Steele] as interpreting
* * * the Lanham Act * * * to have extraterritorial
effect”). The Court in Steele found the Lanham Act
applicable to the defendant’s foreign sales of goods
bearing a copy of a U.S.-registered mark. See pp. 3-4,
supra. Holding someone liable for conduct he performed abroad could colloquially be described as an
“extraterritorial” application of a statute. But the
Court’s more recent decisions articulating and applying the modern two-step framework make clear that,
in determining whether a particular application of a
statute qualifies as “extraterritorial” or “domestic,”
the location of the defendant’s own conduct is not necessarily dispositive. See Morrison, 561 U.S. at 266267. Instead, “[i]f the conduct relevant to the statute’s
focus occurred in the United States,” then “the case
involves a permissible domestic application even if
other conduct occurred abroad.” RJR Nabisco, 579
U.S. at 337 (emphasis added). Conversely, a statute is
being applied extraterritorially only when the conduct
relevant to the statute’s “focus” occurred outside the
United States.
Neither the Lanham Act’s text nor this Court’s
precedents suggest that the Act applies “extraterritorially” in the sense of covering foreign conduct relevant to the statute’s focus. Aramco predated this
Court’s articulation of the current two-step framework, and the Aramco Court mentioned the Lanham
Act only in “rebuttal to a counterargument” about its
14
interpretation of a different statute. Kirtsaeng v.
John Wiley & Sons, Inc., 568 U.S. 519, 548 (2013). The
Aramco Court’s description of Steele therefore should
not control the determination whether the presumption against extraterritorial application has been rebutted now that the question is directly presented.2
3. At step two of the Court’s modern framework, the focus of the relevant Lanham Act provisions is consumer confusion
a. In determining the territorial reach of various
federal laws, this Court has identified as the “focus” of
the relevant statute—the object of its solicitude, which
must occur in the United States—some conduct or
event that the statute expressly referenced. Under
the Lanham Act, the key statutory referents are the
conduct prohibited (the “use in commerce” of another
entity’s trademark) and the effect of that conduct (a
“likel[ihood]” of “confusion,” “mistake,” or “decei[t]”).
15 U.S.C. 1114(1)(a); see 15 U.S.C. 1125(a)(1)(A). The
text, context, and purposes of the relevant Lanham
Act provisions indicate that the focus of those provisions is consumer confusion or mistake. Where such
effects are likely to occur in the United States, application of Sections 32(1)(a) and 43(a)(1)(A) is a permissible domestic application of the Act, even if the defendant’s own conduct occurred elsewhere.
The Lanham Act provisions at issue here do not
categorically prohibit all uses of another’s mark, but
In Morrison (which itself mentioned the Lanham Act only in
responding to a counterargument), the Court did not state either
that the Lanham Act “ha[s] extraterritorial effect,” or even that
the Court in Steele had so held, but only that the Court in Aramco
had “read [Steele]” as standing for that proposition. Morrison, 561
U.S. at 271 n.11.
2
15
only those uses that are “likely to cause confusion, or
to cause mistake, or to deceive.” 15 U.S.C. 1114(1)(a),
1125(a)(1)(A). “In almost all aspects of trademark law,
‘likelihood of confusion’ is the test of infringement and
of the scope of rights in a trademark.” 4 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair
Competition § 23:1, at 23-8 (5th ed. 2022) (McCarthy
on Trademarks). Even when a trademark registrant
has acquired an “incontestable” and “ ‘exclusive right
to use the mark in commerce,’ the plaintiff’s success”
in an infringement suit “requires a showing that the
defendant’s actual practice is likely to produce confusion in the minds of consumers about the origin of the
goods or services in question.” KP Permanent MakeUp, Inc. v. Lasting Impression I, Inc., 543 U.S. 111,
117 (2004) (citations and ellipsis omitted). Thus, as the
court of appeals in this case recognized, “market confusion” is “the hallmark of a trademark claim.” Pet.
App. 49a.
As explained above (see pp. 2-3, supra), Congress
viewed use of infringing trademarks as objectionable
because of its adverse effects both on consumers and
on trademark owners. A violation of the Lanham Act
“deprives the owner of the goodwill which he spent energy, time, and money to obtain” and, “[a]t the same
time, [it] deprives consumers of their ability to distinguish among the goods of competing manufacturers.”
Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844,
854 n.14 (1982); see 1 McCarthy on Trademarks § 2.10,
at 2-24 (“The trademark laws exist * * * to protect
the consuming public from confusion, concomitantly
protecting the trademark owner’s right to a nonconfused public.”) (quoting James Burrough Ltd. v.
Sign of the Beefeater, Inc., 540 F.2d 266, 276 (7th Cir.
16
1976)). Given the background understanding that
“Congress is primarily concerned with domestic conditions,” Foley Bros., 336 U.S. at 285, and in the absence
of clear textual evidence to the contrary, it is appropriate to infer that Congress sought to prevent those
ill effects from occurring in the United States.
For both consumers and trademark owners, the
most likely location of the harms that trademark law is
designed to prevent is the place where consumers are
confused or deceived. That is particularly so because
the injuries that infringement inflicts on trademark
owners are derivative of consumer confusion: Mark
owners can suffer diminished sales and impaired
goodwill precisely because, and to the extent that, consumers form misimpressions about the sources of particular goods. To the extent that petitioners’ sales
created a likelihood of consumer confusion in the United States, Congress’s purposes therefore are squarely
implicated, even though petitioners’ own conduct occurred abroad.
b. The Court in Morrison applied a similar analysis
in determining the territorial reach of Section 10(b) of
the Securities Exchange Act of 1934 (Exchange Act),
15 U.S.C. 78j(b). See 561 U.S. at 262. The Court explained that “Section 10(b) does not punish deceptive
conduct, but only deceptive conduct ‘in connection with
the purchase or sale of ’ ” securities. Id. at 266 (quoting
15 U.S.C. 78j(b)). The Court concluded that “the focus
of the Exchange Act is not upon the place where the
deception originated, but upon purchases and sales of
securities in the United States.”
Ibid.
“Those
purchase-and-sale transactions,” the Court concluded,
“are the objects of the statute’s solicitude.” Id. at 267.
Morrison thus makes clear that, for some federal stat-
17
utes, the “focus” will be markets or transactions that
Congress sought to protect, rather than the harmful
conduct that Congress proscribed.
In much the same way, the Lanham Act does not
punish all uses in commerce of another’s mark, but only those uses that are “likely to cause confusion, or to
cause mistake, or to deceive.” 15 U.S.C. 1114(1)(a),
1125(a)(1)(A). In enacting the Lanham Act, Congress
sought to ensure that consumers in the United States
can rely on trademarks as accurate source-identifiers,
and that U.S. trademark owners doing business in this
country can reap the benefits of their accumulated
goodwill. Those purposes are best achieved by treating consumer confusion and mistake as the “focus” of
the relevant Lanham Act provisions.
The logical implication of Morrison is that the Exchange Act covers deceptive conduct outside the United States that encourages the domestic purchase or
sale of a security. See 561 U.S. at 266 (concluding that
“the focus of the Exchange Act is not upon the place
where the deception originated, but upon purchases
and sales of securities in the United States”); id. at 270
(referring to securities purchases or sales that are
“made in the United States, or involve[] a security
listed on a domestic exchange”); see also, e.g., Stoyas
v. Toshiba Corp., 896 F.3d 933, 950 (9th Cir. 2018)
(treating “the foreign location of the allegedly deceptive conduct” as irrelevant in determining whether
Section 10(b) applies under Morrison), cert. denied,
139 S. Ct. 2766 (2019). Similarly under Sections
32(1)(a) and 43(a)(1)(A) of the Lanham Act, foreign uses of a mark in commerce that cause a likelihood of
U.S. consumer confusion can be actionable because
18
they create the domestic harm that is the focus of
those provisions.
B. Treating Consumer Confusion As The Focus Of The
Lanham Act Provisions At Issue Here Is Consistent
With This Court’s Disposition Of Steele
In Steele, the Court found the Lanham Act applicable, despite the foreign locus of the defendant’s sales,
where the trademark owner’s “Texas sales representative received numerous complaints from retail jewelers
in the Mexican border area whose customers brought
in for repair defective ‘Bulovas’ which upon inspection
often turned out not to be products of that company.”
344 U.S. at 285. The Court observed that, when the
“spurious ‘Bulovas’ filtered through the Mexican border into this country,” Steele’s counterfeit goods
“could well reflect adversely on Bulova Watch Company’s trade reputation” in the United States. Id. at 286.
Steele clarifies the types of harm, both to consumers and to the trademark owner, that the Lanham
Act’s trademark-infringement provisions are intended
to prevent. Perhaps the most obvious ill effect of
trademark infringement occurs at the point of sale,
when a consumer buys goods based on a misimpression
as to their source. In Steele, that happened in Mexico,
where consumers bought the counterfeit watches. But
a different harm occurred within the United States
when the purchasers returned to this country and
found that their watches needed repairs. See 344 U.S.
at 285. To the extent that consumers then formed mistaken negative impressions of the U.S. mark owner in
the United States, see id. at 286, that is a type of domestic injury (both to the consumers and to the
trademark owner) that the Lanham Act is intended to
prevent.
19
To be sure, the Steele Court also relied in part on
two additional connections to the United States—the
U.S. citizenship of the defendant, and the defendant’s
importation of watch parts from the United States in
preparing to affix the infringing mark. See 344 U.S. at
285-286. But the Court did not suggest that those
facts need be present in every case for the Lanham
Act to apply to foreign conduct, and no lower court has
understood Steele to embrace such a rule. Instead, the
Court’s emphasis on the U.S. consumer confusion that
Steele’s conduct produced, and its ultimate holding
that Bulova’s Lanham Act suit could go forward, see
id. at 285, 289, are consistent with the conclusion that
the Act applies to foreign uses of a mark in commerce
that create a likelihood of consumer confusion in the
United States.3
C. Petitioners’ Criticisms Of The Government’s Position
Are Unsound
Petitioners argue (Br. 39-45) that, under step two of
the Court’s two-step framework, the defendant’s use of
a mark in commerce, rather than consumer confusion,
is the focus of the pertinent Lanham Act provisions.
Under that approach, petitioners would be liable only
for the $240,000 worth of goods that they sold directly
As this case comes to the Court, it is undisputed that petitioners have no foreign trademark rights to the marks at issue. This
case therefore does not present the complications that could arise
if the foreign exercise of such rights led to consumer confusion in
the United States. See Steele, 344 U.S. at 288-289. If such circumstances arose, comity considerations could place additional limits
on the reach of the Lanham Act. See Hartford Fire Ins. Co. v.
California, 509 U.S. 764, 798 (1993) (“assuming,” without deciding,
that “international comity” could “counsel against exercising jurisdiction” in certain circumstances).
3
20
into this country, and not for the additional $2 million
worth of goods they sold abroad that were designated
for use in the United States, that ultimately entered
the United States, and that were likely to (and at least
some of which in fact did) cause consumer confusion in
the United States, Pet. App. 40a-43a, 71a n.2. See Pet.
Br. 44-45. That argument lacks merit.
1. Petitioners suggest (Br. 42) that the presumption against extraterritoriality can perform its intended function only if the focus of the relevant Lanham
Act provisions is the conduct (use of a mark in commerce) that the Act prohibits. But Morrison establishes that the focus of a federal statute—which, if it
occurs in the United States, gives rise to a permissible
domestic application—can be the market or transactions that Congress seeks to protect, rather than the
conduct that the statute declares to be unlawful. The
clear implication of Morrison is that a defendant who
made misrepresentations wholly outside the United
States can be liable under the Exchange Act if the
requisite nexus to domestic securities transactions exists. See pp. 16-17, supra.
Petitioners argue (Br. 43) that “Morrison does not
help the government” because the Court held that Section 10(b)’s focus was on “conduct—there, sales of securities.” But not every Section 10(b) violation produces an actual securities transaction. A person who
knowingly makes a false statement for the purpose of
inducing a securities purchase or sale violates the
statute, even if his deception is unsuccessful and no
actual purchase or sale occurs. Cf. SEC v. Zandford,
535 U.S. 813, 819 (2002); SEC v. Rana Research, Inc.,
8 F.3d 1358, 1361-1364 (9th Cir. 1993). In any event,
the consumer confusion that the Lanham Act is de-
21
signed to prevent is typically manifested by consumer
conduct. Indeed, the prospect that confused consumers’ behavior will be affected (i.e., that consumers will
make different purchases if they misapprehend the
sources of particular goods) is why infringement
threatens the interests of legitimate mark owners.
2. Petitioners suggest (Br. 43-44) that the inquiry
the government contemplates would be unduly speculative or inherently unworkable. Determining whether
particular uses of trademarks are likely to produce
consumer confusion is concededly an inexact science.
Under established trademark principles, however, that
determination is at the very core of the infringement
inquiry. See pp. 14-15, supra. Petitioners identify no
sound reason to believe that the inquiry will be less
manageable when a defendant’s own conduct occurs
outside the United States.
Petitioners also suggest (Br. 44) that the government’s approach would produce no meaningful practical benefit because “[t]he only ‘foreign’ conduct with
any genuine likelihood of confusing U.S. consumers
would occur when companies located abroad sell to
buyers in the U.S.,” in which case the defendant’s own
use of the mark in commerce will be treated as domestic. The circumstances of this case refute that suggestion. Petitioners sold approximately $2 million worth
of the goods at issue here to buyers abroad who designated the United States as “the ultimate location
where the product was intended to be used.” Pet. App.
71a n.2 (brackets and citation omitted). Those sales
had an evident potential to cause confusion within the
United States, and the court of appeals found that at
least some of the sales ultimately had that effect. See
id. at 42a-43a. Petitioners assert (Br. 44) that, if a for-
22
eign intermediary buys goods abroad and imports
them into the United States for resale, application of
the Lanham Act to the intermediary’s conduct would
be a permissible domestic application. But the intermediary might lack the scienter of the original seller,
which would limit the forms of relief available to the
plaintiff, see 15 U.S.C. 1117(b) and (c)(2), even if the
original seller’s deliberately deceptive conduct foreseeably caused U.S. consumer confusion. And petitioners’ approach would allow a seller deliberately using a mark to deceive U.S. consumers to escape liability whenever it employs the expedient of carrying out
abroad its U.S.-targeted operations.
3. Petitioners agree (Br. 39) that a likelihood of
“domestic confusion is necessary for a Lanham Act
claim.” But it is not clear why that would be so under
petitioners’ own theory. Neither Section 32(1)(a) nor
Section 43(a)(1)(A) refers explicitly to U.S. confusion
or mistake. That limitation follows naturally if consumer confusion is identified as the focus of those provisions. But if the provisions’ focus is instead use of
the mark in commerce, a domestic use (e.g., affixing a
counterfeit mark within the United States to goods
that are intended for export and sale abroad) would
potentially be actionable, even if the only consumers
who are likely to be confused are potential buyers in a
foreign country. There is no reason to suppose that
Congress would have viewed that scenario as a greater
threat to the U.S. interests that the Lanham Act protects than the circumstances presented here, where $2
million worth of petitioners’ foreign sales were found
to have caused a likelihood of domestic consumer confusion.
23
D. Treating Consumer Confusion As The Focus Of The
Pertinent Lanham Act Provisions Accords With Fundamental Trademark Principles And With International Agreements To Which The United States Is A
Party
1. “The concept of territoriality is basic to trademark law; trademark rights exist in each country solely according to that country’s statutory scheme.” Fuji
Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha,
754 F.2d 591, 599 (5th Cir. 1985) (footnote omitted);
see Ingenohl v. Olsen & Co., 273 U.S. 541, 544 (1927)
(“A trade-mark started elsewhere would depend for its
protection in Hongkong upon the law prevailing in
Hongkong and would confer no rights except by the
consent of that law.”). That principle has been widely
accepted in U.S. law since this Court’s decision in A.
Bourjois & Co. v. Katzel, 260 U.S. 689 (1923) (Holmes,
J.). The Court there recognized that a given mark
may signify to consumers in one country that the
trademarked goods come from a particular source, and
to consumers in another country that the goods come
from a different source. See id. at 691-692.
So understood, a trademark has a separate existence under each country’s laws, “symboliz[ing] the
domestic goodwill of the domestic mark-holder so that
the consuming public may rely with an expectation of
consistency on the domestic reputation earned for the
mark by its owner.” 5 McCarthy on Trademarks
§ 29:1, at 29-6 (citation omitted). Consequently, “ownership of a mark in one country does not automatically
confer upon the owner the exclusive right to use that
mark in another country.” ITC Ltd. v. Punchgini,
Inc., 482 F.3d 135, 155 (2d Cir.), cert. denied, 552 U.S.
827 (2007). “Rather, a mark owner must take the
24
proper steps to ensure that its rights to that mark are
recognized in any country in which it seeks to assert
them.” Ibid.
Those principles apply with particular force to Section 32(1)(a) of the Lanham Act, which specifically addresses infringement of trademarks that are registered with the USPTO. Where allegedly infringing
conduct abroad creates a likelihood of confusion only in
a foreign country, providing a Section 32(1)(a) remedy
would effectively treat a U.S. trademark as if it granted exclusive rights beyond the United States. Treating consumer confusion as Section 32(1)(a)’s focus, by
contrast, is consistent with trademark law’s territoriality principle because it limits U.S.-law infringement
remedies to uses that misappropriate the U.S. goodwill
protected by a USPTO-registered mark.
The other Lanham Act provision at issue here, Section 43(a) reaches “beyond trademark protection” to
other forms of unfair competition. Dastar Corp. v.
Twentieth Century Fox Film Corp., 539 U.S. 23, 29
(2003). Conduct that confuses U.S. consumers can be
actionable under that provision regardless of whether
a defendant’s conduct misuses a U.S. mark, or uses a
trademark at all. See 15 U.S.C. 1125(a)(1); Belmora
LLC v. Bayer Consumer Care AG, 819 F.3d 697, 702
(4th Cir. 2016), cert. denied, 137 S. Ct. 1202 (2017).
But “[t]he law of unfair competition * * * focus[es]
* * * on the protection of consumers, not the protection of producers.” Bonito Boats, Inc. v. Thunder
Craft Boats, Inc., 489 U.S. 141, 157 (1989). Section
43(a) therefore is best understood not to reach conduct
that, while unfair to consumers abroad, has no likely
adverse effect on U.S. consumers.
25
2. The trademark territoriality principle is reflected in international agreements to which the United
States is a party. The Paris Convention, for example,
provides that “[t]he conditions for the filing and registration of trademarks shall be determined in each
country of the Union by its domestic legislation,” and
that “[a] mark duly registered in a country of the Union shall be regarded as independent of marks registered in the other countries of the Union.” Paris Convention for the Protection of Industrial Property, done
July 14, 1967, art. 6(1) and (3) (Paris Convention), 21
U.S.T. 1639, 828 U.N.T.S. 325. The Convention (which
the Lanham Act implements, see 15 U.S.C. 1126)
commits member countries to accord to the nationals
of other contracting parties trademark rights comparable to those accorded its own nationals. See Paris
Convention arts. 2 and 3, 21 U.S.T. 1631, 828 U.N.T.S.
313. Applying these Lanham Act provisions to foreign
sales that have not been shown to create a likelihood of
U.S. consumer confusion is at odds with the Convention’s underlying “principle that each nation’s law shall
have only territorial application,” 5 McCarthy on
Trademarks § 29:25, at 29-98.
The international intellectual-property system in
which the United States participates contemplates
mechanisms for an actor to secure protection of its
mark in multiple jurisdictions. See Protocol Relating
to the Madrid Agreement Concerning the International Registration of Marks, adopted June 27, 1989, S.
Treaty Doc. No. 41, 106th Cong., 2d Sess. (2000),
T.I.A.S. 03-112. The purposes of that system are best
served by recognizing that the owner of a U.S. mark
lacks a right under U.S. law to be protected against
foreign confusion, and by leaving to foreign jurisdic-
26
tions the authority to remedy confusion within their
territories.
E. The Court Of Appeals And Respondent Are Mistaken
In Their Broader View Of The Lanham Act’s Application To Foreign Sales
1. The court of appeals did not assess whether each
use of respondent’s trademarks was likely to cause
consumer confusion in the United States, or whether a
reasonable jury could have so found. Rather, the court
identified two rationales for holding that respondent
could recover even for foreign sales that were not likely to result in consumer confusion within the United
States. Those rationales lack merit.
First, the court of appeals observed that “millions
of euros worth of infringing products found their way
into the United States and * * * caused confusion
among U.S. consumers.” Pet. App. 43a. The court
acknowledged that those sales “represented only 3% of
[petitioners’] total sales.” Ibid. The court stated,
however, that it would “ask only whether the effects of
[petitioners’] foreign conduct produce substantial impacts on U.S. commerce” because “[o]therwise, billiondollar-revenue companies could escape Lanham Act
liability by claiming that millions of dollars of their infringing products entering the United States represented only a fraction of their sales.” Ibid.
That reasoning was mistaken. Contrary to the
court of appeals’ suggestion, computation of a Lanham
Act damages award in a case like this one does not require an all-or-nothing choice between holding the defendant liable for every foreign sale or allowing it to
escape liability altogether. Rather, Sections 32(1)(a)
and 43(a)(1)(A) make actionable a particular “use[] in
commerce” only where the Act prohibits “such use.”
27
15 U.S.C. 1114(1)(a); see 15 U.S.C. 1125(a)(1)(A) (prohibiting a “use[] in commerce” that “is likely to cause
confusion”). To award relief for uses that have no likelihood of confusing or deceiving U.S. consumers would
improperly provide a remedy for conduct that does not
violate the Act. Cf. Microsoft Corp. v. AT&T Corp.,
550 U.S. 437, 456 (2007) (rejecting a plaintiff’s effort to
“convert[] a single act” in the United States “into a
springboard for liability” for acts abroad) (citation
omitted).
Second, the court of appeals endorsed respondent’s
“diversion-of-sales theory—the idea that [petitioners]
stole sales from [respondent] abroad, which in turn affected [respondent’s] cash flows in the United States.”
Pet. App. 44a. The court viewed that diversion of sales
as the sort of “substantial effect on U.S. commerce”
that could justify applying the Lanham Act to all of the
foreign sales at issue here. Ibid.; see id. at 44a-47a.
But because respondent’s trademark rights under U.S.
law protect only its domestic goodwill, respondent is
entitled to monetary relief under the Act only for
harms resulting from misappropriation of that goodwill. See pp. 15-16, 23-24, supra. The “causal chain
linking [respondent’s] injuries to consumer confusion,”
Lexmark Int’l, Inc. v. Static Control Components,
Inc., 572 U.S. 118, 139 (2014), therefore must be a link
to U.S. consumer confusion. Economic losses proximately caused by confusion of foreign consumers are a
matter for those foreign jurisdictions to redress, even
when those losses are suffered by U.S. companies.
Under the proper analysis, the court of appeals
should have considered whether particular uses of respondent’s marks created a likelihood of consumer
confusion in the United States (whether at the point of
28
sale or subsequently), giving appropriate deference to
any jury finding on that issue. And the court should
have tailored the relief awarded to those uses. For example, an award of damages under the Act requires a
showing of “actual injury,” such as “loss of sales, profits, or present value (goodwill)” caused by “actual confusion among consumers of the plaintiff’s product” resulting from the defendant’s infringement. Web Printing Controls Co. v. Oxy-Dry Corp., 906 F.2d 1202, 1205
(7th Cir. 1990). The actual confusion required by that
analysis is confusion in the United States. Similarly, in
defending against a claim for infringer’s profits, a
Lanham Act defendant can seek to prove that some of
the sales it made were not attributable to the use of an
infringing mark. 5 McCarthy on Trademarks § 30:65,
at 30-215. A defendant can likewise reduce the award
of infringer’s profits by proving that some of its sales
were not attributable to U.S. confusion. And any injunctive relief awarded should be tailored to preventing future violations of the Lanham Act as properly
construed.
2. Respondent’s contrary arguments are likewise
unavailing.
a. Respondent has not contended that the government’s interpretation of the Lanham Act is incorrect
under this Court’s modern two-step framework for assessing the territorial reach of federal statutes. Rather, respondent’s primary submission is that applying
that framework to the Lanham Act requires “overruling Steele.” Supp. Br. 4. That argument is mistaken.
In Morrison and RJR Nabisco, the Court set out
the paradigm “for analyzing extraterritoriality issues”
with respect to federal statutes generally.
RJR
Nabisco, 579 U.S. at 337; see WesternGeco, 138 S. Ct.
29
at 2136 (“This Court has established a two-step
framework for deciding questions of extraterritoriality.”). The result in Steele, including the Court’s recognition that some foreign sales of trademarked goods
are actionable under the Lanham Act, is consistent
with that framework. See WesternGeco, 138 S. Ct. at
2137-2138; see pp. 18-19, supra. Steele therefore
should not dissuade this Court from applying its modern methodology here.
To be sure, if the Court in Steele had set out a specific test for determining the territorial reach of the
Lanham Act, principles of statutory stare decisis
might counsel in favor of adhering to that test, even if
it was inconsistent with the general two-step framework set forth in the Court’s subsequent decisions.4
But the Court in Steele did not establish a test for determining when the Lanham Act applies to conduct
abroad. Rather, the Court simply identified factors
that “when viewed as a whole” established that
Steele’s own activities “f[e]ll within the jurisdictional
scope of the Lanham Act,” without specifying whether
any of those factors was sufficient or necessary. 344
That is so, for instance, with respect to this Court’s decisions
under the Sherman Act, 15 U.S.C. 1 et seq. See Hartford Fire, 509
U.S. at 796 (setting out a “substantial effect” test and citing a long
line of this Court’s decisions adopting that test). In any event, giving the Sherman Act extraterritorial effect is consistent with the
Court’s modern framework because the Foreign Trade Antitrust
Improvements Act of 1982, Pub. L. No. 97-290, Tit. IV, § 402, 96
Stat. 1246, clearly manifests Congress’s intent that the Sherman
Act and the Federal Trade Commission Act (FTC Act), 15 U.S.C.
41 et seq., should apply extraterritorially, while establishing specific limits on their reach. See 15 U.S.C. 6a (Sherman Act) and
45(a)(3) (FTC Act); see also F. Hoffmann-La Roche Ltd. v. Empagran S. A., 542 U.S. 155, 162-163, 169 (2004).
4
30
U.S. at 285; see id. at 285-286; McBee v. Delica Co.,
417 F.3d 107, 117 (1st Cir. 2005) (observing that, although this Court made clear in Steele that the Lanham
Act reaches some foreign conduct, the Court “has never laid down a precise test for when such reach would
be appropriate”). Given the minimal guidance that
Steele could provide for analyzing diverse fact patterns
going forward, the soundest course is to apply the
general two-step framework articulated in the Court’s
recent decisions. That is particularly so because one of
the factors the Steele Court relied on was the demonstrated confusion of consumers within the United
States, precisely the consideration that matters when
these Lanham Act provisions are properly interpreted
under the Court’s modern two-step framework.
The additional circumstances that the Court in
Steele treated as relevant—the U.S. citizenship of the
defendant, and the fact that some components of the
defendant’s watches were imported from the United
States—are unconnected to the Lanham Act’s text,
and the Court’s consideration of those factors appears
to have been linked to its view that the question before
it concerned the district court’s subject-matter jurisdiction over the case. See 344 U.S. at 283-286; see also, e.g., McBee, 417 F.3d at 111 (developing test for determining the Lanham Act’s territorial reach by “isolat[ing] the factors pertinent to subject matter jurisdiction”). This Court has more recently made clear,
however, that issues concerning the territorial reach of
particular federal statutes are merits rather than jurisdictional questions. See Morrison, 561 U.S. at 253254. The court of appeals in this case recognized the
non-jurisdictional character of the issue before it, see
Pet. App. 36a, and respondent does not appear to ar-
31
gue that the Court should adhere as a matter of statutory stare decisis to the contrary understanding expressed in Steele. There is no sound reason to treat
the defendant’s citizenship and/or the location of its
preparatory conduct as aspects of a binding test once
the apparent predicate for considering those factors
has been abandoned.
b. Respondent argues that the Lanham Act’s definition of “commerce” is particularly broad because it
refers to “all commerce which may lawfully be regulated by Congress.” See Supp. Br. 4 (quoting Aramco,
499 U.S. at 252). To the extent that argument relies on
Aramco’s description of the Lanham Act, the Aramco
Court’s brief discussion of the Act in the course of construing a different statute does not suffice for the reasons set forth above. See p. 13, supra. And as explained above, the Lanham Act’s definition of “commerce” is insufficient to establish extraterritorial effect at step one of the modern framework. See p. 12,
supra.
Respondent is correct that the Lanham Act’s broad
definition of commerce gives the Act “sweeping reach.”
Supp. Br. 4 (quoting Aramco, 499 U.S. at 252). But the
breadth of the language is in service of domestic interests. See Park ’N Fly, Inc. v. Dollar Park & Fly, Inc.,
469 U.S. 189, 193 (1985) (explaining that Congress
sought to give trademarks “nationally the greatest
protection that can be given them”) (quoting S. Rep.
No. 1333, 79th Cong., 2d Sess. 6 (1946)) (emphasis
added). More is required to show that Congress intended to protect U.S. mark owners from harms occurring abroad.
The apparent implication of respondent’s argument
(see Br. in Opp. 31-32) is that the Lanham Act covers
32
all foreign uses of a U.S. mark that the Constitution
authorizes Congress to regulate. On that reading, the
Act would encompass purely foreign transactions that
cause no likelihood of consumer confusion in the United States, so long as some other constitutionally sufficient nexus to this country is present. But there is no
good reason to conclude that Congress intended for
“American law [to] supplant, for example, Canada’s or
Great Britain’s or Japan’s own determination about
how best to protect Canadian or British or Japanese
customers from” confusion caused by trademark misuse. F. Hoffmann-La Roche Ltd. v. Empagran S. A.,
542 U.S. 155, 165 (2004).
c. Respondent also defends the court of appeals’
judgment on the “independent” ground that respondent “would have made every single sale at issue but for
[petitioners’] willful infringement.” Supp. Br. 9. But
that theory assumes that the “infringement” prohibited by the Lanham Act includes uses of respondent’s
mark that are likely to cause confusion only in a foreign country. Because that premise is mistaken, the
diversion-of-sales theory cannot justify the full award
here. See p. 27, supra.
In defending the diversion-of-sales theory, respondent asserts that “a core purpose” of the Lanham
Act is to allow “U.S. trademark holders” to “capitalize
on the goodwill their marks generate.” Supp. Br. 10.
The Act undoubtedly protects a U.S. trademark holder’s ability to capitalize on the U.S. goodwill that consumers in this country associate with the mark. But
the “right to a non-confused public,” 1 McCarthy on
Trademarks § 2.10, at 2-24 (citation omitted), that the
Lanham Act protects does not extend to the public of
other countries. See pp. 23-24, supra. The Act accord-
33
ingly provides a remedy for profits lost because of the
confusion of U.S. consumers, but not, for example, for
profits lost because the confusion of French consumers
caused respondent to lose sales in France. Rather,
any misappropriation of French goodwill is for French
law to redress.
Finally, respondent suggests that the entire damages award can be affirmed because some uses of its
marks besides the sales destined for the United States
were likely to confuse U.S. customers. See Supp. Br.
5-7. But the jury was not instructed to confine its
analysis to consumer confusion that was likely to occur
in the United States, see C.A. App. 2460-2461, nor did
the lower courts view the actionable uses or the appropriate relief as so limited. Accordingly, although respondent may be entitled to additional relief beyond
damages for the 3% of petitioners’ goods that were
shown to have reached the United States, affirming
the entire award on the present record is unwarranted.5
The lower courts in this case never determined the
scope of appropriate relief under the correct interpretation of the Lanham Act. On remand, those courts
can conduct the proper inquiry, considering any additional arguments by the parties as relevant in assessing which of petitioners’ uses of respondent’s
For example, to the extent petitioners’ uses of the mark at a
foreign trade show reached some American attendees who were
likely to be confused and to remain confused once they returned to
the United States, see Resp. Supp. Br. 6, such uses may be actionable if applicable proximate-causation and other requirements are
met. But respondent’s actual damages for those uses would be
limited to damages resulting from that U.S. confusion (and not
otherwise compensated by other portions of the award, such as the
damages for sales into the United States).
5
34
marks created a likelihood of confusion in the United
States and what monetary and injunctive relief is appropriate for those uses.
CONCLUSION
The judgment of the court of appeals should be vacated and the case remanded for further proceedings.
Respectfully submitted.
ELIZABETH B. PRELOGAR
Solicitor General
BRIAN M. BOYNTON
Principal Deputy Assistant
Attorney General
MALCOLM L. STEWART
Deputy Solicitor General
MASHA G. HANSFORD
Assistant to the Solicitor
General
DANIEL TENNY
JOSEPH F. BUSA
Attorneys
DECEMBER 2022
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.