Commodores Fight Tees Up Test for New Trademark Reach Precedent

The Eleventh Circuit followed the US Supreme Court’s lead in ignoring the “elephants in the room” of US trademark law’s international reach as it remanded a fight over the band name The Commodores, legal professionals say.

The high court’s June ruling in Abitron Austria GmbH v. Hetronic International Inc. substantially altered the legal calculus in the Commodores case, the US Court of Appeals for the Eleventh Circuit ruled earlier this month. The district court will now have to reassess the scope of an international ban against ex-Commodores guitarist Thomas McClary using the name, as well as attorneys fees’ awarded over his litigation tactics.

The remand creates an early test case for applying a high court ruling attorneys have labeled as nebulous and light on guidance to lower courts. The district court will have to take an early crack at trying to apply the explicitly narrow ruling to a substantially different set of facts.

The appeals court could have addressed legal questions raised by the high court during the fourth appeal in the nine-year case but declined to wade into any analysis, said intellectual property law professor Christine Haight Farley of American University. Instead, she said, it sent the case back to district court to apply new legal precedent with “no guardrails.”

“It seems like the Eleventh Circuit totally punted, saying, ‘We think it would be best if the district court tried this out first,’” Farley said. “This is what we expected, because Abitron was so narrowly written by the majority. The majority tried so hard not to appear to be writing a new rule that it didn’t explain how to apply the decision at all.”

Game-Changer

The Commodores rose to fame in the 1970s with then-lead singer Lionel Richie on the back of Motown hits like “Brick House.” McClary left as the band’s guitarist in 1984. Three decades later the band sued McClary in the US District Court for the Middle District of Florida after learning he’d formed a band called “The Commodores Featuring Thomas McClary,” which he also called “The 2014 Commodores.”

Commodores’ Entertainment Corp.—which registered band-related US trademarks in 2001—eventually won multiple summary judgment bids and two jury trials against McClary. The district court found the former guitarist repeatedly infringed in multiple countries after being on notice of CEC’s claimed rights, awarding profits from seven performances in Europe and one in the US. The court also granted CEC a global permanent injunction. The Eleventh Circuit upheld damages in 2020 and the injunction in 2018.

Then came the Supreme Court’s Abitron decision.

The Eleventh Circuit’s Sept. 1 ruling said the justices “altered the law in some measure surrounding the foreign reach of” US trademark law. The dispute over whether the appeals court should alter either the injunction or attorneys’ fees holding—which were on appeal at the time of the high court ruling—"raises new factual questions,” the circuit court said without elaborating on the particular questions.

The Supreme Court in Abitron rejected an appeals court’s basis for awarding $90 million for almost entirely foreign sales of infringing industrial radio remote controls. The high court also said whether the infringing “use in commerce” happened in the US, and not the consumer confusion, was the key question in determining the law’s reach.

An “elephant in the room” that the Supreme Court “almost deliberately refused to address” was $2 million in sales not directly sold into—but destined for—the US, IP law professor Margaret Chon of Seattle University said. In the modern world of digital, global sales, the majority opinion from Justice Samuel Alito didn’t lay down any guidance on how to parse different types of sales.

“The court dropped the ball on that. Those are the hard facts, it would have been great to have some sort of understanding,” Chon said. “I think what Justice Alito’s opinion attempted to do is draw fairly clear rules that make very clear that anything that happens fully outside of the US can’t be touched. But there are some gray areas.”

Applying Abitron to Gray Areas

Sales of concert tickets in Europe to Europeans stemming from ads aimed directly at them likely would be unreachable under Abitron, legal professionals said. Chon said the ruling also suggests the global Commodores injunction “cannot stand” regarding foreign use of the trademark. But other scenarios—including Commodores damages, if they were still on appeal—could have raised tougher territoriality calls.

Online concert ticket sales, advertisements targeted at potential American visitors, and revenue from online streams of the concert raise those territoriality questions, IP attorney Michael J. Allan of Steptoe & Johnson LLP said. Such international crossover could be interpreted as having more of a basis for touching the US compared to Abitron‘s sales of Hetronic radios that never reached the US.

Allan noted that Justice Ketanji Brown Jackson’s concurrence broached more nuanced scenarios bypassed by Alito’s opinion, and Justice Sonia Sotomayor’s concurrence—which agreed with the outcome but not the reasoning. Jackson’s hypotheticals suggested it might be possible to find US jurisdiction in cases with less clear-cut facts regarding domesticity.

“Those are the types of things that ultimately will go a little more toward the Jackson middle-of-the-road opinion, to determine whether ‘use in commerce’ carries over into the US,” Allan said of possible Commodores scenarios. “Those are the kinds of factual issues that I’d guess there wasn’t a ton of focus on in the lower court.”

Farley said it was debatable that the question presented on remand to the district court was relevant to Abitron, or a question of fact for a trial court rather than one of law an appeals court could address.

The district court might indeed address another critical question that Alito’s opinion ignored: how to assess the domesticity of infringement conduct that happens on the internet, Farley said. But she also said there may be less to glean because this dispute is over a trademark covering services rather than goods, and most services don’t occur across borders as countless goods do.

“This doesn’t seem to be a great test case for this e-commerce question,” Farley said.

Whether the district court dives deeper into the nuances of what constitutes domestic use in commerce in this case, it and others will soon have to begin to plant flags on how to fill in the blanks the Supreme Court left in Abitron.

“In short order we’re going to start to get lower court opinions that apply facts to the holding and put some meat on the bone,” Allan said. “It will be instructive to see how courts are handling it.”

The case is Commodores Entertainment Corp. v. Thomas McClary, 11th Cir., No. 22-10188.