Supreme Court Will Consider Overseas Reach of US Trademark Law

The US Supreme Court will debate the worldwide reach of federal trademark law, agreeing to consider the extent to which a foreign-based company can be forced to pay damages for infringing sales that take place overseas.

The justices said they will review a $90 million jury award won by a Methode Electronics Inc. subsidiary in a lawsuit that accused an Austrian company and three of its units of selling copycat versions of proprietary remote controls used in heavy machinery.

The Austrian company, ABI Holding GmbH, contends that $87 million of that sum covered devices that were sold overseas and weren’t intended to be used in the US. The company says a federal appeals court ruling upholding the award threatens the business models of global retailers including Amazon.com Inc. and EBay Inc.

“That sweeping theory allows US courts to assess damages on a foreign defendant’s worldwide sales any time a U.S. plaintiff claims lost sales abroad,” ABI argued in court papers.

Methode’s Hetronic International contends the Denver-based 10th US Circuit Court of Appeals was right to uphold the award. That company says the ABI units, which had licensing agreements with Oklahoma-based Hetronic, used fake letterhead and email addresses to sell almost $100 million in knockoffs designed to look like genuine products.

“The result was widespread confusion among US consumers, not to mention tens of millions of dollars in diverted sales from Hetronic,” the company argued.

The Biden administration urged the high court to take up the case, saying the 10th Circuit ruling “risks globalizing US trademark law.” The administration says trademark holders should get damages for overseas infringement only if that activity is likely to cause confusion within the US.

The court will hear arguments next year and likely rule by late June. The case is Abitron Austria v. Hetronic International, 21-1043.

To contact the reporter on this story:
Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

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