Supreme Court Justices Hear Oral Arguments on Geographical Reach of the Lanham Act and the Extent of First Amendment Protection for Parody of Registered Trademark

This week the U.S. Supreme Court heard oral arguments in two important trademark infringement cases which test the limits of the Lanham Act and the First Amendment, respectively: Abitron Austria GmbH, et al. v. Hetronic International, Inc. (No. 21-1043) and Jack Daniel’s Properties, Inc. v. VIP Products LLC. (No. 22-148).

Abitron presents the question of whether the Lanham Act provides a remedy in U.S. courts for trademark infringement that occurs solely outside the U.S., including “purely foreign sales that never reached the United States or confused U.S. customers.” The 10^th Circuit Court of Appeals held that it does and affirmed a district court judgment and damages award of over $90 million in favor of Oklahoma-based plaintiff/respondent Hetronic International, against German and Austrian companies who sold radio remote control products to European customers which infringed on Hetronic’s federally-registered trade dress and trademarks. According to the 10^th Circuit panel, the Lanham Act applies extraterritorially when the foreign conduct of an infringing defendant diverts foreign sales that would otherwise go to the U.S. plaintiff.  In the court’s view, this sufficiently affects U.S. commerce, as it deprives the U.S. economy of foreign revenue. At the request of the Supreme Court, the Solicitor General filed an amicus brief on behalf of the United States, in which it criticized the Court of Appeals’ decision, arguing that it improperly failed to consider whether a particular use of the mark caused U.S. customer confusion. Under the Solicitor General’s suggested approach, 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 sale or subsequently), giving appropriate deference to any jury finding on that issue. The court should have permitted monetary damages only for those uses.” Based on prior arguments from the parties, the Supreme Court may focus on indirect losses to a U.S. trademark holder whose trademark is infringed by a foreign defendant, as well as the traditional consumer confusion standard. The Court’s interpretation of the Lanham Act and its applicability to foreign infringing activity and sales outside the U.S. could certainly have far-reaching implications for U.S. companies and their trademarks.

See our Clark Hill Client Alert of Nov. 22, 2022.

In Jack Daniel’s Properties, Inc. v. VIP Products LLC, the defendant/respondent VIP marketed and sold dog toys that spoof and trade on Jack Daniel’s famous brand for its “Old No. 7”  Kentucky Bourbon. Jack was none too pleased and brought a trademark infringement and dilution lawsuit to clean up the mess. The district court found in Jack Daniel’s favor, finding that VIP’s use of Jack’s famous mark on its products was likely to confuse consumers and infringed and tarnished the famous Jack Daniel’s marks and reputation. On appeal, the 9^th Circuit reversed, finding that VIP’s use of the Jack Daniel’s marks on its products triggered a First Amendment free speech interest, which conferred special protection from infringement claims and rendered its dog toys “noncommercial” and therefore exempt as a matter of law from dilution-by-tarnishment claims under the Trademark Dilution Revision Act. The Supreme Court now has the opportunity to clarify what is commercial versus non-commercial use of a mark within the context of a parody. Additionally, perhaps the Supreme Court will provide further clarity as to when and how First Amendment parody arguments change Lanham Act analysis.

We will update this Alert when the Supreme Court issues its written opinions on these two cases.

The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.