Abitron Eliminates Circuit Tests but Causes More Confusion


Confusion” by QuinnDombrowski

is licensed under CC BY-SA 2.0

During the oral argument in Abitron Austria GMBH v. Hetronic International, Inc., Justices Alito, Sotomayor, Gorsuch, and Barrett all expressed concern over whether the Court should overrule its 1952 decision in Steele v. Bulova Watch Co (1952). A reader of the Court’s majority decision by Justice Alito might be surprised to see that the majority took no such explicit step.

Notwithstanding the decision’s silence, it is clear that Steele is no longer good law. Even the attempt by Justice Sotomayor in her concurrence to reconcile Steele with RJR Nabisco and its progeny would require overruling Steele at least in part, though she also never states as much. The Supreme Court has swept away decades of doctrinal development by the circuit courts of appeals with nary a remark about those approaches. The reasoning of the majority has implications for the law of extraterritoriality. But there are aspects unique to intellectual property law, particularly as it relates to damages.

Seventy Years of Doctrine

In Abitron, the Court confronted a conundrum: how to reconcile its new extraterritoriality framework with its longstanding precedent of Steele. In recent years, the Court has developed a two-step framework for assessing the extraterritorial reach of U.S. statutes, formally articulated in RJR Nabisco, Inc. v. European Community (2016). At step one, courts determine whether the presumption has been rebutted by some clear indication from Congress. If the presumption has not been rebutted, the courts then move to step two. At step two, the courts assess what the focus of the relevant statute is. If the conduct in the case relevant to the focus of the statute take place within the United States, even if some conduct was outside, then the statute is permissibly regulating domestic activity notwithstanding some foreign conduct.

The analysis in Steele looks nothing like that methodology. Instead, the Court, in holding that the Lanham Act applied extraterritorially, analyzed various factual aspects of the case. In Steele, the Supreme Court allowed the Lanham Act to apply extraterritorially where a U.S. citizen affixed and sold the BULOVA trademark on watches in Mexico, but some of those watches managed to cross the border into Texas. The accused infringer initially registered the BULOVA mark in Mexico, but that registration was cancelled.

The Second Circuit in Vanity Fair Mills v T. Eaton Co. (1956) distilled Steele into three factors: (1) the citizenship of the accused infringer, (2) substantial effects on U.S. commerce, and (3) conflicts with foreign law. The Second Circuit characterized the rationale in Steele as “so thoroughly based on the power of the United States to govern ‘the conduct of its own citizens upon the high seas or even in foreign countries when the rights of other nations or their nationals are not infringed’, that the absence of one of the above factors might well be determinative and that the absence of both is certainly fatal.” Over the next 60 years, the courts of appeals built on Steele and Vanity Fair. All of the courts retained these factors as aspects of their tests, although they disagreed on how to weigh them or, for example, what level of effect on U.S. commerce was required, if any.

The Supreme Court in Abitron faced circuit splits that pre-dated its two-step framework, as well as doctrinal confusion after RJR Nabisco about how Steele would fit into this new landscape. There were plenty of issues present: what role, if any, should citizenship play? Given that the Commerce Clause is the source of congressional power to enact the Lanham Act, how much effect on U.S. commerce was required? What role, if any, should conflicts with foreign law play?

The Abitron Decision

Although the decision in Abitron was technically 9-0, in reality the court was split 5-4 on how to address the extraterritorial reach of the Lanham Act at step two. All of the justices agreed that, contrary to all of the holdings of the courts of appeals post-Steele, the Lanham Act did not rebut the presumption against extraterritoriality at step one. At step two, the majority eschewed a discussion of the focus of the statute, instead turning to the conduct regulated by the Lanham Act. The majority opinion, authored by Justice Alito, viewed the relevant conduct as “use in commerce,” which must be domestic. The Court rejected the likelihood of consumer confusion within the United States as the dividing line. The Supreme Court sent the case back to the lower courts to apply its “use in commerce” test with very little guidance.

In reaching this holding, the majority “put [Steele] aside” by calling it “narrow and fact-bound” and involving “both domestic conduct and a likelihood of domestic confusion.” The majority never stated that Steele is overruled and did not reconcile Steele with its current framework.

In contrast, Justice Sotomayor’s concurrence discussed Steele and attempted to reconcile it with the Court’s modern framework. For her, the focus of the statute is consumer confusion within the United States, not merely use of the mark in commerce. If foreign activity resulted in U.S. consumers being confused, then the Lanham Act could apply. Her dispute with the majority was over step two of the modern framework because she felt the Court needed to identify the focus of the relevant statutory provisions and that there should be no separate “conduct” analysis. But even her reasoning is inconsistent with Steele’s focus on citizenship, effects on U.S. commerce, and conflicts. None of those factors are relevant under her approach.

Justice Jackson concurred to elaborate on the use in commerce requirement. She proposed a hypothetical, based on questions she asked at oral argument, regarding a U.S. student purchasing a COACHE bag in Germany, similar to the COACH marked bags in the United States, produced by the Coache family in Germany. In her view, when the student brings the bag back to the United States, there is no use in U.S. commerce. But if the student were to sell the bag in the United States, then there would be a use in commerce and the German family could be liable for U.S. trademark infringement.

The Takeaways

So, what are the takeaways from Abitron and its implications for trademark and intellectual property law more broadly?

Steele Is No Longer Good Law: “Use in Commerce” Is Now the Test

Although neither the majority nor the concurrences stated explicitly that Steele is overruled, implicitly it is. All of the tests that the circuit courts developed are now gone. In particular, two key factors in Steele, the citizenship of the defendant and the need for some level of effect on U.S. commerce, are no longer relevant to the analysis. Additionally, the formal consideration of conflicts of law seems, at best, uncertain. The Court in its other decisions on extraterritoriality have not included a formal consideration of comity. The role that comity may play in trademark law – and beyond – remains an open question. One of us has called for considering comity in both patent law and trademark law. In light of various treaties involving intellectual property law, consideration of foreign law in intellectual property law is far less difficult than other areas.

Courts now will need to determine whether the mark was used in commerce domestically. The Supreme Court, however, provided little guidance on this question. The Court referred to the definition of “use in commerce” in § 1127 of the Lanham Act, but only cited to part of the definition. Section 1127 provides a more robust definition of “use in commerce” as it relates to trademarks and service marks. Specifically, it states that

a mark shall be deemed to be use in commerce (1) on goods when (A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and (B) the goods are sold or transported in commerce, and (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.

Under the Court’s reasoning, it would seem that these such uses (placement of the marks or display of the marks) would now need to take place within the United States. There could be considerable reach under that approach, however. As Justice Jackson’s concurrence noted in footnote 2, webpages that are accessible within the United States may be sufficient display to trigger a Lanham Act violation. Justice Jackson’s concurrence also suggests that there would be a domestic use of a mark if a product purchased abroad is resold within the United States, regardless of whether the purchase was made from a legitimate foreign trademark owner or if the foreign producers made no effort to avail themselves of the U.S. market. Such an expansive, viral approach to trademark law seems to go too far, however, especially given the above definition.

Professors Margaret Chon and Christine Haight Farley have suggested that the use in commerce test has even broader implications. As they explore, there had been a longstanding debate over whether “use in commerce” meant “use in commerce as a trademark.” The Abitron decision help reopen that debate. The courts will have to wrestle more extensively with this vague statutory language.

What About Damages?

Interestingly, this case came to the Court after a determination of both liability and damages, and the basis for most of the damages in the case was foreign activity. Perhaps because of its focus on liability, the Court did not specifically address damages. Guidance there, however, would have been helpful.

As one of us noted in an amicus brief with Professors Chon and Marketa Trimble, the Court had the opportunity to clarify the Lanham Act remedy provision, § 1117, as it should be tied to the relevant rights-granting provisions (§ 1114(1)a) and § 1125(a)(1)). Because the Court decided the case at the liability phase, the proper interpretation of § 1117, and its relationship to the liability provisions, remains an open question. In other words, if there is an act of domestic infringement, could a trademark holder nevertheless receive damages for foreign activity proximately caused by such infringement?

The Court’s earlier decision in WesternGeco does provide guidance as to how this relationship should work, even in the face of the Court’s internal disagreement on step two of the RJR Nabisco methodology. WesternGeco addressed the availability of patent infringement damages for activities arising outside of the United States. Skipping the step one analysis, the Court decided the case at step two. In contrast with Abitron, the Court assessed the focus of the statute, with little regard to the relevant conduct at issue. The Court applied step two to the damages provision of the Patent Act, 35 U.S.C. § 284, and determined that § 284 primarily focuses on infringement. The Court then turned its attention to the relevant liability provision to determine the type of infringement that occurred. At issue was 35 U.S.C. § 271(f)(2) that defines infringement as the supplying a component of the patented invention from the United States that has no other use except to be combined into the patented invention. In doing so, the Court tied the extraterritorial reach of the general damages provision to the relevant liability defining provision. The relevant act of exporting the component was domestic, allowing any damages that flowed from that exportation to be recoverable, while recognizing that proximate cause still provides a limit on the reach of damages.

Although one of us has some disagreement with WesternGeco’s ultimate holding and its implications, we do believe it reflects the appropriate methodology for general remedies provisions. We imagine that the analysis under § 1117 should and will look similar, although perhaps with a different outcome. The amicus brief asserted that, when it comes to general remedies provisions such as §1117, it is important for the Court to acknowledge the link with the underlying violation of other statutory provisions. The territorial scope of the remedies provision is thus assessed by considering the territorial limits of the relevant of rights-granting provision. If the toggle for extraterritoriality is use in commerce, then seemingly only those uses that are domestic and cause a likelihood of consumer confusion should be compensable as damages. Foreign activity, as was present in Abitron, would not be compensable even if there is a precursor domestic tie. The split in Abitron over identifying the relevant conduct versus the statute’s focus may complicate this analysis. However, it does suggest a more stringent interpretation of the territorial limits of trademark law, particularly when compared to § 271(f) of the Patent Act, which Congress specifically crafted to have extraterritorial reach.


From an intellectual property perspective, Abitron has wiped away seventy years of jurisprudence and substituted a new test. But the Supreme Court provided little guidance about how to apply that test and how to calculate damages. Lower courts will have to work through those questions in the decades to come.