Abitron on Remand


Construction cranes at sunset

by World Bank Photo Collection

is licensed under CC BY-NC-ND 2.0

Last year, in Abitron Austria GmbH v. Hetronic International, Inc., the Supreme Court held that the federal trademark statute—known as the Lanham Act—applies only to domestic conduct infringing U.S. trademarks. A group of Austrian and German companies collectively known as “Abitron” placed U.S.-protected trademarks owned by a U.S. company, Hetronic, on products made in Europe. Some of these products were sold directly to the United States, some reached the United States through intermediaries, and some never made it the United States. Having articulated a domestic-conduct requirement, the Supreme Court remanded to the Tenth Circuit to apply that requirement.

On April 23, the Tenth Circuit handed down its decision on remand. Writing for a unanimous panel, Judge Gregory A. Phillips held that the Lanham Act applies to Abitron’s direct sales to the United States but not to its purely foreign sales or to those that came to the United States through intermediaries. The court also held that Hetronic might be entitled to disgorgement of profits from foreign sales—even purely foreign ones—if it could show that those sales resulted from trademark infringement, such as advertising, in the United States.

Shortly after the Supreme Court’s decision in Abitron, Linda Silberman and Rochelle Dreyfuss wrote at TLB that the decision raised more questions than it answered. Lower courts are now starting to answer some of those questions. Unfortunately, as I explain below, the Tenth Circuit seems to have answered one of them wrong.

The Facts

Hetronic makes radio remote controls for heavy equipment. To exploit the European market, Hetronic entered licensing and distribution agreements with Abitron. After a dispute about ownership of intellectual property, Abitron started to make copycat products, which it sold to customers in abroad and in the United States. Some of Abitron’s sales abroad were to equipment manufacturers who installed its remote controls in their own products. Some of that equipment was then sold to customers in the United States. According to Hetronic, Abitron took steps to facilitate such sales by applying for a license from the FCC to allow its equipment to operate there and by hiring a U.S. distributor to service its products and to promote them at trade shows in the United States.

Direct Sales to the United States

The Tenth Circuit had little difficulty concluding that the trademark statute applies to Abitron’s direct sales the United States. “These sales blatantly used Hetronic trademarks in domestic commerce,” the court noted, “thus no ‘extraterritorial application of the Act’ was required.”

Abitron argued that its direct sales to Hetronic affiliates should be excluded because those sales created no likelihood of confusion. But the Tenth Circuit refused to revisit on appeal the jury’s finding of confusion because Abitron did not object to the jury instruction about confusion and did not argue before the district court that its sales to Hetronic affiliates created no likelihood of confusion. In any event, the court of appeals continued, actionable confusion is not limited to the source of the goods. The possibility of confusion about whether Abitron’s products would have the same qualities and features as Hetronic’s was, in the court’s view, sufficient to support a claim of infringement.

Foreign Sales

At the other extreme, it was also clear that the trademark statute does not apply to Abitron’s purely foreign sales. “Because the Court now requires infringing conduct in domestic commerce to anchor any Lanham Act claim,” the Tenth Circuit wrote, “none of Abitron’s purely foreign conduct—that is, foreign sales to foreign customers—can premise liability for Hetronic’s Lanham Act claims.”

Downstream Sales

Somewhere between these two extremes lie Abitron’s sales to foreign intermediaries that incorporated Abitron’s remote controls into other equipment that was then sold to the United States. Adopting Hetronic’s terminology, the Tenth Circuit referred to these as “downstream sales.”

Hetronic’s argument that downstream sales are covered by the trademark statute relied heavily on the concurring opinion by Justice Jackson. She wrote that “a ‘use in commerce’ does not cease at the place the mark is first affixed, or where the item to which it is affixed is first sold.” To illustrate, Justice Jackson imagined a U.S. student who buys a handbag in Germany marked “Coache,” the family name of the Germany company’s owner. Bringing the bag back to the United States for personal use would not be a “use in commerce,” she reasoned, even if people who saw the bag might confuse it with one made by the U.S. company Coach. But if the student sold the bag to someone else in the United States, that would constitute a “use in commerce” making the German company liable. Because the majority opinion did not address this situation, and Justice Jackson provided the crucial fifth vote, her interpretation of “use in commerce” should control.

The Tenth Circuit distinguished in a footnote Justice Jackson’s opinion on the ground that her example involved goods that were resold between parties in the United States. But this misses her point. Justice Jackson’s point was that the party affixing a trademark continues to “use” it in commerce when that good is resold by others. The example she gave involved a downstream sale entirely within the United States, but nothing in her opinion suggests that this is required for a use in commerce to be considered domestic. Recall from above that the Tenth Circuit’s own opinion holds that Abitron’s direct sales from abroad to U.S. customers constitute a use in domestic commerce. If that is true of Abitron’s sales, then it must also be true of sales by foreign intermediaries to U.S. customers. And, by Justice Jackson’s reasoning, such subsequent use in domestic commerce makes Abitron liable.

The Tenth Circuit also deemed irrelevant the fact that Abitron supported downstream sales by getting a license from the FCC and by hiring a U.S. distributor. Obtaining the license and hiring a distributor did not constitute use of the trademarks, the court reasoned. On the other hand, the court concluded that using the trademarks to advertise Abitron products in the United States, whether in connection with downstream sales or not, fell within the scope of the Lanham Act.


As for remedies, the district court originally granted disgorgement of profits and injunctive relief. The Tenth Circuit concluded that both had to be narrowed substantially but remanded the case to the district court for further tailoring.

Significantly, the Tenth Circuit did not rule out the possibility that some foreign sales might qualify for disgorgement if they were the direct result of advertising in the United States, an issue that Timothy Holbrook and Anshu Garg have previously addressed. The court reasoned that “if Abitron’s foreign sales arose from domestic infringing conduct, then those profits represent the fruits of a domestic injury for which Hetronic may seek disgorgement.” Here, the court of appeals followed the Supreme Court’s reasoning in WesternGeco LLC v. ION Geophysical Corp. (2018), in which the Court held that the Patent Act allows recovery of foreign lost profits that can be traced to domestic infringement. Nevertheless, the court of appeals held that, to recover for Abitron’s foreign sales, Hetronic had to show that those sales were proximately caused by infringement in the United States.

With respect to injunctive relief, the Tenth Circuit held, any injunction had to be limited to Abitron’s domestic conduct. “Hetronic’s rights were violated when Abitron used Hetronic trademarks in U.S. commerce through its domestic sales, marketing, advertising, and distribution,” the court wrote. “This list of Abitron’s injurious conduct sketches the outer limit for the injunctive relief permitted” by the Lanham Act.


I think the Supreme Court was mistaken to require conduct in the United States in addition to a likelihood of consumer confusion. The Tenth Circuit’s decision on remand amplifies the mistake by excluding downstream sales to the United States even though, as Justice Jackson’s concurrence explained, these involve domestic conduct. It is inconceivable to me that a foreign company can avoid liability under the Lanham Act simply by selling to another foreign company before goods bearing a U.S.-protected trademark are imported into the United States. Yet that, in essence, is what the Tenth Circuit has held.