Supreme Court Opens Floodgates For Overseas Knockoffs So Enjoy 'Dysney's Mickey Mouse' And Your 'MacDonald's Burgers'
Which company pirating American intellectual property flew Alito on their private jet? Because today’s opinion in Abitron v. Hetronic proved a boon for knockoff brands around the world. Do you have to report counterfeit goods as gifts under the statute? Asking for some Supreme Court justices.
The decision was deceptively unanimous, as the Court blew by its announcement at lightning speed in its excited dash to end affirmative action. It wasn’t until the dust settled that anyone noticed a 9-0 result supported by a 5-4 split in reasoning, with Sotomayor penning a concurrence in the judgment only joined by the Chief, Kagan, and Barrett.
An American company built remote controls for construction equipment. It developed a distributor relationship with an Austrian company that — allegedly — then took its insider information about the product to build its own knockoffs and sell them in Europe under Hetronic’s name. The Supreme Court tossed the $90 million judgment Hetronic won at trial for trademark infringement, ruling that the Lanham Act doesn’t apply if the people buying the knockoff are exclusively overseas.
Because when Congress passed a law in the 1940s without explicitly assuming that a global economy would develop, it offers no protection until someone tries to sell the offending product in Topeka. For the majority, Congress was more concerned about rigidly interpreting the “American market” than “protecting American businesses.” Yeah, that sounds like Congress… never caring about American capitalism.
This is, of course, stupid.
The concurring crew agreed that the jury hadn’t considered the domestic impact in this case, but acknowledged that a product doesn’t need to reach American shores to dilute a trademark in America. Astoundingly, the majority doesn’t even breathe on the concept of a “global market.” The concurrence… does:
In today’s increasingly global marketplace, where goods travel through different countries, multinational brands have an online presence, and trademarks are not protected uniformly around the world, limiting the Lanham Act to purely domestic activities leaves U. S. trade- mark owners without adequate protection. Cf. McBee, 417 F. 3d, at 119 (noting that “global piracy of American goods is a major problem for American companies,” and absent some enforcement over foreign activities, “there is a risk” that “violators will either take advantage of inter- national coordination problems or hide in countries without efficacious . . . trademark laws, thereby avoiding legal authority”).
Yes! Of course that’s true. A shitty product review of a Hetronic product from Hans in Salzburg absolutely dilutes the value of the brand for a potential consumer in Cleveland. This shouldn’t be difficult!
Alito cites to the controversial Nestlé case — which is superficially and not really accurately reduced to “Supreme Court endorses child slavery” — and tries to shoehorn to write off any law that applies to activity outside the United States. But the Alien Torts Statute at issue in that case dealt with extraterritorial acts with extraterritorial harms. Say what you will about the wisdom of that decision, it doesn’t stand for the proposition that the law cannot cover extraterritorial acts with domestic harms.
Is this because he’s worried about future environmental claims for the cross-border pollution caused by the oil and gas companies he profits from? Because if that’s his worry, he’s better off just blowing up the Clean Air Act than undermining intellectual property law. He certainly has the majority for it.
So it’s open season for international knockoffs as American businesses have no domestic protection from their reputations getting wrongfully trashed in America by shoddy merchandise.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
Source: Above the Law
