Online Influencers, Knockoff Handbags, Drunk Elephants, And Dog Poop: This Week In Trademark Law At The U.S. Supreme Court

• Jurisdiction: United States,Federal
• Law Firm: Seyfarth Shaw LLP
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Trademark, Advertising, Marketing & Branding
• Author: Ms Lauren Gregory
• Published date: 05 April 2023

The Supreme Court heard oral argument this week in not one, but two trademark cases with huge implications on commercial activity in the U.S. and abroad. The justices had a bit of fun'and even laughed at points when hypotheticals highlighted the absurdity of what consumers might encounter in today's online marketplace'but at the end of the day, raised very serious questions about the proper reach of the federal Lanham Act.

Both Abitron Austria GmbH et. al. v. Hetronic Int'l, Inc. and Jack Daniel's Properties Inc. v. VIP Products, Inc. require the Court to consider exactly how far trademark law can go in regulating conduct in the face of competing public policy interests. On Tuesday, the Court heard argument in Abitron to decide whether the Lanham Act can extend beyond U.S. borders to regulate foreign companies operating almost entirely overseas. (This is where the online influencers and knockoff handbags come in.) And on Wednesday, Jack Daniels prompted a debate over the tug-of-war between free speech and the right to control brand image in the marketplace. (These topics were discussed in the context of drunk elephants and dog poop.)

Here is a rundown on what you need to know about the key legal issues at stake, and how the arguments played out:

Extraterratorial Application of the Lanham Act: Abitron Austria GmbH et al. v. Hetronic Int'l, Inc., Docket No. 21-1043

• Petitioners Abitron et al. are appealing a $115 million judgment, almost $90 million of which was tied to sales of infringing products by foreign entities abroad. The Tenth Circuit had affirmed on the basis that infringing products might ultimately flow into the United States and/or divert sales from U.S.-based mark owner Hetronic, and thus had a "substantial effect" on U.S. commerce.
• The Supreme Court ruled that the Lanham Act has "sweeping reach into 'all commerce which may lawfully be regulated by commerce'" in 1952. Steele v. Bulova Watch Co. 344 U.S. 280, 287 (1952). Various circuits have since adopted balancing tests applying Steele to extraterritorial activity with a "substantial effect" on U.S. commerce The Court is now faced with determining exactly where to draw the line.
• The Petitioners' attorney argued Tuesday that the holding in Steele is distinguishable, because it applied to conduct by a U.S. citizen. He received pushback from Justice Sonia Sotomayor, who questioned the logic of only holding U.S. citizens accountable when foreign companies also purposely target marketing to U.S...