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Pay for Delay Is Sometimes Okay

by | May 23, 2024 | ,

The US Court of Appeals for the Second Circuit affirmed the dismissal of a lawsuit against pharmaceutical companies accused of violating antitrust laws by using reverse payments to delay entry of a generic version of a patented drug. CVS Pharmacy, Inc. v. Forest Labs. Inc., Case Nos. 23-410; -418; -420; -423 (2d Cir. May 13, 2024) (Jacobs, Sack, Nardini, JJ.)

This case involves a drug called Bystolic, which is a beta blocker designed to treat high blood pressure. Numerous purchasers of Bystolic and its generic versions brought state and federal antitrust claims against Forest Labs. and the generic manufacturers. The purchasers alleged that Forest Labs. unlawfully paid off the generic manufacturers to delay the market entry of their products and prolong Forest Labs.’ ability to reap monopoly profits. The purchasers claim that Forest Labs. covered up these payments by pretextually compensating the generics for goods and services that Forest Labs. did not truly need. The purchasers claim that without such “side deals,” generic versions of Bystolic would have entered the market earlier – whether by the generic manufacturers prevailing in the infringement litigation, entering at risk (i.e., with litigation ongoing) or agreeing to a settlement allowing for earlier market entry.

The payments made by Forest Labs. are known as “reverse payments” because, unlike a typical settlement payment, the patent holder pays the alleged patent infringer even though they have no claim for damages. In 2013, the Supreme Court explained in FTC v. Actavis that such payments should be evaluated pursuant to antitrust law’s rule of reason, under which courts balance anticompetitive effects against procompetitive benefits. The Supreme Court explained that while reverse payments may look dubious, they are not automatically unlawful. Instead, these payments may “sometimes” violate the antitrust laws, but only if they are both “large” and “unjustified.” According to the Supreme Court, whether a reverse payment passes antitrust muster “depends upon its size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification,” including fair value for goods and services exchanged as part of a bona fide commercial relationship.

Forest Labs. and the generic manufacturers moved to dismiss the purchasers’ claims for failure to state a claim. The district court granted the motion, concluding that the purchasers’ allegations did not plausibly show an antitrust violation under Actavis. The purchasers’ appealed.

The Second Circuit affirmed the dismissal. Analyzing Actavis, the Court explained that reverse payments are subject to the rule-of-reason analysis and the relevant inquiry involves determining why the payment was made. The Court noted that the payments must be analyzed against a backdrop of the strong public policy favoring settlement of disputes, meaning that the payments violate antitrust law only if they are both large and unjustified or unexplainable. In turn, whether a reverse payment is “unjustified” depends on whether it “reflects traditional settlement considerations,” including “fair value” for products or services provided by the generic manufacturer pursuant [...]

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Testing Negative: Collateral Order Doctrine Precludes Appellate Jurisdiction

by | May 23, 2024 |

Addressing appellate jurisdiction in view of the collateral order doctrine, the US Court of Appeals for the Federal Circuit dismissed an appeal of a district court’s ruling denying a motion to dismiss because the district court’s order did “not conclusively determine any issue.” Copan Italia S.p.A. v. Puritan Med. Prod. Co. LLC, Case No. 22-1943 (Fed. Cir. May 14, 2024) (Cunningham, Bryson, Stark, JJ.)

Copan and Puritan are competing medical supplies companies. Copan filed suit against Puritan alleging infringement of Copan’s patents for “flocked” swabs, which are used “for collecting biological specimens.” While the lawsuit was filed in 2018, the circumstances surrounding the case changed significantly in March 2020 when the COVID-19 pandemic caused the demand for flocked swabs to skyrocket. In May 2020, the parties agreed to stay the proceedings until the COVID-19 crisis passed.

During the stay, Puritan entered into a contract with the US Air Force, causing Puritan to expand its manufacturing facilities and capabilities. The Air Force stated in a document associated with the contract that, under the Public Readiness and Emergency Preparedness Act (PREP Act), (1) the contract was being entered into for the purpose of covered countermeasures for responding to a public health emergency, (2) Puritan’s performance under the agreement was for recommended activities in responding to the public health emergency and (3) Puritan was a covered person under the PREP Act. Further, the Air Force “expressly acknowledge[d]” that Puritan “shall be immune from suit and liability to the extent and as long as [Puritan’s] activities fall withing the terms and conditions of the PREP Act and the PREP Act declaration.”

Puritan asserted it had immunity under the PREP Act from certain claims in Copan’s infringement suit. Puritan sought leave to amend its answer to include this affirmative defense and filed a partial motion to dismiss the claims directed to Puritan’s performance under the Air Force contract. Copan opposed the motion, arguing the PREP Act does not apply to claims for patent infringement and immunity only applies to claims for losses relating to physical harm, like products liability.

The district court denied Puritan’s motion, finding “that Puritan had not shown, as a factual matter, that its flocked swabs were ‘covered countermeasures’ under the PREP Act.” The district court pointed to “evidentiary gaps,” which prevented Puritan – at the current stage of litigation – from proving the PREP Act affirmative defense. Puritan appealed.

The Federal Circuit determined it lacked jurisdiction and dismissed the appeal. Because the denial of Puritan’s partial motion to dismiss was not a final order, appellate jurisdiction would only arise in limited circumstances under the collateral order doctrine. The collateral order doctrine allows appellate jurisdiction on rulings that (1) conclusively determine a disputed question, (2) resolve an issue completely separate (collateral) to the merits of the action and (3) are effectively unreviewable on appeal from a final judgment.

The Federal Circuit found that the district court order did not conclusively determine any issue and therefore the Federal Circuit lacked jurisdiction under the [...]

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Patent Thicket Avoidance: PTO Proposes Changes to Terminal Disclaimer Practice

by | May 23, 2024 |

On May 10, 2024, the US Patent & Trademark Office (PTO) issued a notice of proposed rulemaking (Notice) concerning major changes to the terminal disclaimer (TD) practice, which may lead to a sea change in patent prosecution strategies. The proposed change would require a TD to include an agreement from the patent owner that the patent will be unenforceable if it’s tied directly or indirectly to another patent having any patent claim invalidated or canceled based on prior art. 89 Fed. Reg. 40439 (May 10, 2024).

The rule change is a potential boon for patent challengers and is intended to promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by TDs to patents with claims finally held unpatentable or invalid. Under current practice, invalidation of a patent tied to another patent by a TD does not directly affect the patentability of the other patent. Under the new rule, a competitor could target a single patent in a validity dispute in a post-grant challenge without the need to seek review and invalidation of other related patents. As a result, invalidating one claim in a patent tied to other patents by TDs would render all other tied patents unenforceable.

According to the Notice, the proposed change aligns with the US government’s intent to reduce drug costs and promote competition by reducing barriers to market entry in accordance with President Biden’s Executive Order 14036 on “Promoting Competition in the American Economy.” Part of the reduced costs are said to come from bringing down the cost of challenging large “patent thickets” of multiple patents covering a single product or minor variations of the product tied by TDs.

The proposed rule change would represent a paradigm shift for TD practice. Current TD practice under 37 CFR 1.321(c) or (d) allows applicants to file multiple patents with claims varying in only minor ways from one another by filing TDs to obviate obviousness-type double patenting (ODP) rejections over closely related patent claims issued or pending in applications commonly owned or commonly owned on the basis of a joint research agreement. In filing a TD, the applicant agrees to disclaim any patent term extending beyond the term of the prior patent having similar patent claims.

The proposed rule seeks “to revise 37 CFR 1.321 (c) and (d) to require that a terminal disclaimer filed to obviate nonstatutory double patenting include an agreement by the disclaimant that the subject patent or any patent granted on the subject application shall be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting in which:

(1) any claim has been finally held unpatentable or invalid under 35 U.S.C. 102 or 103 . . . by a Federal court in a civil action or by the PTO, and all appeal rights have been exhausted; or

(2) a [...]

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Prime Delivery: Amazon Program Now Offers Personal Jurisdiction to Patent Holders

by | May 16, 2024 |

Addressing the issue of personal jurisdiction in the context of a declaratory judgment case involving a program for resolving patent infringement claims, the US Court of Appeals for the Federal Circuit concluded that a patent owner has personal jurisdiction in the forum of an alleged infringer when it files a program claim against the alleged infringer. SnapRays, dba SnapPower v. Lighting Defense Group, Case No. 23-1184 (Fed. Cir. May 2, 2024) (Moore, CJ. Lourie, Dyk, JJ.)

The Amazon Patent Evaluation Express (APEX) program helps resolve patent infringement claims against sellers on Amazon. Under APEX, a patent owner submits an APEX Agreement to Amazon that identifies the allegedly infringed patent claim and the Amazon listings with the alleged infringing products. Amazon then sends this APEX Agreement to the seller, who can do one of the following to avoid removal of their accused listings:

  • Opt into APEX and let a third party determine whether their product likely infringes
  • Resolve the claim directly with the patent owner
  • File a lawsuit for declaratory judgment of noninfringement. If the seller does nothing, its listings are automatically removed from Amazon within three weeks of receipt of the APEX Agreement.

Lighting Defense Group (LDG), a Delaware company whose principal place of business is in Arizona, submitted an APEX Agreement alleging that SnapPower’s Amazon products (electrical outlet covers with integrated technology) infringed one of its patents. SnapPower, a Utah company whose principal place of business is in Utah, then filed a declaratory judgment action against LDG in Utah. LDG then filed a motion to dismiss for lack of personal jurisdiction. The district court granted the motion, finding that SnapPower did not demonstrate that LDG purposefully directed activities at SnapPower in Utah and that there was no evidence that LDG reached out to Utah other than through responses to SnapPower’s communications. SnapPower appealed.

The Federal Circuit reversed, finding that LDG was subject to personal jurisdiction under the Court’s three-prong test because (1) LDG purposefully directed its activities at SnapPower in Utah, (2) LDG’s submission of the APEX Agreement was directed to SnapPower in Utah and aimed to affect activities in Utah and (3) it would not be unreasonable to find personal jurisdiction over LDG in Utah.

In assessing the first prong, the Federal Circuit found that LDG knew, via APEX’s terms, that Amazon would notify SnapPower of the APEX Agreement and that the options available to SnapPower included a claim for declaratory judgment. Further, the Court found that the APEX Agreement had more power than cease and desist letters because of the automatic removal of the listings after three weeks, which would affect sales and activities in Utah.

In assessing the second prong, the Federal Circuit found that personal jurisdiction comported with due process because LDG’s actions aimed to affect marketing, sales and other activities in Utah and because the suit arose out of LDG’s activities in the forum.

In assessing the final prong, the Federal Circuit rejected LDG’s argument that allowing personal jurisdiction would “open the [...]

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Stud-y Harder: Domestic Industry Must Be Established for Each Asserted Patent

by | May 16, 2024 |

Addressing a final determination by the US International Trade Commission of no violation of § 337, the US Court of Appeals for the Federal Circuit affirmed that the complainant had not satisfied the economic prong of the domestic industry requirement because it relied on aggregated evidence of investments across different products protected by different patents. Zircon Corp. v. ITC, Case No. 22-1649 (Fed. Cir. May 8, 2024) (Lourie, Bryson, Stark, JJ.)

In 2020, Zircon filed a complaint seeking a § 337 investigation based on alleged infringement of four patents covering electronic stud finders. The Commission instituted an investigation, naming Stanley Black & Decker as the respondent. Zircon withdrew one patent during the investigation and, in late 2021, the administrative law judge (ALJ) issued an initial determination finding no violation of § 337. The ALJ found some claims of one of the three patents to be valid and infringed but held that Zircon had failed to establish the economic prong of the domestic industry requirement because it had aggregated its investments across all 53 of its practicing products, of which only 14 practiced all three patents. On review, the Commission affirmed the finding of no violation, holding that all claims were either invalid or not infringed. The Commission also affirmed the domestic industry finding, holding that the aggregation prevented it from evaluating the significance of Zircon’s investments with respect to each of the three asserted patents. Zircon appealed.

The Federal Circuit affirmed on the basis that Zircon failed to meet the second prong of the domestic industry requirement. The Court explained that where different groups of products practice different patents, the complainant must separately establish a domestic industry for each group of products. The Court agreed with Zircon that such a showing might not necessarily require breaking out investments on a per-patent basis but concluded that the complainant must ultimately show that the domestic industry requirement is met for each asserted patent. Because the Federal Circuit upheld the finding of no domestic industry, it found it unnecessary to reach the infringement and invalidity rulings.



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Say What? Recitation Entitled to Patentable Weight When Not “Communicative Content”

by | May 16, 2024 |

Addressing when claimed printed matter is entitled to patentable weight, the US Court of Appeals for the Federal Circuit reversed the Patent Trial & Appeal Board’s ruling involving the printed matter doctrine, explaining that the claimed subject matter was not communicative content. IOEngine, LLC v. Ingenico Inc., Case No. 21-1227 (Fed. Cir. May 3, 2024) (Lourie, Chen, Stoll, JJ.)

Financial technology company Ingenico filed three petitions for inter partes review (IPR) of certain claims from three patents owned by IOEngine, all of which shared the same title and written description. The patents, titled “Apparatus, Method and System for a Tunneling Client Access Point,” claimed a “portable device” that was “configured to communicate with a terminal.” The challenged claims recited a memory that contained program code “configured in various ways to facilitate communication … with a communications network node.”

The Board issued final written decisions, which found the challenged claims to be unpatentable for obviousness or anticipation. The Board also found several claims to be anticipated after giving no patentable weight to certain claim recitations by application of the printed matter doctrine. The Board found that the terms “encrypted communications” and “program code” claim “only communicative content” (i.e., printed matter) and that these recitations were not entitled to patentable weight.

The Board concluded that the recitation of “encrypted communications” was subject to the printed matter doctrine because “nothing in the claim … requires anything beyond sending and receiving data, even if the data is in an encrypted form.” Similarly, the Board found that the recitation “program code” was subject to the printed matter doctrine because the “recital of ‘downloading’ of program code was limited to downloading (sending or transmitting) the code, which is a communication, and no other function is recited in the claim.”

IOEngine appealed, arguing that the Board erroneously construed the term “interactive user interface,” erred in its application of the printed matter doctrine, and erred in its anticipation and obviousness analysis.

The Federal Circuit affirmed the Board’s claim construction, finding IOEngine had forfeited its proposed construction because it did not present it to the Board during the IPR proceeding. Likewise, the Court affirmed the Board’s unpatentability determination of anticipation and obviousness for those claims where the Board did not invoke the printed matter doctrine.

However, the Federal Circuit reversed the Board’s determination that the recitations “encrypted communications” and “program code” were entitled to no weight under the printed matter doctrine.

The Federal Circuit explained that courts use a two-step test to determine whether a recitation should be accorded patentable weight under the printed matter doctrine. First, a court should determine “whether the limitation in question is directed toward printed matter.” Under step one, a limitation should be considered printed matter when the limitation “claims the content of information,” meaning that “the matter [is] claimed for what it communicates.” Only if the first step is met should the court proceed to step two. In the second step, the court considers “whether the printed matter nevertheless should be given patentable [...]

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“Common Sense” Governs Tribal Sovereign Immunity Under Federal Contracting Program

by | May 16, 2024 |

The US Court of Appeals for the Eleventh Circuit reversed and remanded a district court’s ruling, holding that waiver of sovereign immunity for claims related to a federal contracting program means the defendant, a sovereign Indian tribe, can be sued and that the district court failed to consider the valid and enforceable nature of the forum. AQuate II, LLC v. Jessica Tedrick Myers and Kituwah Global Gov’t Group, LLC, Case No. 22-12669 (11th Cir. May 1, 2024) (Grant, Abudu, Hull, JJ.)

AQuate II is a business organized under the authority of the Alabama-Quassarte Tribal Town. Kituwah Services is organized under the authority of the Eastern Band of Cherokee Indians. Both tribal entities compete for and perform federal contracts under the Small Business Administration’s 8(a) Business Development program, which was created to help qualifying small businesses that are owned/controlled by “socially and economically disadvantaged” individuals/groups compete for federal procurement contracts. Jessica Myers, a former AQuate II employee, took a job as the director of administration for Kituwah and allegedly violated her confidentiality commitments by taking copies of contracts, proposals, personnel lists and other secret information. Myers also allegedly contacted her former colleagues at AQuate II to solicit information regarding bids for a federal contract and provided job offers to AQuate II employees contingent upon Kituwah winning the federal contract. AQuate II sued in federal district court, alleging that Myers breached her employment agreements and that she and Kituwah violated both the Defend Trade Secrets Act of 2016 and the Alabama Trade Secrets Act. (18 U.S.C. § 1836; Ala. Code § 8-27-1 et seq.) AQuate II requested a preliminary injunction, and Kituwah and Myers moved to dismiss.

Enrollment in the 8(a) program requires qualifying businesses to agree to “sue and be sued” in US federal courts for “all matters relating to” the Small Business Administration, including its 8(a) program and related participation, loans and contract performance. (13 C.F.R. § 124.109(c)(1).) Kituwah invoked sovereign immunity and claimed it was not subject to suit in federal district court. AQuate II argued that Kituwah had waived its sovereign immunity with respect to claims relating to Kituwah’s participation in the 8(a) program. The district court granted the motion to dismiss, holding that Kituwah had not waived sovereign immunity for the trade secrets claims because AQuate II’s lawsuit did not “relate to” participation in the 8(a) program. The district court dismissed the same claims against Myers, finding that Kituwah was a necessary and indispensable party under Rule 19. Lastly, the district court dismissed the remaining breach of contract claim against Myers under forum non conveniens, concluding that the dispute resolution policy required that the claim be resolved in the Alabama-Quassarte Tribal Town court. The district court denied AQuate II’s motion for reconsideration, and AQuate II appealed.

The Eleventh Circuit reversed and remanded, noting that under 1998 Supreme Court precedent, Kiowa Tribe of Oklahoma v. Mfg. Techs., “an Indian tribe is subject to suit only where Congress has authorized the suit, or the tribe has waived its immunity.” [...]

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When Is It Really Over? If Additional Proceedings Are Needed, Judgment Is Not Final

by | May 16, 2024 |

The US Court of Appeals for the Federal Circuit, factually distinguishing the concept of finality in this case from its earlier decision in Fresenius USA v. Baxter Int’l, vacated and remanded a district court’s amended final judgment with instructions to dismiss the case as moot in view of parallel proceedings that had found all patent claims invalid. Packet Intelligence LLC v. NetScout Systems, Inc., Case No. 22-2064 (Fed. Cir. May 2, 2024) (Lourie, Hughes, Stark, JJ.)

This dispute was originally before the Federal Circuit in 2020 when NetScout appealed a district court’s judgment that it willfully infringed multiple patents and that none of the patent claims were shown to be unpatentable or invalid. NetScout also appealed the district court’s damages award, which included enhancements. In the first appeal, the Federal Circuit reversed the damages award, vacated the enhanced damages and affirmed the remainder of the decision (Packet I). While the case was on remand to the district court, the Patent Trial & Appeal Board issued final written decisions in a series of inter partes reviews (IPRs) that had been initiated by third parties, finding all claims to be unpatentable as obvious. Packet appealed the Board’s decisions to the Federal Circuit. The district court issued an amended decision on May 4, 2022, after the Federal Circuit’s first decision remanding the case and after the Board’s final written decisions in the IPRs.

NetScout appealed again, arguing that if the Federal Circuit affirmed the Board’s findings invalidating the patents at issue, then the claims at issue in the litigation would all be unpatentable, which would trigger an immediate issue preclusion that would leave Packet unable to collect on any outstanding monetary damages awarded by the district court. Therefore, the question before the Federal Circuit was whether the decision in Packet I rendered the case sufficiently final such that it would be immune to the Board’s subsequent determination of unpatentability.

The Federal Circuit determined that Packet’s infringement judgment was not final before the Federal Circuit affirmed the Board’s unpatentability judgments. The Court discussed its prior decisions on finality, focusing on its 2013 decision in Fresenius in which the Court considered a different concept of finality. In Fresenius, the Court explained that the finality at issue was not the potential res judicata effect on another litigation. Rather, Fresenius was concerned with “whether the judgment in this infringement case is sufficiently final so that it is immune to the effect of the final judgment in the PTO proceedings, as affirmed by this court.” The Federal Circuit stated that in accordance with this concept of finality (also the one at issue in NetScout’s appeal), a litigation is sufficiently final when it is “entirely concluded” so that the cause of action is merged into a final judgment and the final judgment leaves nothing for the court to do but execute the judgment.

Applying this standard to the facts of the case at issue, the Federal Circuit found that Packet’s cause of action remained pending and [...]

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Take Three for Take-Two: Jury Finds Implied License for Tattoos on Video-Game Avatar

by | May 9, 2024 |

A jury rejected allegations that a video-game maker’s use of tattoos in a game violated the copyright of the artist who inked them, finding the video-game maker had an implied license to depict a player’s tattoos in its likeness of him. Hayden v. 2K Games Inc., Case No. 1:17-cv-02635 (N.D. Ohio)

Jimmy Hayden is a tattoo artist who has created works for many National Basketball Association (NBA) stars, including Lebron James, Shaquille O’Neal, Kyrie Irving, Danny Green and Tristan Thompson. Hayden filed suit against Take-Two Interactive Games, a developer, publisher and marketer of interactive entertainment and video games, in 2017 for the depiction of his copyrighted tattoos on the likenesses of James, Green and Thompson in the popular NBA 2K game series. The NBA 2K series allows players to control realistic avatars of more than 400 NBA players.

In January 2024, the district court dismissed the infringement claims concerning four of the six tattoos but ruled that claims concerning two of the tattoos on James could proceed to trial. The jury found that Take-Two’s agreement with the NBA and its players’ union to use James’s likeness included an implied license to depict his tattoos.

Practice Note: A likely issue on appeal will be whether the jury was correctly instructed in the implied license doctrine, which involves inferring intent from the parties’ conduct, as well as whether it applied the doctrine correctly.

Similar Cases

This case is the latest in a series of disputes between tattoo artists and the use of their work in video games. In 2020, Take-Two was sued in the US District Court for the Southern District of New York over its depiction of tattoos on NBA players, including James, Kenyon Martin and Eric Bledsoe. In that case, Solid Oak Sketches, Inc. v. Take-Two Games, Inc. (499 F.Supp.3d 333 (S.D.N.Y. 2020)), the district court granted Take-Two’s motion for summary judgment, finding that the tattoos depicted on the basketball players were not substantially similar to the actual tattoos, that the video game company’s use was within the license granted by the players to use their likeness and that the video game’s use of the copyrighted tattoos was transformative.

In another case, Alexander v. Take-Two Interactive Software, Inc. et al. (Case No. 18-cv-966-SMY, (S.D. Ill. 2022)), a tattoo artist won a jury trial concerning the depiction of tattoos on professional wrestler Randy Orton in Take-Two’s WWE 2K video game series. In that case, the jury awarded Alexander $3,750 in damages, finding that the reproduction of the tattoos was not fair use, but the small size of the award reflected their finding that the game’s profits were not attributable to the copied tattoos.



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Foreign Sales to Foreign Customers Are Not Actionable Under the Lanham Act

by | May 9, 2024 |

Issuing a revised opinion following the Supreme Court’s 2023 decision in Abitron Austria GmbH v. Hetronic Int’l, Inc., the US Court of Appeals for the Tenth Circuit determined that none of the defendant’s purely foreign sales to foreign customers can premise liability for the plaintiff’s Lanham Act claims and that any permanent injunction issued against the defendant cannot extend beyond qualifying domestic conduct. Hetronic International, Inc. v. Hetronic Germany GmbH; Hydronic-Steuersysteme GmbH; ABI Holding GmbH; Abitron Germany GmbH; Abitron Austria GmbH; Albert Fuchs, Case Nos. 20-6057; -6100 (10th Cir. Apr. 23, 2024) (Murphy, McHugh, Phillips, JJ.)

Hetronic is a US company that manufactures radio remote controls for heavy-duty construction equipment. Hetronic sued its foreign distributors and licensees (collectively, Abitron) in the US District Court for the Western District of Oklahoma for trademark infringement when, following termination of the Hetronic distribution and license agreements, Abitron reverse-engineered Hetronic’s products and began manufacturing and selling their own copycat products bearing Hetronic’s trade dress (a “distinctive black-and-yellow color scheme”). Abitron’s sales of the copycat products took place primarily in Europe. In the first rounds of this dispute, the district court rejected Abitron’s argument that Hetronic sought an impermissible extraterritorial application of the Lanham Act, and a jury awarded Hetronic $96 million in damages related to Abitron’s global use of Hetronic’s marks. Abitron was also permanently enjoined from using the marks anywhere in the world. Abitron appealed to the Tenth Circuit.

As a matter of first impression, the Tenth Circuit fashioned its own test to determine the extraterritoriality of the Lanham Act, upholding the district court’s ruling but narrowing the injunction to only the countries where Hetronic marketed or sold its products. Abitron appealed to the Supreme Court.

The Supreme Court granted certiorari to resolve a circuit split over the Lanham Act’s extraterritorial reach. Specifically, the Supreme Court was asked to decide whether the Lanham Act applies to “purely foreign sales that never reached the United States or confused U.S. customers” and considered its long-standing presumption against extraterritoriality, with the first step of its analysis consisting of asking whether Congress has “affirmatively and unmistakably instructed” that a particular statute “should apply to foreign conduct.” As the second step, the Supreme Court determined whether a claim seeks a permissible domestic or impermissible foreign application of a statute.

The Supreme Court held that Sections 32(1)(a) and 43(a)(1)(A) of the Lanham Act are not extraterritorial and that the infringing conduct – being “use in commerce” of a trademark – determines the dividing line between foreign and domestic application of the Lanham Act. The Supreme Court vacated the Tenth Circuit’s findings and remanded for further proceedings, instructing the Tenth Circuit to reevaluate which of Abitron’s allegedly infringing activities count as use in commerce under the Supreme Court’s exterritoriality frameworks and to determine on which side of the dividing line Abitron’s conduct falls.

With the Supreme Court having already determined step one, on remand, the Tenth Circuit started with step two of the extraterritoriality analysis and found [...]

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