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WASHINGTON (Reuters) – Limiting the foreign reach of American trademark law, the U.S. Supreme Court on Thursday threw out a $96 million jury award for Methode Electronics (NYSE:MEI) Inc’s Hetronic International in its fight with its former European distributor for selling Hetronic-branded products with unauthorized parts.
The decision overturned a lower court’s ruling that Abitron Germany GmbH was liable in the United States for trademark infringement that occurred abroad. Abitron had appealed the ruling by the Denver-based 10th U.S. Circuit Court of Appeals.
Oklahoma-based Hetronic makes remote-control systems for cranes and other industrial machinery. Hetronic Germany, which was later bought by Abitron Germany GmbH, distributed its products in Europe.
Hetronic sued Abitron and its affiliates in federal court in Oklahoma for making and selling Hetronic-branded products with unauthorized parts. A jury found in favor of Hetronic and awarded more than $115 million in damages, $96 million of which was for violating federal trademark law. That $96 million was the subject of the appeal to the Supreme Court.
The Denver-based 10th U.S. Circuit Court of Appeals affirmed the verdict, rejecting Abitron’s argument that it should not be liable because it was a foreign company and nearly all of the allegedly infringing sales happened in Europe.
The 10th Circuit decided that Abitron’s actions had a substantial effect on American commerce and “diverted tens of millions of dollars of foreign sales from Hetronic that otherwise would have ultimately flowed into the United States.”
President Joe Biden’s administration told the Supreme Court that Abitron should be liable only for its acts abroad that were likely to confuse consumers in the United States.
