Extraterritoriality and the Lanham Act

Two recent decisions by the Fourth and Ninth Circuits on issues of extraterritoriality could have a significant impact on Lanham Act litigation. These two cases are striking because of the contrasting extraterritoriality issues raised, their potential impact on future litigation – especially in the area of proving economic and reputational harm – and their potential impact on commerce.

In March 2016, the Fourth Circuit vacated the district court’s dismissal of Bayer’s unfair competition claims of false association and false advertising in Bayer V. Balmora. The appeals court held that Bayer was not required to use or register its trademark in the U.S. to pursue unfair competition claims under the Lanham Act.

In the second case, in August of 2016 the Ninth Circuit reversed a district court’s dismissal of a trademark infringement and unfair competition case under the Lanham Act in Trader Joe’s v. Hallatt. The district court had dismissed Trader Joe’s claims based on a finding  that federal courts lacked subject matter jurisdiction. The appeals court decision was based on a finding “that the extraterritorial reach of the Lanham Act raises a question relating to the merits of a trademark claim, not to federal courts’ subject matter jurisdiction.”

Both cases are now back with district courts, so the legal battles are far from over. However, the reasoning expressed by the appeals courts in these cases indicates that proving economic and reputational harm will be key requirements for plaintiffs to prevail under such claims.