Because the harm occurs domestically, the plan’s a domestic application of the Lanham Act

//DH

THE LANHAM ACT PASSES THE SECOND STEP OF THE RJR NABISCO TEST BECAUSE PREVENTING FOREIGN CONDUCT THAT CAUSES DOMESTIC CONFUSION OR INJURES DOMESTIC REPUTATION IS A PERMISSIBLE DOMESTIC APPLICATION OF THE LANHAM ACT.

Alternatively, if in deciding step one of the RJR Nabisco test the Court rules that the Lanham Act does not rebut the presumption against extraterritoriality, then it proceeds to step two and asks:

[W]hether the case involves a domestic application of the statute, and we do this by looking to the statute’s “focus.” If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then impermissible the case extraterritorial involves an application regardless of any other conduct that occurred in U.S. territory.

RJR Nabisco, 579 U.S. at 337. This rubric raises two component questions: first, what is the relevant conduct, and second, what is the focus of the Lanham Act.

2.1 Because Steele was based on reputational injury in the U.S., it reflects permissible domestic application of the Lanham Act.

Importantly, although Steele is widely cited as supporting “extraterritorial” application of the Lanham Act, the Court relied heavily on the domestic impact of Steele’s foreign conduct. The counterfeit watches filtered back into the U.S., causing injury to Bulova’s reputation in the U.S. Moreover, the Steele Court did not make a broad pronouncement that the Lanham Act has extraterritorial effect in all circumstances. Instead, it held that “[i]n the light of the broad jurisdictional grant in the Lanham Act, we deem its scope to encompass petitioner’s activities here.” Id. at 286. (Emphasis added).

Accordingly, Steele may be interpreted in the light of the RJR Nabisco rubric either as a limited extraterritorial application, or as an example of “permissible domestic application” of the Lanham Act without contradicting Steele’s precise holding. Compare WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct. 2129, 2137-38 (2018) (finding, based on the Patent Act’s focus on domestic conduct of exporting from the U.S. certain non-staple components, that a recovery of profits from the resulting foreign sales was a “permissible domestic application” under RJR Nabisco). The requirement of cases such as Vanity Fair and its variants that the foreign conduct must have a substantial impact on U.S. commerce, see Section 2.4, infra, is sufficient to confine the Lanham Act to “permissible domestic applications,” and thereby allow the Court to preserve seventy years of jurisprudence interpreting Steele.

2.2 Preventing domestic consumer confusion and reputational injury is a “permissible domestic application” of the Lanham Act.

Both the cause and the effect of confusion are “conduct relevant to the focus” of the Lanham Act. RJR Nabisco, 579 U.S. at 337. A statute’s focus “is the object of its solicitude, which can include the conduct it seeks to regulate, as well as the parties and interests it seeks to protect or vindicate.” WesternGeco, 138 S. Ct. at 2137 (internal quotation marks omitted) (quoting Morrison, 561 U.S. at 267) (emphasis added). The “object of the [Lanham Act’s] solicitude” is the prevention of various harmful effects, including consumer confusion and injury to the trademark owner’s goodwill. Therefore the “relevant conduct” within the RJR Nabisco formulation is not only the cause of the injury, but also its effect, i.e., the injury (such as confusion or injury to reputation).3

It follows that if foreign conduct causes an effect within the U.S., “then the case involves a permissible domestic application even if other conduct occurred abroad.” RJR Nabisco, 579 U.S. at 337. However, when foreign conduct causes only foreign injury, e.g., only confusion of foreign consumers, then there is no “relevant conduct” in the U.S. and application of the Lanham Act would be

impermissible.

Consequently, a ruling by this Court that the Lanham Act does not rebut RJR Nabisco’s step one presumption against extraterritoriality would not undermine the vast majority of Lanham Act decisions that grant an extraterritorial remedy where foreign conduct caused substantial trademark injury in the U.S. If a Lanham Act claim is brought to prevent domestic trademark-related injury, then it would be a “permissible domestic application” of the statute. And this would be true even if the Lanham Act does not qualify under step one of the RJR Nabisco test.