Is There a New Extraterritoriality in Intellectual Property?
Timothy R. Holbrook
INTRODUCTION
Intellectual property (IP) rights are creatures of national law. Individual countries define and enforce them. These exclusive rights are also territorially limited and thus generally do not extend outside of the country that has provided the rights. Instead, they are limited to activities within the country.
At least, that is how the situation would appear by reading various national statutes and international treaties. The reality is far more complex. In the global marketplace, such territorial rights do not map onto the commercial realities of many companies. Their products, services, and activities routinely cross borders, and some networked systems straddle territorial lines. Just think of the internet — its virtual tentacles extend across borders and around the world. Given the global marketplace and the intangible-yetterritorial nature of intellectual property rights, IP sits squarely in the middle of concerns about extraterritoriality. The patchwork of national rights can be ill-fitting to protect products that travel the world and systems that reach into multiple countries. Right holders are faced with knitting together a patchwork of IP rights across various countries. Ensuring a complete tapestry in such a framework can be difficult. It is unsurprising, then, that IP owners attempt to leverage the rights in one country into the markets of another country, thereby applying those exclusive rights extraterritorially.
Within the United States, applying US law to activities in other countries is disfavored by the courts. This principle transcends intellectual property law and applies generally to all laws. The US Supreme Court has long articulated a presumption against the extraterritorial application of US law. This is not to say that Congress does not have the power to make US law apply outside of the US territorial boundaries. It is well settled that Congress has such power, particularly as it relates to US citizens. Nevertheless, extending US law to foreign acts creates a host of complications, particularly as an affront to the sovereignty of the country within which the relevant activity is taking place. Given the political dimensions of extraterritoriality, courts tread lightly when deciding to apply US law to foreign acts, generally requiring a clear expression of Congressional intent.
Even though the presumption against extraterritoriality is long-standing in American jurisprudence, the courts have applied it inconsistently. In recent years, the Supreme Court has sought to reinvigorate the presumption and harmonize its use across all areas of law. Patent law has been a key driver of the evolution of this presumption in the Court. The use of patent law as a lever for this development is somewhat surprising because patent law is generally viewed as the most territorial of the three main federal forms of IP protection (the other two being copyright and trademark). Nevertheless, patent cases have been central to the work the Court has done with respect to the presumption. The full impact of the Supreme Court’s cases in the patent context is still unfolding at the US Court of Appeals for the Federal Circuit, the court that hears all appeals arising under the patent laws of the United States.
But what impact has this line of cases had on the other areas of intellectual property? Given the Court’s efforts to create a trans-substantive presumption, has a more uniform approach to extraterritoriality emerged across these three IP regimes, or does the law remain fractured? And, if the law is fractured, could that nevertheless be the correct answer given the unique policies underlying each of these areas of IP?
This Article is the first to comprehensively interrogate the impact of the Supreme Court’s recent interventions in extraterritoriality as it relates to the three historical forms of federal intellectual property: patent, copyright, and trademark. In this manner, it fills an important gap in the literature because most assessments of the presumption focus only on one area of law. Moreover, this Article offers a novel comparative assessment of the evolution of the presumption across the patent, copyright, and trademark regimes, offering both a descriptive account of the state and evolution of the law, as well as a normative assessment of whether the current state of the law best effectuates the policies that justify these forms of protection.
In reviewing the application of the Supreme Court’s recent jurisprudence in these three areas of intellectual property, the Article concludes that the Supreme Court’s effort to standardize the law of extraterritoriality has failed. Lower courts’ engagement with the presumption has been, at best, inconsistent. There are times where the courts simply ignore the Court’s recent cases, relying on previous cases and doctrine without pausing to reconsider whether those doctrines survive the Supreme Court’s latest changes to the law. The Article also concludes that this inconsistency cannot be justified based on the differing policies surrounding copyright, trademarks, and patents.
This Article proceeds as follows. Part I discusses the state of the law of extraterritoriality in copyright, trademark, and patent, as it stood before the Supreme Court’s recent intervention. This review demonstrates that all three disciplines were treating extraterritoriality very differently, and none were paying much attention to the presumption against extraterritoriality. Part II reviews a tetralogy of recent Supreme Court cases, describing the Court’s attempt to formalize its approach to extraterritoriality across all fields of law. Part III analyzes the state of IP law in the aftermath of this tetralogy of extraterritoriality cases. It concludes that there has been some impact on patent law, but virtually none on copyright or trademark. The Article assesses whether there is a new extraterritoriality for intellectual property and concludes that there is not: The Supreme Court’s efforts, at least in IP, have not led to greater coherence. While there may be reasons for the lower courts’ failure to follow the framework, it does represent a missed opportunity for cross-fertilization, at least among intellectual property regimes, if not across all fields of law. It also offers a call for the consideration of comity — looking to foreign law and potential conflicts — in deciding whether to apply US law extraterritorially.
I. THE LANDSCAPE: EXTRATERRITORIALITY IN INTELLECTUAL PROPERTY BEFORE THE SUPREME COURT’S RECENT INTERVENTIONS
Issues of extraterritoriality in intellectual property are not new. Each form of intellectual property has wrestled with how to deal with extraterritorial or transborder infringement issues. Nevertheless, these issues have come to the fore in the modern era with the global trading system and technologies such as software, digital products, and the internet, all of which have reduced the power of national borders as barriers to trade. This Part reviews the law of extraterritoriality that developed, before the Supreme Court’s recent interventions, in each of the three federal forms of IP protection: trademark, copyright, and patent.
A. TRADEMARK’S HISTORICAL EXTRATERRITORIAL REACH
Trademark is concerned with commerce, which includes regulation of “commerce with foreign nations.” As such, the nature of the rights and the policies implicated by trademark can differ from those of patent and copyright. Whereas patent and copyright are justified in the United States primarily on utilitarian grounds, providing exclusive rights to prevent free riding on another’s invention or writing, trademark law balances consumer protection, producers’ goodwill, and market competition. Given these foci, and Congress’s express power to regulate commerce with foreign nations, trademark law is positioned for increased extraterritorial consideration.
Indeed, trademarks have long had extraterritorial reach under Supreme Court precedent. As Graeme W. Austin noted, “[o]f the major intellectual property rights, trademark rights have long been the most susceptible to extraterritorial application.” The reputation of a mark could easily cross borders, allowing American consumers to be familiar with a foreign trademark. In contrast to patent and copyright, the extraterritorial reach of the Lanham Act has never been controlled by a locus analysis in which a court identifies the location of the act of infringement. Instead, the focus has been on the effect infringement may have on commerce.
The seminal Supreme Court decision as to the extraterritorial reach of the Lanham Act is Steele v. Bulova Watch Co. The case, even after nearly 70 years, remains the key precedent in assessing extraterritoriality in the trademark area. The Supreme Court has not overruled Bulova, even though its recent engagement with the presumption against extraterritoriality is arguably in tension with it.
In Bulova, the trademark owner asserted infringement against a US citizen who was selling counterfeit watches in Mexico. Although at one point the accused infringer had a trademark registration in Mexico for the mark “Bulova,” the Mexican government revoked it prior to the Supreme Court’s decision. A number of the counterfeit watches made their way back into the United States, particularly along the Texas–Mexico border. However, most of the alleged infringement took place in Mexico and not in the United States.
The Supreme Court concluded that a US court could hear the case under US trademark law. The Court held that, under these facts, jurisdiction was appropriate, permitting the extraterritorial application of federal trademark law in the infringement context. The Court noted that the Lanham Act “confers broad jurisdictional powers upon the courts of the United States,” and concluded that Congress’s definition of “commerce” in the Act encompasses “all commerce which may lawfully be regulated by Congress,” including extraterritorial conduct. In holding that US law applied, the Court recognized that Congress has the power to regulate US citizens wherever they may be in the world. The Court also concluded that the infringer’s “operations and their effects were not confined within the territorial limits of a foreign nation”; instead, there were effects within the United States. Finally, the Court found no conflict with foreign law because the Mexican courts had rescinded the accused infringer’s Mexican trademark registration.
In so holding, the Court did not reference the presumption and seemingly did not apply it. Indeed, the Court decided Bulova during a period when it generally was not applying the presumption. The dissent called out this oversight, articulating that federal law generally only applies domestically absent a contrary Congressional intent. The dissent did not find the requisite intent to justify extending the Lanham Act extraterritorially. Nevertheless, the majority’s holding and reasoning continue to be influential today.
— from Is There a New Extraterritoriality in Intellectual Property? 44 Columbia Journal of Law & the Arts 457