9th Circuit Affirms Geographic Limits on Lanham Act Damages for U.S.-Made Goods Sold Exclusively Abroad

The Lanham Act empowers trademark owners to sue for infringement and recover damages when another party markets and sells products under a confusingly similar brand name. However, the Act’s reach is geographically limited by the sovereignty of foreign nations and does not extend extraterritorially. This principle was recently reinforced by the U.S. Supreme Court in Abitron Austria GmbH v. Hetronic International, Inc. (2023), which held that the Lanham Act’s trademark infringement provisions apply only to domestic commerce within the United States. Damages for infringement occurring abroad are not recoverable under U.S. law.

The practical implications of this limitation were tested in the Ninth Circuit’s recent decision in Doctor’s Best, Inc. v. Nature’s Way, LLC. The case involved a California-based company, Doctor’s Best, which manufactured and transported a line of nutritional supplements branded “Nature’s Day” within the United States but marketed and sold these products exclusively in China, South Korea, and Taiwan. Nature’s Way, a competitor with a federally registered trademark for “Nature’s Way” supplements sold throughout all 50 U.S. states, alleged that Doctor’s Best’s use of “Nature’s Day” infringed its trademark rights under the Lanham Act.

Doctor’s Best sought a declaratory judgment of non-infringement in the U.S. District Court for the Central District of California after Nature’s Way opposed Doctor’s Best’s trademark application for “Nature’s Day.” Nature’s Way counterclaimed for trademark infringement. Before any discovery was conducted, Doctor’s Best moved for summary judgment, submitting a declaration from a company executive stating that while the products were manufactured, bottled, labeled, and transported within the U.S., they were never marketed or sold domestically, nor were there plans to do so. The marketing channels for “Nature’s Day” were entirely separate from those used by Nature’s Way.

The district court applied the Supreme Court’s Abitron framework, first concluding that Doctor’s Best’s domestic manufacturing and transport qualified as a “use in commerce” under the Lanham Act. However, applying the Sleekcraft multi-factor test to assess likelihood of consumer confusion, the court found no genuine issue of material fact that Doctor’s Best’s domestic activities caused confusion among U.S. consumers, since the products were not sold or marketed in the U.S. The court denied Nature’s Way’s request for additional discovery and granted summary judgment in favor of Doctor’s Best.

On appeal, the Ninth Circuit panel conducted a de novo review and affirmed the district court’s ruling. The panel emphasized that the uncontroverted evidence showed no overlapping marketing channels or sales within the U.S. between the two brands. It agreed that no rational jury could find trademark infringement based on Doctor’s Best’s domestic manufacturing and transport when the products were marketed and sold exclusively abroad. Consequently, the court affirmed the declaratory judgment of non-infringement and dismissed Nature’s Way’s Lanham Act claims.

Judge Ikuta issued a special concurrence, agreeing with the outcome and the application of the Abitron precedent. She noted that while the domestic transport of the products constituted a use in commerce, the record did not support a finding that this caused a likelihood of confusion among U.S. consumers. She further agreed that under Abitron, courts should not consider consumer confusion occurring solely outside the U.S. when determining Lanham Act violations.

This decision underscores the extraterritorial limits of U.S. trademark law and highlights the necessity for trademark owners to secure and enforce their rights in foreign jurisdictions where their products are marketed and sold. Since the Supreme Court’s Abitron ruling, trademark holders have been advised to register and monitor their marks internationally rather than relying solely on U.S. courts for protection against overseas infringement.

The Ninth Circuit’s Doctor’s Best ruling clarifies that even if infringing products are manufactured domestically, damages under the Lanham Act will not be awarded if marketing and sales occur exclusively abroad. Trademark owners facing such scenarios must pursue remedies under the laws of the countries where the infringement takes place.

The author of this analysis is a California-based commercial and intellectual property litigator with over 40 years of experience in federal and state courts, currently practicing at Clark Hill’s San Diego office. Clark Hill provides comprehensive legal services in trademark, copyright, patent, and trade secrets disputes, supported by offices across the United States, Dublin, and Mexico City.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. It does not establish an attorney-client relationship. Readers should consult qualified counsel before taking any action based on this information. The views expressed are those of the author alone and do not necessarily reflect those of Clark Hill PLC.