Hetronic International, Inc. v. Hetronic Germany Gmbh

10 F.4th 1016 (10th Cir. 2021)

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Nature of the Case

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Facts

P sells and services its radio remote controls in over forty-five countries around the world. Ps products feature a distinctive black-and-yellow color scheme to distinguish them from those of its competitors. In 2006, P entered distribution and licensing agreements with Hydronic Steuersysteme GmbH, an Austrian corporation managed by Albert Fuchs. Hydronic came to distribute P's products in over twenty European countries. In 2007, P entered similar distribution and licensing agreements with a company that would eventually be purchased by D, a German corporation owned by Fuchs. D became P's principal distributor in Germany. The distribution and licensing agreements authorized D to assemble and sell P's remote controls under Ps brand, but they were required to purchase parts from P unless otherwise authorized in writing. D agreed to act in P's best interest and to protect P's confidential information. They also agreed not to compete with P. In September 2011 a D employee happened upon an old research-and-development agreement entered between P and D's predecessor. After consulting with legal counsel, D took the position that it owned all the technology developed under that agreement. D began reverse-engineering P's products. D began selling P-branded products that incorporated parts sourced from unauthorized third-parties. P terminated the licensing and distribution agreements. But D continued to sell P-branded products for several months. D began competing directly with P, selling the same NOVA and ERGO products with the exact same trade dress. In June 2014, P sued D alleging a breach of contract and claims under the Lanham Act and Oklahoma state tort law. The district court concluded that the forum-selection clause in P's agreements with D extended D's successors-in-interest. The district court ruled that the parties had purposefully availed themselves of a U.S. forum under Federal Rule of Civil Procedure 4(k)(2). Ds' argued that the court lacked subject-matter jurisdiction to resolve the Lanham Act claims because the conduct at issue occurred overseas. Ds asserted that the Lanham Act applies extraterritorially only if a defendant's conduct has a substantial effect on U.S. commerce. The jury returned a verdict for P and awarded over $115 million in damages, $96 million of which related to Ds' Lanham Act violations. After the trial, P moved for a permanent injunction to prohibit Defendants from further infringing its trademarks. The district court concluded that the Lanham Act reached Ds' foreign conduct. The court entered a permanent injunction order, enjoining Ds' infringing activities worldwide. Ds appealed. Ds argue as a threshold matter that the Act doesn't apply extraterritorially to their foreign conduct.