Trademark Law Meets the Metaverse - Can Courts Keep Up with Virtual Reality?

Do you know what happens when the legal system meets cutting-edge technology and global commerce? Well, we get cases like Abitron Austria GmbH v. Hetronic International. It’s a recent Supreme Court case that seems straightforward on the surface but raises a lot of intriguing questions—especially as we think about the future of commerce in the metaverse.  

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What in the [Meta]World?: Abitron Creates More Questions than Answers

About the author
Daniel M. Grigore
Carrie Richey

Transcript

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Do you know what happens when the legal system meets cutting-edge technology and global commerce? Well, we get cases like Abitron Austria GmbH v. Hetronic International. It’s a recent Supreme Court case that seems straightforward on the surface but raises a lot of intriguing questions—especially as we think about the future of commerce in the metaverse.  

Today, we’ll explore the Abitron decision, the Court’s divided ruling, and the growing significance of digital spaces like the metaverse in shaping legal considerations. 

Alright, let's start at the beginning. The case centers around Hetronic International, a U.S.-based company, and Abitron, one of its former partners operating in Europe. Hetronic designs and sells industrial remote controls—primarily in Europe—under trademarks registered in the United States.  

Things took a turn when Abitron claimed it owned Hetronic’s trademarks, broke away, and began manufacturing identical products under Hetronic’s name. Naturally, this led to a lawsuit. Hetronic filed a case under the Lanham Act, the U.S. trademark law, and was awarded around $96 million in damages.  

But here’s the kicker—Abitron’s infringements mostly occurred outside U.S. borders. That raises the big legal question in this case, which is whether U.S. trademark law can apply to activities occurring abroad if it doesn’t cause confusion in U.S. commerce.  

This case went all the way to the Supreme Court, which delivered a unanimous ruling that U.S. trademark law—specifically the Lanham Act—does not apply extraterritorially. But here's the twist. That unanimity was more fractured than it sounds.  

Justice Alito penned the majority opinion, joined by Justices Thomas, Gorsuch, Kavanaugh, and Jackson. On the other side, Justice Sotomayor, along with Chief Justice Roberts and Justices Kagan and Barrett, agreed on the result but strongly disagreed with how to interpret the Lanham Act’s reach.  

Here’s how this played out step-by-step:

Both sides agreed on the first step—there’s a general presumption that U.S. laws don’t apply outside its borders unless explicitly stated in the statute. The Lanham Act doesn’t clearly say anything about applying abroad, so it fails this first step.

The conflict came in step two. Justice Alito’s majority took a conduct-based approach, narrowing the Lanham Act’s application to cases where the infringing use occurred within the United States. Essentially, it focuses on where the conduct happens, not the resulting impact.  

Justice Sotomayor, however, brought a consumer-confusion focus into her concurring opinion. She argued that if activities—domestic or foreign—create consumer confusion in U.S. markets, then the Lanham Act should apply. This interpretation is more expansive and considers Congress’s intent to protect U.S. consumers and businesses.  

Justice Jackson, while falling in line with the majority's overall conduct-focused approach, offered a unique perspective by expanding how “use in commerce” could be understood. She suggested it could include any scenario where a trademark serves its source-identifying purpose for domestic commerce, even in intangible or virtual settings.

This split in reasoning highlights exactly why this case is more complex than it seems and why it sets the stage for future debates.

Now, what makes this even more fascinating is how these interpretations might apply to modern commerce—particularly online and in the metaverse.  

Let's take a step back. The metaverse, for those who don't know, is a shared virtual space that exists outside physical borders. It’s a place where virtual avatars transact, brands build digital storefronts, and trademarked items can appear in entirely intangible forms.  

Justice Jackson’s approach to “use in commerce” seems especially relevant here. After all, how do we define conduct in a virtual space where physical location is meaningless? Could a virtual designer handbag violate U.S. trademark law if it confuses a virtual user in the metaverse, even if the seller operates outside U.S. territory? These questions remain unanswered, and the Abitron decision doesn’t simplify matters.

Justices Sotomayor and Jackson also hinted at the challenges the internet and globalized digital markets pose to traditional legal frameworks. They acknowledged that the Lanham Act, which was written long before digital commerce existed, doesn’t adequately consider how trademark law should operate in these spaces.

The bigger picture? Abitron underscores the slow pace at which the legal system adapts to technological advancements.  

With the rise of virtual realities, AI, and globally integrated platforms, existing laws often fall short. And it’s not just trademark law. This dilemma extends to data privacy, intellectual property, and even antitrust law. The metaverse, specifically, challenges the idea of boundaries altogether.  

To move forward, there’s a need for both judicial clarity and legislative action. Courts must refine legal standards for applying existing laws to digital contexts. At the same time, lawmakers should start filling the gaps by creating frameworks designed with modern technology in mind. 

To sum up, while the Abitron case seemingly offers a simple answer—limiting the scope of U.S. trademark law to domestic transactions—it leaves us with several complex questions about global commerce, consumer protection, and virtual transactions.

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

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