Hetronic International, Inc. v. Hetronic Germany Gmbh

PUBLISH
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
_________________________________
HETRONIC INTERNATIONAL, INC.,
Plaintiff - Appellee,
v.
HETRONIC GERMANY GMBH;
HYDRONIC-STEUERSYSTEME GMBH;
ABI HOLDING GMBH; ABITRON
GERMANY GMBH; ABITRON
AUSTRIA GMBH; ALBERT FUCHS,
Defendants - Appellants.
Nos. 20-6057 & 20-6100
_________________________________
Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 5:14-CV-00650-F)
_________________________________
Geren T. Steiner (Anton J. Rupert and Mack J. Morgan with him on the briefs), of
Rupert, Steiner & Morgan PLLC, Oklahoma City, Oklahoma, for Defendants-Appellants.
Debbie L. Berman (Wade A. Thomson and Matthew S. Hellman with her on the brief), of
Jenner & Block LLP, Chicago, Illinois, for Plaintiff-Appellee.
_________________________________
Before PHILLIPS, MURPHY, and McHUGH, Circuit Judges.
_________________________________
PHILLIPS, Circuit Judge.
_________________________________
Hetronic International, Inc., a U.S. company, manufactures radio remote
controls—the kind used to remotely operate heavy-duty construction equipment
FILED
United States Court of Appeals
Tenth Circuit
August 24, 2021
Christopher M. Wolpert
Clerk of Court
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 1

-- 1 of 67 --

2
(think cranes). Defendants, none of whom are U.S. citizens, distributed Hetronic’s
products, mostly in Europe. That relationship worked well for nearly a decade. But
then one of Defendants’ employees stumbled across an old research-and-development
agreement between the parties. Embracing a creative legal interpretation of the
agreement endorsed by Defendants’ lawyers, Defendants concluded that they—not
Hetronic—owned the rights to Hetronic’s trademarks and other intellectual property.
That caused some tension in the relationship. Defendants began manufacturing
their own products—identical to Hetronic’s—and selling them under the Hetronic
brand, mostly in Europe. They even kept the same product names. Hetronic
terminated the parties’ distribution agreements, but that didn’t stop Defendants from
making tens of millions of dollars selling their copycat products (which they continue
to sell today). Defendants attempted a brief foray into the U.S. market but backed off
after Hetronic sued them.
Hetronic asserted numerous claims against Defendants, but we’re here
concerned almost exclusively with its trademark claims under the Lanham Act. A
jury sitting in the Western District of Oklahoma awarded Hetronic over $100 million
in damages, most of which related to Defendants’ trademark infringement. Then on
Hetronic’s motion, the district court entered a worldwide injunction barring
Defendants from selling their infringing products. Defendants have ignored the
injunction.
In the district court and now on appeal, Defendants have focused on one
defense in particular: Though they accept that the Lanham Act can sometimes apply
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 2

-- 2 of 67 --

3
extraterritorially, they insist that the Act’s reach doesn’t extend to their conduct,
which generally involved foreign defendants making sales to foreign consumers. Our
circuit has yet to grapple with that question. After considering the Supreme Court’s
lone decision on the issue and persuasive authority from our sibling circuits, we
conclude that the district court properly applied the Lanham Act to Defendants’
conduct. But we narrow the district court’s expansive injunction. And so, exercising
jurisdiction under 28 U.S.C. § 1291, we affirm in part, reverse in part, and remand
for further consideration consistent with this opinion.
BACKGROUND
I. Factual Background
Hetronic sells and services its radio remote controls in over forty-five
countries around the world. Though Hetronic offers a wide range of radio remote
controls, the parties’ dispute centers on ten of those products: ERGO, EURO, GL,
GR, HH, MINI, NOVA, Pocket, TG, and RX. Hetronic’s products feature a
distinctive black-and-yellow color scheme to distinguish them from those of its
competitors:
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 3

-- 3 of 67 --

4
Appellants’ App. vol. 7 at 1615–16, 1644.
Hetronic markets and distributes its radio remote controls through a worldwide
network of wholly-owned subsidiaries and distributors. In 2006, Hetronic entered
distribution and licensing agreements with Hydronic Steuersysteme GmbH, an
Austrian corporation managed by Albert Fuchs. In time, Hydronic came to distribute
Hetronic’s products in over twenty European countries. In 2007, Hetronic entered
similar distribution and licensing agreements with a company that would eventually
be purchased by Hetronic Germany GmbH, a German corporation owned by Fuchs.
Hetronic Germany became Hetronic’s principal distributor in Germany.
The distribution and licensing agreements authorized Hydronic and Hetronic
Germany to assemble and sell Hetronic’s remote controls under Hetronic’s brand, but
they were required to purchase parts from Hetronic unless otherwise authorized in
writing. Further, the two distributors agreed to act in Hetronic’s best interest and to
protect Hetronic’s confidential information. They also agreed not to compete with
Hetronic. They abided by those conditions without issue through much of 2011.
September 2011 marked the beginning of the end of Hetronic’s business
relationship with Hetronic Germany and Hydronic. That month, a Hetronic Germany
employee happened upon an old research-and-development agreement entered
between Hetronic and Hetronic Germany’s predecessor. After consulting with legal
counsel, Hetronic Germany took the position that it owned all the technology
developed under that agreement (more on that later).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 4

-- 4 of 67 --

5
Based on that understanding, Hetronic Germany and Hydronic began reverse-
engineering Hetronic’s products. One of Hetronic Germany’s former employees
testified by deposition that he used Hetronic-manufactured parts to try to “recreate
the model . . . so that no difference could be seen.” Id. at 1631. Once they developed
these new, copycat parts (what they referred to as “KH” parts, id.), Hetronic
Germany and Hydronic sought out new suppliers to source them. Eventually, both
Hetronic Germany and Hydronic began selling Hetronic-branded products that
incorporated KH parts sourced from unauthorized third-parties.
In 2014, a whistleblower who had worked for Hetronic Germany told Hetronic
what had been going on the past few years. That June, once Hetronic understood the
scope of Hetronic Germany and Hydronic’s activities, it terminated their licensing
and distribution agreements. But both distributors continued to sell Hetronic-branded
products for several months.
Around the same time, Fuchs used an Austrian company he owned, ABI
Holding GmbH, to incorporate two new companies, Abitron Germany GmbH and
Abitron Austria GmbH. Abitron Austria purchased Hydronic in August 2014;
Abitron Germany purchased Hetronic Germany the following month. They soon
began competing directly with Hetronic, selling the same NOVA and ERGO products
with the exact same trade dress (compared below).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 5

-- 5 of 67 --

6
Id. at 1644. Before this litigation ensued, they sold several hundred thousand dollars’
worth of products in the United States.
II. Procedural Background
In June 2014, Hetronic sued Hetronic Germany and Hydronic in the Western
District of Oklahoma, alleging breach of contract. In 2015, Hetronic filed an
amended complaint that added as defendants Fuchs, ABI, Abitron Austria, and
Abitron Germany. The amended complaint also added new claims under the Lanham
Act and state tort law.
Two motions to dismiss soon followed, one filed by the Abitron companies
and the other by ABI and Fuchs. Each motion argued that the district court lacked
personal jurisdiction over the relevant Defendants. The district court denied both
motions. First, the district court concluded that the forum-selection clause in
Hetronic’s agreements with Hetronic Germany and Hydronic extended to both
Abitron Germany and Abitron Austria as Hetronic Germany’s and Hydronic’s
successors-in-interest. Second, the district court denied ABI and Fuchs’s motion
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 6

-- 6 of 67 --

7
because it concluded that they had purposefully availed themselves of a U.S. forum
under Federal Rule of Civil Procedure 4(k)(2).
Hetronic then filed a Second Amended Complaint, and both sides moved for
summary judgment. Though the district court granted Hetronic’s motion on
Defendants’ counterclaims, it otherwise denied the motion.
Defendants’ motion argued that the court lacked subject-matter jurisdiction to
resolve Hetronic’s Lanham Act claims because the conduct at issue occurred
overseas. Specifically, Defendants asserted that the Lanham Act applies
extraterritorially only if a defendant’s conduct has a substantial effect on U.S.
commerce; because that was allegedly lacking here, Defendants maintained that
Hetronic’s claims had to be dismissed. The district court rejected that argument and
denied Defendants summary judgment based on their extraterritoriality defense.
While Defendants played defense in federal district court, they sought to go on
offense in the European Union. In July 2015, Abitron Germany sought a “declaration
of invalidity” from the European Union Intellectual Property Office (EUIPO) that
would nullify Hetronic’s “NOVA” trademark in the EU. Id. vol. 13 at 3106–07, 3171.
The Cancellation Division—the initial EUIPO tribunal to consider the request—
rejected Abitron Germany’s claim. Abitron Germany appealed, but the Board of
Appeal affirmed. The Board concluded that Hetronic owned all the disputed
intellectual property.
Based on that ruling, Hetronic moved for summary judgment on Defendants’
defense that they owned the disputed intellectual property, arguing that the doctrine
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 7

-- 7 of 67 --

8
of issue preclusion barred Defendants from relitigating that question. After briefing
and two hearings, the district court granted Hetronic’s motion, concluding that the
EUIPO proceeding afforded Defendants a full and fair opportunity to adjudicate the
merits of the ownership dispute.
About a week later, the eleven-day jury trial began. The jury returned a verdict
for Hetronic on all counts, finding that Defendants had willfully infringed Hetronic’s
trademarks. The jury awarded Hetronic over $115 million in damages, $96 million of
which related to Defendants’ Lanham Act violations.
After the trial, Hetronic moved for a permanent injunction to prohibit
Defendants from further infringing its trademarks. In opposing the injunction,
Defendants reasserted their contention that the court lacked jurisdiction under the
Lanham Act to enjoin Defendants’ foreign activities. Applying the facts established
at trial, the district court concluded that the Lanham Act reached Defendants’ foreign
conduct. The court granted Hetronic’s motion and entered a permanent injunction
order, enjoining Defendants’ infringing activities worldwide.
This appeal followed.
DISCUSSION
Defendants raise numerous issues on appeal. First, Defendants argue that the
district court erroneously exercised personal jurisdiction over four of the six
defendants. Second, Defendants argue that the district court erred in concluding that
the Lanham Act applied extraterritorially to reach their foreign activities. Third,
Defendants argue that the district court erred when it ruled that issue preclusion
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 8

-- 8 of 67 --

9
barred them from asserting at trial that they owned the disputed intellectual property.
Fourth, Defendants argue that the district court made several erroneous evidentiary
rulings at trial. We address each argument in turn.
I. Personal Jurisdiction
Defendants have never disputed the district court’s exercise of personal
jurisdiction over Hetronic Germany and Hydronic, which derived from a forum-
selection clause in the parties’ distribution and licensing agreements. That clause
designates Oklahoma as the forum for all disputes. But Defendants challenge the
district court’s exercise of personal jurisdiction over the Abitron entities, ABI, and
Fuchs. Following the parties’ lead, we first address the court’s personal jurisdiction
over Abitron Germany and Abitron Austria and then consider its jurisdiction over
Fuchs and ABI.
We review de novo a district court’s exercise of personal jurisdiction,
ClearOne Commc’ns, Inc. v. Bowers, 651 F.3d 1200, 1214 (10th Cir. 2011) (footnote
and citation omitted), and we consider each defendant separately, Newsome v.
Gallacher, 722 F.3d 1257, 1265–66 (10th Cir. 2013) (citation omitted). “The plaintiff
has the burden of proving that the court has jurisdiction.” Compañía de Inversiones
Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 970 F.3d 1269,
1281 (10th Cir. 2020) (citation omitted), cert. denied, No. 20-1033, 2021 WL
2519105 (2021).
When the district court evaluates personal jurisdiction “based only on the
complaint and affidavits, ‘a prima facie showing of personal jurisdiction’ is
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 9

-- 9 of 67 --

10
sufficient.” Niemi v. Lasshofer, 770 F.3d 1331, 1347 (10th Cir. 2014) (quoting
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir.
2008)). Because the district court here assessed personal jurisdiction based only on
the complaint and affidavits—and because Defendants never challenge the
jurisdictional facts upon which the district court based its rulings—we consider only
whether Hetronic made a prima facie showing of personal jurisdiction. See id.
A. Abitron Companies
Though Abitron Germany and Abitron Austria weren’t parties to Hetronic’s
distribution and licensing agreements with Hetronic Germany and Hydronic, the
district court nevertheless concluded that the forum-selection clauses in those
agreements bound both Abitron entities. According to the district court, Abitron
Austria and Abitron Germany were Hydronic’s and Hetronic Germany’s successors-
in-interest. We agree.
In assessing personal jurisdiction, we have acknowledged that “[a]
corporation’s contacts with a forum may be imputed to its successor. . . .” Williams v.
Bowman Livestock Equip. Co., 927 F.2d 1128, 1132 (10th Cir. 1991) (citation
omitted). But our Circuit has yet to address the specific issue here: whether a
successor corporation is bound by its predecessor’s contractual waiver of personal
jurisdiction through a forum-selection clause.
Courts that have considered this question “have uniformly found that it is
consistent with due process to impute a corporation’s waiver of personal jurisdiction
to its successor . . . for the same reasons that imputation of jurisdictional contacts is
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 10

-- 10 of 67 --

11
appropriate.” Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 654 & n.19
(5th Cir. 2002) (collecting cases); cf. Purdue Rsch. Found. v. Sanofi-Synthelabo, S.A.,
338 F.3d 773, 783–84 (7th Cir. 2003) (distinguishing between “a corporate
successor,” whose contacts may be attributed to a predecessor, and “an assignee of a
contract,” whose contacts generally shouldn’t be attributed to the assignor). Under
this theory of personal jurisdiction, we ask whether the successor is a “mere
continuation” of the predecessor. Patin, 294 F.3d at 654 (“The premise underlying
the ‘mere continuation’ exception to the rule against successor liability is that the
successor corporation is, in fact, the same corporate entity as the predecessor
corporation, simply wearing a ‘new hat.’” (citations omitted)).
To start, we must first answer the threshold question whether Abitron Austria
and Abitron Germany are in fact successors-in-interest of Hydronic and Hetronic
Germany, respectively. To decide that question, we look to the law of the forum
state—here, Oklahoma. See Williams, 927 F.2d at 1132. Under Oklahoma law, “[t]he
general rule . . . is that where one company sells or otherwise transfers all its assets to
another company, the latter is not liable for the debts and liabilities of the transferor.”
Pulis v. U.S. Elec. Tool Co., 561 P.2d 68, 69 (Okla. 1977); see also Flores v. U.S.
Repeating Arms Co., 19 F. App’x 795, 797 (10th Cir. 2001) (unpublished) (applying
Oklahoma law). But Oklahoma’s courts have recognized four exceptions to that
general rule:
(1) Where there is an agreement to assume such debts or liabilities[;]
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 11

-- 11 of 67 --

12
(2) Where the circumstances surrounding the transaction warrant a
finding that there was a consolidation or merger of the corporations[;] or
(3) that the transaction was fraudulent in fact[;] or
(4) that the purchasing corporation was a mere continuation of the selling
company.
Pulis, 561 P.2d at 69 (citations omitted). Only the fourth exception applies here.
Under the “mere continuation” exception, “the test is not whether there is a
continuation of business operations, but whether there is a continuation of the
corporate entity.” Crutchfield v. Marine Power Engine Co., 209 P.3d 295, 301 (Okla.
2009) (footnote omitted). To assess whether the corporate entity has been continued,
Oklahoma courts consider (1) “whether there is a common identity of directors,
officers, and stockholders before and after the sale,” (2) “whether there was good
consideration for the sale,” and (3) “whether the seller corporation continues to exist
in fact.” Id. (footnote omitted). Concerning the third factor, “[t]he bare de jure
existence of the seller corporation after the sale is insufficient alone to establish that
the successor corporation is not a mere continuation of the seller company.” Id. at
301–02 (footnote omitted).
These factors weigh heavily in favor of concluding that the Abitron entities are
Hydronic’s and Hetronic Germany’s successors-in-interest. The analysis is the same
for both companies under the first and third factors. Starting with the first factor,
Defendants don’t contest that Fuchs owns all four companies. Nor do they contest the
district court’s finding that “the Abitron entities are using the same facilities,
management, employees, customer lists, and product mark and dress as H[etronic]
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 12

-- 12 of 67 --

13
Germany and Hydronic.” Appellants’ App. vol. 1 at 122–23. Further, Hetronic
Germany’s former CEO became the CEO of both Abitron companies.
On the third factor, though the seller corporations continue to exist in fact,
their “bare de jure existence” carries little weight. Crutchfield, 209 P.3d at 301–02.
Almost all of Hydronic’s and Hetronic Germany’s assets were transferred to the
Abitron entities, with only “a small amount being left for the purposes of satisfying
debt with Hetronic International.” Appellants’ App. vol. 1 at 122.
The analysis on the second prong—whether there was good consideration for
the sale—is less straightforward. Abitron Germany purportedly paid €3 million1 to
purchase Hetronic Germany. But no funds were exchanged when the sale closed, and
ABI loaned Abitron Germany the money to complete the sale. As for the sale of
Hydronic to Abitron Austria, the parties provide no information about the purchase’s
details. So we can’t assess the second prong as to Abitron Austria.
But even if we concluded that the second factor cuts against finding that the
Abitron companies are successors-in-interest (and it isn’t clear that it does),
Oklahoma courts weigh all three factors in deciding this issue. See Pulis, 561 P.2d at
71–72. At least two of those three factors weigh against Defendants. Considering the
three factors collectively, particularly the common identity of directors, officers, and
stockholders before and after the sale, we hold that the Abitron companies constitute
1 €3 million refers to 3 million euros. Though the exchange rate varies, 3
million euros currently equates to about $3.54 million. See Foreign Exchange Rates –
H.10, Board of Governors of the Federal Reserve System,
https://www.federalreserve.gov/releases/h10/current/ (last visited July 29, 2021).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 13

-- 13 of 67 --

14
a “mere continuation” of Hydronic and Hetronic Germany and are therefore
successors-in-interest under Oklahoma law. See Crutchfield, 209 P.3d at 301.
And because the Abitron entities are mere continuations of Hetronic Germany and
Hydronic, the district court rightly concluded that the forum-selection clause in the
parties’ licensing agreements bound both Abitron Germany and Abitron Austria.2 See
Patin, 294 F.3d at 654. Consequently, the district court properly exercised personal
jurisdiction over both companies.
B. Fuchs and ABI
The district court ruled that it could exercise personal jurisdiction over Fuchs
and ABI under Federal Rule of Civil Procedure 4(k)(2). Rule 4(k)(2) states that
For a claim that arises under federal law, serving a summons or filing a
waiver of service establishes personal jurisdiction over a defendant if:
2 Defendants appear to argue that the forum-selection clauses don’t bind them
because Hetronic sued them only after terminating the licensing agreements. Our
circuit hasn’t addressed that issue, but the Supreme Court “presume[s] as a matter of
contract interpretation that . . . parties d[o] not intend a pivotal dispute resolution
provision to terminate for all purposes upon the expiration of [an] agreement.” Litton
Fin. Printing Div., a Div. of Litton Bus. Sys., Inc. v. N.L.R.B., 501 U.S. 190, 208
(1991). Though Litton related to arbitration clauses in the collective-bargaining
context, our sibling circuits that have considered this question agree that dispute-
resolution clauses generally may be enforced even after an agreement is terminated.
Silverpop Sys., Inc. v. Leading Mkt. Techs., Inc., 641 F. App’x 849, 857 (11th Cir.
2016) (unpublished) (“While contractual obligations may expire upon the termination
of a contract, provisions that are structural (e.g., relating to remedies and the
resolution of disputes) may survive that termination.” (emphasis added) (citations
omitted)); U.S. Smoke & Fire Curtain, LLC v. Bradley Lomas Electrolok, Ltd., 612
F. App’x 671, 672–73 (4th Cir. 2015) (unpublished) (“Generally, dispute-resolution
provisions, such as forum-selection clauses, are enforceable beyond the expiration of
the contract if they are otherwise applicable to the disputed issue and the parties have
not agreed otherwise.” (citations omitted)).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 14

-- 14 of 67 --

15
(A) the defendant is not subject to jurisdiction in any state’s courts
of general jurisdiction; and
(B) exercising jurisdiction is consistent with the United States
Constitution and laws.
Fed. R. Civ. P. 4(k)(2). Under this rule, which has been described as a kind of federal
long-arm statute, a court may exercise personal jurisdiction over a foreign defendant
if (1) the “plaintiff’s claims arise under federal law”; (2) “the defendant is not subject
to the jurisdiction of any state court of general jurisdiction”; and (3) “the plaintiff can
show that the exercise of jurisdiction comports with due process.” CGC Holding Co.
v. Hutchens, 974 F.3d 1201, 1208 (10th Cir. 2020) (citing Grupo Cementos, 970 F.3d
at 1281 n.1).
Defendants don’t dispute that Hetronic’s claims arise under federal law; their
arguments focus on the second and third elements. On the second element,
Defendants indirectly argue that the district court failed to properly consider whether
they were subject to the jurisdiction of other states’ courts besides Oklahoma. See
Appellants’ Opening Br. at 53 (faulting the district court because it “actually
considered contacts with other forums (Nevada, Massachusetts) that might have been
proper forums, but made no determination as to same” (citation omitted)).
Defendants imply that the district court was required to conduct a sua sponte analysis
of all fifty states—or at least Nevada and Massachusetts—to assess whether Rule
4(k)(2)’s requirements had been satisfied.
It’s true that subsection A of Rule 4(k)(2) could be read to require a plaintiff to
conduct a state-by-state assessment showing that the defendant isn’t subject to any
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 15

-- 15 of 67 --

16
state’s courts of general jurisdiction. But we recently joined the majority of circuits
that have rejected that reading of the rule: “Every other circuit court [besides the First
and Fourth Circuits] to consider the issue has placed the initial burden on the
defendant to identify a state in which the lawsuit could proceed.” Grupo Cementos,
970 F.3d at 1283 (citations omitted). We adopted the Seventh Circuit’s reasoning on
this point:
Now one might read Rule 4(k)(2) . . . [as] requiring 51 constitutional
decisions: The court must first determine that the United States has power
and then ensure that none of the 50 states does so . . . . Constitutional
analysis for each of the 50 states is eminently avoidable by allocating
burdens sensibly. A defendant who wants to preclude use of Rule 4(k)(2)
has only to name some other state in which the suit could proceed.
Naming a more appropriate state would amount to a consent to personal
jurisdiction there (personal jurisdiction, unlike federal subject-matter
jurisdiction, is waivable). If, however, the defendant contends that he
cannot be sued in the forum state and refuses to identify any other where
suit is possible, then the federal court is entitled to use Rule 4(k)(2).
Id. at 1283–84 (quoting ISI Int’l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548,
552 (7th Cir. 2001)).
Defendants never argued in the district court that some other state’s courts
could exercise personal jurisdiction over them. So they have forfeited any challenge
along those lines. Grupo Cementos, 970 F.3d at 1282. Even on appeal, they never
argue that Nevada or Massachusetts could exercise personal jurisdiction over them.
Rather, they merely allege that the district court erred by not considering those states
in assessing Rule 4(k)(2)’s applicability. But as our caselaw makes clear, the district
court wasn’t required to consider all 50 states (or even two states that a defendant
merely alludes to). By failing to point to some other state that could exercise personal
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 16

-- 16 of 67 --

17
jurisdiction over them, Defendants conceded that Hetronic satisfied the second
element to establish personal jurisdiction under Rule 4(k)(2).
Finally, Hetronic has satisfied the third element by demonstrating that the
exercise of jurisdiction comports with due process. “To determine whether the
exercise of federal jurisdiction over [Defendants] satisfies due process, we must
determine whether [Defendants] had minimum contacts with the United States.” CGC
Holding Co., 974 F.3d at 1209. Under that standard, a federal court can exercise
specific personal jurisdiction over a foreign defendant “only if the defendant
purposely directed [its] activities at the forum and the plaintiff’s injuries arose from
the defendant’s forum-related activities.” Id. (citing Dudnikov, 514 F.3d at 1071).
The relevant forum here is not an individual state, but the United States as a whole.3
Both Fuchs and ABI have sufficient minimum contacts that demonstrate they
purposefully directed their activities at the forum (the United States), and Hetronic’s
3 Ordinarily, we would also consider whether the exercise of jurisdiction was
reasonable. CGC Holding Co., 974 F.3d at 1209 (“Even when a defendant has
purposely established minimum contacts with a forum state, minimum requirements
inherent in the concept of fair play and substantial justice may defeat the
reasonableness of jurisdiction.” (internal quotation marks and citations omitted)).
That entails weighing five factors: (1) “the burden on the defendant,” (2) “the forum
state’s interest in resolving the dispute,” (3) “the plaintiff’s interest in receiving
convenient and effective relief,” (4) “the interstate judicial system’s interest in
obtaining the most efficient resolution of controversies,” and (5) “the shared interest
of the several states in furthering fundamental substantive social policies.” Id. at
1210 (citation omitted). But to defeat jurisdiction on this ground, “[a] defendant must
present a ‘compelling’ case that these factors render jurisdiction unreasonable.” Id.
(quoting Grupo Cementos, 970 F.3d at 1289). Defendants ignore these
reasonableness factors entirely, so we needn’t consider them.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 17

-- 17 of 67 --

18
injuries arose in part from those forum-related activities. As for Fuchs, Hetronic
alleged the following:
• Fuchs traveled to the United States to try to obtain certifications from the U.S.
Federal Communications Commission, which he needed for the Abitron entities to
sell radio products in the United States.
• Fuchs also engaged a Massachusetts company to obtain the FCC certifications.
• Fuchs traveled to Las Vegas, Nevada, to meet with Hetronic’s former President,
Torsten Rempe, to seek advice about competing with Hetronic, along with sending
over twenty separate e-mail communications to Rempe.
These contacts suffice to show Fuchs directed his activities at the United States and
directly relate to the injuries Hetronic complained of (i.e., trademark violations). See
CGC Holding Co., 974 F.3d at 1209 (holding that a Canadian defendant had
sufficient minimum contacts with the United States even though she operated her
RICO conspiracy mostly from Toronto because she worked extensively with a U.S.
partner and “prepar[ed] loan commitment letters directed at U.S. borrowers”).
The same goes for ABI. The district court detailed the following contacts ABI
had with the United States:
• ABI filed a trademark application for the Abitron entities in the United States to
protect the competing remote-control products it intended to sell.
• ABI entered a project agreement with a U.S.-based company (AZCS) owned by
Rempe. Under the agreement, ABI received consulting services from AZCS,
including market research, so that ABI could directly compete with Hetronic in the
United States.
Based on these findings, ABI can’t seriously contest that it purposefully directed its
activities at the United States. Nor can it dispute that Hetronic’s injuries arose in part
from these activities. On these facts, ABI should have expected that it could be haled
into court in the United States. See id.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 18

-- 18 of 67 --

19
In sum, we conclude that the district court properly exercised personal
jurisdiction over all Defendants. The forum-selection clauses in Hydronic’s and
Hetronic Germany’s licensing agreements bound both Abitron companies as
successors in interest. And Hetronic has shown that the court rightly exercised
personal jurisdiction over both Fuchs and ABI under Rule 4(k)(2). We thus consider
the merits of the parties’ dispute.
II. Permanent Injunction
Defendants attack the permanent injunction prohibiting their worldwide sales
of lookalike remote controls on primarily three grounds. They argue (1) that the
district court erroneously concluded that the Lanham Act applied extraterritorially
here; (2) that the injunction lacks the specificity required by Rule 65 of the Federal
Rules of Civil Procedure; (3) and that the injunction sweeps too broad. Though we
agree that the district court’s worldwide injunction reaches too far, we otherwise
reject Defendants’ challenges and uphold the injunction.
We review for abuse of discretion the district court’s grant of a permanent
injunction. Husky Ventures, Inc. v. B55 Invs., Ltd., 911 F.3d 1000, 1011 (10th Cir.
2018) (citation omitted). “A district court ‘necessarily abuses its discretion if it bases
its ruling on an erroneous view of the law or on a clearly erroneous assessment of the
evidence.’” Id. (brackets omitted) (quoting Zurich N. Am. v. Matrix Serv., Inc., 426
F.3d 1281, 1289 (10th Cir. 2005)). A district court’s factual findings are clearly
erroneous if they lack “factual support in the record, or if we, after reviewing all the
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 19

-- 19 of 67 --

20
evidence, are left with the definite and firm conviction that a mistake has been
made.” Id. (brackets and citation omitted).
We begin by considering whether the district court correctly concluded that the
Lanham Act reaches all of Defendants’ allegedly infringing conduct here, after which
we assess the injunction’s specificity and scope.
A. Extraterritorial Reach of the Lanham Act
The Lanham Act governs federal trademark and unfair competition disputes. It
subjects to liability “[a]ny person who shall . . . use in commerce any . . . colorable
imitation of a registered mark,” 15 U.S.C. § 1114(1) (Section 32), or “[a]ny person
who . . . uses in commerce any” word, false description, or false designation of origin
that “is likely to cause confusion . . . or to deceive as to the affiliation,” origin, or
sponsorship of any goods, id. § 1125(a)(1) (Section 43). Notably, the Act defines
commerce broadly as “all commerce which may lawfully be regulated by Congress,”
id. § 1127, and affords federal courts jurisdiction over all claims arising under it, id.
§ 1121(a). Though most of the damages the jury awarded to Hetronic flowed from
Defendants’ Lanham Act violations, Defendants argue as a threshold matter that the
Act doesn’t apply extraterritorially to their foreign conduct. We disagree.
The Supreme Court has in recent years considered (or reconsidered) the
extraterritoriality of several federal statutes, some of them multiple times: the Alien
Tort Statute, Nestlè USA, Inc. v. Doe, 141 S. Ct. 1931, 1936–37 (2021), and Kiobel v.
Royal Dutch Petrol. Co., 569 U.S. 108, 115–17 (2013); the Patent Act, WesternGeco
LLC v. ION Geophysical Corp., 138 S. Ct. 2129, 2136–38 (2018); the Racketeer
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 20

-- 20 of 67 --

21
Influenced and Corrupt Organizations Act, RJR Nabisco, Inc. v. Eur. Cmty., 136
S. Ct. 2090, 2099–2103 (2016); section 10(b) of the Securities Exchange Act of
1934, Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 255–65 (2010); and both the
Foreign Trade Antitrust Improvements Act of 1982, F. Hoffmann-La Roche Ltd. v.
Empagran S.A., 542 U.S. 155, 163–73 (2004), and its predecessor, the Sherman Act,
Hartford Fire Ins. Co. v. California, 509 U.S. 764, 794–99 (1993). But you have to
go back almost three-quarters of a century since the Court last substantively
considered the extraterritoriality of the Lanham Act. Steele v. Bulova Watch Co., 344
U.S. 280, 282–85 (1952). Though the Steele Court acknowledged the general
presumption against extraterritoriality, see id. at 285, it held that the Lanham Act
could apply abroad at least in some circumstances, see id. at 286 (“In the light of the
broad jurisdictional grant in the Lanham Act, we deem its scope to encompass
petitioner’s [foreign] activities here.”).4 Still, that lone decision leaves much
unanswered about the extent of the Lanham Act’s extraterritorial reach—particularly,
as in our case, as it relates to foreign defendants. See McBee v. Delica Co., 417 F.3d
4 The Court has in passing reaffirmed the Lanham Act’s extraterritorial reach
in two more recent decisions. See Morrison, 561 U.S. at 271 n.11 (citing Steele and
noting that the Court has interpreted the Lanham Act “to have extraterritorial
effect”); EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 252 (1991) (“While
recognizing that ‘the legislation of Congress will not extend beyond the boundaries
of the United States unless a contrary legislative intent appears,’ the Court concluded
that in light of the fact that the allegedly unlawful conduct had some effects within
the United States, coupled with the [Lanham] Act’s ‘broad jurisdictional grant’ and
its ‘sweeping reach into “all commerce which may lawfully be regulated by
Congress,”’ the statute was properly interpreted as applying abroad.” (quoting Steele,
344 U.S. at 285, 287)).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 21

-- 21 of 67 --

22
107, 117 (1st Cir. 2005) (noting that although “[t]he Supreme Court has long since
made it clear that the Lanham Act could sometimes be used to reach extraterritorial
conduct,” “it has never laid down a precise test for when such reach would be
appropriate” (footnote and citations omitted)).
Though none of the Supreme Court’s recent decisions concerning
extraterritoriality resolve the issues we face here related to the Lanham Act, they
offer some useful guidance. In RJR, the Court established “a two-step framework for
analyzing extraterritoriality issues.” 136 S. Ct. at 2101. At step one, “we ask whether
the presumption against extraterritoriality has been rebutted—that is, whether the
statute gives a clear, affirmative indication that it applies extraterritorially.” Id. Steele
already answered that question in the affirmative. See 344 U.S. at 285–88; see also
Trader Joe’s Co. v. Hallatt, 835 F.3d 960, 966 (9th Cir. 2016) (“The Supreme Court
settled this question with regard to the Lanham Act when it held [in Steele] that the
Act’s ‘use in commerce’ element and broad definition of ‘commerce’ clearly indicate
Congress’s intent that the Act should apply extraterritorially.” (citing Steele, 344
U.S. at 286)). When a court concludes at step one that the statute in question applies
extraterritorially, it needn’t reach step two (which asks “whether the case involves a
domestic application of the statute”). RJR, 136 S. Ct. at 2101. Instead, when the
presumption against extraterritoriality has been rebutted, RJR tells us that “[t]he
scope of an extraterritorial statute . . . turns on the limits Congress has (or has not)
imposed on the statute’s foreign application.” Id. (footnote omitted). In other words,
just because a statute can apply extraterritorially doesn’t mean that it always will.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 22

-- 22 of 67 --

23
Since Steele, the courts of appeals have devised various tests to answer that
question—namely, what are the limits of the Lanham Act’s extraterritorial reach?
Because our circuit has never confronted this issue, we have yet to speak on the
matter. So we begin by adopting a framework for resolving this question. After that,
we address the procedural objections Defendants raised regarding how the district
court went about addressing this issue. Last, we apply our newly adopted framework
to the dispute before us.
1. Framework for Assessing the Scope of the Lanham Act’s
Extraterritoriality
Each of the tests developed by the courts of appeals to explore the Lanham
Act’s extraterritorial reach stems from the Supreme Court’s Steele decision. There,
the defendant, an American citizen operating a watch business in Texas decided to
move his business to Mexico City. 344 U.S. at 284–85. He discovered that “Bulova”
had not been registered in Mexico, so he secured the rights to the name. Id. Importing
watch parts from Switzerland and the United States, he sold the watches in Mexico
under the “Bulova” name. Id. at 285. Bulova Watch Co., one of the largest watch
manufacturers in the world, soon began receiving complaints from customers who
needed repairs of defective “Bulova” watches that often turned out to be the
defendant’s product. Id. Bulova challenged in Mexico’s courts the defendant’s right
to use the Bulova name, and the Mexico Supreme Court upheld an administrative
ruling that had nullified the defendant’s trademark registration. Id. Bulova then
sought relief in federal court under the Lanham Act. Id. at 281–82.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 23

-- 23 of 67 --

24
The Court concluded that the Lanham Act encompassed the defendant’s
conduct, reasoning that “the United States is not debarred . . . from governing the
conduct of i[t]s own citizens upon the high seas or even in foreign countries when the
rights of other nations or their nationals are not infringed.” Id. at 285–86 (citation
omitted). The Court explained that “Congress has the power to prevent unfair trade
practices in foreign commerce by citizens of the United States, although some of the
acts are done outside the territorial limits of the United States.” Id. at 286 (citation
omitted). Key to the Court’s decision was that the defendant’s “operations and their
effects were not confined within the territorial limits of a foreign nation”; the
“spurious ‘Bulovas’ filtered through the Mexican border into” the United States. Id.
(emphasis added). And the Court noted that the inferior watches could damage
Bulova’s reputation in both the United States and foreign markets. Id.
Since Steele, the courts of appeals that have confronted this issue have adopted
one of three tests for deciding whether the Lanham Act governs a defendant’s foreign
conduct. The first, devised by the Second Circuit and known as the Vanity Fair test,
considers three factors: (1) whether the defendant’s conduct had a substantial effect
on U.S. commerce; (2) whether the defendant was a United States citizen; and (3)
whether there was a conflict with trademark rights established under the relevant
foreign law. Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F.2d 633, 642 (2d Cir.
1956). Though no factor is dispositive, the absence of one of the factors “might well
be determinative and . . . the absence of both is certainly fatal.” Id. at 643 (footnote
omitted).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 24

-- 24 of 67 --

25
Of our sibling circuits that have considered this issue, most have adopted some
version of the Vanity Fair test. The Eleventh and Federal Circuits have adopted it
wholesale. See Int’l Cafe, S.A.L. v. Hard Rock Cafe Int’l, (U.S.A.), Inc., 252 F.3d
1274, 1278 (11th Cir. 2001) (describing the three-factor analysis as the “Bulova test”
but citing Vanity Fair); Aerogroup Int’l, Inc. v. Malboro Footworks, Ltd., 152 F.3d
948, *2 (Fed. Cir. 1998) (per curiam) (unpublished). The Fourth and Fifth Circuits
have also adopted the Vanity Fair test, but each has tweaked the first prong. Rather
than asking whether the defendant’s conduct had a “substantial effect” on U.S.
commerce, the Fourth Circuit asks whether the conduct had a “significant effect.”
Nintendo of Am., Inc. v. Aeropower Co., 34 F.3d 246, 250 (4th Cir. 1994). The Fifth
Circuit, following the Ninth Circuit’s lead (discussed below), lowered the bar further,
requiring only “some effect” on U.S. commerce. Am. Rice, Inc. v. Ark. Rice Growers
Coop. Ass’n, 701 F.2d 408, 414 n.8 (5th Cir. 1983).
The Ninth Circuit has adopted a similar but distinct tripartite test, based on its
decisions governing the extraterritorial application of antitrust law under the Sherman
Act. See Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 427–28 (9th
Cir. 1977); Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393, 1395 (9th Cir.
1985) (“In Wells Fargo we concluded that the Lanham Act’s coverage of foreign
activities may be analyzed under the test for extraterritorial application of the federal
antitrust laws set forth in Timberlane Lumber Co. v. Bank of America National Trust
& Savings Ass’n, 549 F.2d 597 (9th Cir. 1976) . . . .”). Under what’s known as the
Timberlane test, the Lanham Act applies extraterritorially if:
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 25

-- 25 of 67 --

26
(1) the alleged violations . . . create some effect on American foreign
commerce; (2) the effect [is] sufficiently great to present a cognizable
injury to the plaintiffs under the Lanham Act; and (3) the interests of and
links to American foreign commerce [are] sufficiently strong in relation
to those of other nations to justify an assertion of extraterritorial
authority.5
Trader Joe’s Co., 835 F.3d at 969 (alterations in original) (citation and footnote
omitted). Notably, the Ninth Circuit rejected other circuits’ conclusions that the
effect on U.S. commerce must be “substantial,” reasoning that Steele “contains no
such requirement.” Wells Fargo, 556 F.2d at 428.
Finally, the First Circuit has rejected both the Timberlane and Vanity Fair
tests. See McBee, 417 F.3d at 110 (“[W]e choose not to adopt the formulations used
by various other circuits.” (citations omitted)). Relying heavily on the Supreme
Court’s caselaw governing the extraterritoriality of U.S. antitrust laws (wisely, in our
5 Timberlane’s third prong “considers international comity,” Trader Joe’s Co.,
835 F.3d at 972 (citation omitted), and further breaks down into seven additional
factors:
[1] the degree of conflict with foreign law or policy, [2] the nationality or
allegiance of the parties and the locations or principal places of business
of corporations, [3] the extent to which enforcement by either state can
be expected to achieve compliance, [4] the relative significance of effects
on the United States as compared with those elsewhere, [5] the extent to
which there is explicit purpose to harm or affect American commerce, [6]
the foreseeability of such effect, and [7] the relative importance to the
violations charged of conduct within the United States as compared with
conduct abroad.
Id. at 972–73 (brackets in original) (quoting Star-Kist Foods, 769 F.2d at 1395).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 26

-- 26 of 67 --

27
view),6 id. at 111, the McBee court adopted the following framework. The court
begins by determining whether the defendant is an American citizen. Id. That’s
because “a separate constitutional basis for jurisdiction exists for control of activities,
even foreign activities, of an American citizen.” Id. In that scenario, the court
reasoned that “the domestic effect of the international activities may be of lesser
importance and a lesser showing of domestic effects may be all that is needed.” Id. at
118.
The court adopted a “separate test” to assess the Lanham Act’s extraterritorial
reach when a plaintiff seeks damages based on “foreign activities of foreign
defendants.” Id. at 111. In that situation, the court held that the Lanham Act applies
“only if the complained-of activities have a substantial effect on [U.S.] commerce,
viewed in light of the purposes of the Lanham Act.” Id. The court noted that its
substantial-effect requirement aligned with the framework the Supreme Court has
established for assessing the extraterritorial scope of Sherman Act (antitrust) claims.
See id. at 119–20 (analogizing to Hartford Fire Ins. Co., 509 U.S. at 796).
Besides one caveat we explain below, we adopt the McBee framework for
several reasons. First, we agree with McBee that the Lanham Act will usually extend
extraterritorially when the defendant is an American citizen. Id. at 118. No one
questions Congress’s ability “to regulate the conduct of its own citizens, even
6 “The Court has written in [the antitrust context], on the issue of
extraterritorial application, far more recently than it has written on the Lanham Act,
and thus the decisions reflect more recent evolutions in terms of legal analysis of
extraterritorial activity.” McBee, 417 F.3d at 119.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 27

-- 27 of 67 --

28
extraterritorial conduct.” Id. (quoting Steele, 344 U.S. at 285–86) (internal quotation
marks omitted). Indeed, “Congressional power over American citizens is a matter of
domestic law that raises no serious international concerns, even when the citizen is
located abroad.” Id. (collecting cases); see also Restatement (Third) of Foreign Rels.
Law of the United States § 402 (1987) (“[A] state has jurisdiction to prescribe law
with respect to . . . the activities . . . of its nationals outside as well as within its
territory. . . .” (emphasis added)). Some federal statutes even govern U.S. citizens’
conduct abroad regardless of whether that conduct produces domestic effects. See,
e.g., 18 U.S.C. § 2423(c) (“Engaging in illicit sexual conduct in foreign places. Any
United States citizen . . . who travels in foreign commerce or resides, either
temporarily or permanently, in a foreign country, and engages in any illicit sexual
conduct with another person shall be fined under this title or imprisoned not more
than 30 years, or both.”). So when the defendant is an American citizen, courts may
conclude that the Lanham Act reaches that defendant’s extraterritorial conduct even
when the effect on U.S. commerce isn’t substantial. See McBee, 417 F.3d at 118.
Though that probably amounts to something akin to the Fifth Circuit’s “some effect”
test, Am. Rice, Inc., 701 F.2d at 414 n.8, we’ve no need to lay down a specific test
given that our case involves only foreign defendants.
Second, when a plaintiff seeks to recover under the Lanham Act against a
foreign national, we also agree with McBee that the plaintiff must show that the
defendant’s conduct has a substantial effect on U.S. commerce. True, the Steele
Court never required that the effects on U.S. commerce must be substantial to trigger
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 28

-- 28 of 67 --

29
extraterritorial application of the Lanham Act (as the Fifth and Ninth Circuits have
pointed out in adopting their less-stringent “some effect” test). See 344 U.S. at 286
(noting that the defendant’s conduct “and their effects were not confined within the
territorial limits of a foreign nation”); Am. Rice, 701 F.2d at 414 n.8; Wells Fargo,
566 F.2d at 428. But we nonetheless adopt the substantial-effects requirement for two
reasons. First, the defendant in Steele was an American citizen—for the reasons just
explained, it’s no surprise that the Steele Court was unconcerned about the relatively
modest effect of the defendant’s conduct on U.S. commerce given Congress’s
uncontroversial and extensive powers to regulate the conduct of its own citizens.
Second, requiring that the defendant’s conduct has a substantial effect on U.S.
commerce aligns the test for Lanham Act extraterritoriality with both the Supreme
Court’s antitrust jurisprudence and general principles of foreign relations law. See
Hartford Fire Ins., 509 U.S. at 796 (“[I]t is well established by now that the Sherman
Act applies to foreign conduct that was meant to produce and did in fact produce
some substantial effect in the United States.” (collecting cases)); Restatement (Third)
of Foreign Rels. Law of the United States § 402(1)(c) (1987) (“[A] state has
jurisdiction to prescribe law with respect to . . . conduct outside its territory that has
or is intended to have substantial effect within its territory. . . .”).
Finally, if a plaintiff successfully shows that a foreign defendant’s conduct has
had a substantial effect on U.S. commerce, courts should also consider whether
extraterritorial application of the Lanham Act would create a conflict with trademark
rights established under the relevant foreign law. See Steele, 344 U.S. at 289
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 29

-- 29 of 67 --

30
(“Mexico’s courts have nullified the Mexican registration of ‘Bulova’; there is thus
no conflict which might afford petitioner a pretext that such relief would impugn
foreign law.”). Though the McBee court eschewed such an analysis, 417 F.3d at 111,
every other circuit court considers potential conflicts with foreign law in assessing
the Lanham Act’s extraterritorial reach, see, e.g., Vanity Fair, 243 F.3d at 642;
Trader Joe’s Co., 835 F.3d at 972–73. Accordingly, in conducting this analysis,
courts should weigh any foreign trademark rights established by the defendant.
Hetronic urges us to adopt the Ninth Circuit’s Timberlane test, noting that our
Circuit has looked to that test in assessing extraterritoriality in the antitrust context.
See Montreal Trading Ltd. v. Amax Inc., 661 F.2d 864, 869 (10th Cir. 1981). But we
remain persuaded that McBee provides the better framework for assessing Lanham
Act claims for several reasons. As an initial matter, Hetronic doesn’t argue that we’re
bound by Montreal Trading—nor could it. Unlike our focus here on the Lanham Act,
that case considered the extraterritorial reach of the Sherman Act. Id. Further, that
case involved U.S. defendants; the defendants here are all foreign. Id. at 865–66. As
we have explained, unlike the Timberlane test adopted in Montreal Trading, the
McBee framework accounts for the differences in a defendant’s citizenship. Indeed,
the Montreal Trading court didn’t have the benefit of McBee or the Supreme Court’s
more recent decisions concerning how courts should approach extraterritoriality
questions. Considering those developments, we conclude that McBee establishes the
best test for assessing extraterritoriality under the Lanham Act.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 30

-- 30 of 67 --

31
To recap, in deciding whether the Lanham Act applies extraterritorially, courts
should consider three factors. First, courts should determine whether the defendant is
a U.S. citizen. Second, when the defendant is not a U.S. citizen, courts should assess
whether the defendant’s conduct had a substantial effect on U.S. commerce. Third,
only if the plaintiff has satisfied the substantial-effects test, courts should consider
whether extraterritorial application of the Lanham Act would create a conflict with
trademark rights established under foreign law.
Having adopted a framework for assessing the scope of the Lanham Act’s
extraterritorial reach, we next consider Defendants’ arguments that the district court
erred procedurally in resolving this issue.
2. The District Court Should Have Decided As a Matter of Law
Whether the Lanham Act Reached Defendants’ Foreign
Conduct
a. Background
The district court considered the Lanham Act’s extraterritoriality three times:
once before trial at summary judgment, once during trial on Hetronic’s relevance
objection, and once after trial in considering Hetronic’s preliminary-injunction
motion. Most of Defendants’ procedural objections flow from uncertainties about the
district court’s summary-judgment ruling.
In moving for partial summary judgment, Defendants argued that Hetronic’s
Lanham Act claims failed because the Act didn’t reach Defendants’ foreign sales
(which made up nearly 97% of their total sales). It’s clear that the district court
rejected that argument and denied Defendants summary judgment on their
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 31

-- 31 of 67 --

32
extraterritoriality defense: “Viewed in a light favorable to plaintiff, the record
evidence raises genuine issues of material fact as to customer confusion and harm to
reputation to plaintiff in the United States due to [D]efendants’ alleged infringing
conduct.” Appellants’ App. vol. 7 at 1712. What’s less clear is whether the district
court granted Hetronic summary judgment on the extraterritoriality issue. At times,
the district court’s order suggests that it did: “[T]he court concludes that
extraterritorial application of the Lanham Act to defendants’ foreign sales . . . is
appropriate.” Id. at 1716.
But on appeal, both sides agree that the court merely denied Defendants
summary judgment on their extraterritoriality defense, reserving definitive resolution
of the issue for another day. Appellee’s Resp. Br. at 50 n.15 (conceding that the
district court had not granted summary judgment on the extraterritoriality issue;
“it . . . only denied defendants’ summary judgment motion”); Reply Br. at 4–5.
Despite some of the order’s language suggesting otherwise, we agree that the district
court didn’t resolve the extraterritoriality issue at summary judgment. Indeed, the
court repeatedly stated that it was viewing the evidence in a light favoring Hetronic.
But summary judgment in Hetronic’s favor on that issue would have been appropriate
only if there were no genuine disputes of material fact when viewing the evidence in
Defendants’ favor. See, e.g., Obermeyer Hydro Accessories, Inc. v. CSI Calendering,
Inc., 852 F.3d 1008, 1014 (10th Cir. 2017) (reviewing summary-judgment evidence
in a light most favorable to the nonmoving party (citation omitted)). Even more
fundamentally, the district court concluded that genuine disputes of material fact
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 32

-- 32 of 67 --

33
existed relevant to the extraterritoriality issue. That alone precludes summary
judgment. Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact . . . .”).
Based on the district court’s order, Defendants understandably believed that
they could argue the issue to the jury. So they “prepared to present at trial their
evidence that there was no ‘effect’ on U.S. commerce, and that there was no
confusion among U.S. citizens, caused by the[ir] purely foreign sales.” Reply Br. at
4. But the district court precluded them from doing so. At trial, Hetronic called Josef
Scheuerer, one of Hetronic’s sales representatives, to testify about the confusion
Defendants’ alleged trademark infringement created among Hetronic’s customers. On
cross-examination, Defendants sought to establish that only non-U.S. customers were
confused and that, as a result, any infringement couldn’t have substantially affected
U.S. commerce. Defendants’ line of questioning went to “whether or not there [was]
a Lanham Act claim at all.” Appellants’ App. vol. 13 at 3273. That is, as Defendants
argued on summary judgment, if their foreign sales didn’t substantially affect U.S.
commerce, the Lanham Act wouldn’t apply.
Hetronic objected to the questioning, asserting that the subject matter was
irrelevant and unfairly prejudicial. During a sidebar between the court and counsel,
Hetronic’s counsel misspoke, telling the court that it had already granted summary
judgment in Hetronic’s favor on the extraterritoriality issue. The court apparently
assumed this was so and sustained the objection:
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 33

-- 33 of 67 --

34
HETRONIC’S COUNSEL: Your Honor, . . . it seems like defendants are
trying to reargue extraterritoriality, which Your Honor granted summary
judgment on . . . . [T]hey’re trying to back-door it through this witness
and I think it’s inappropriate. It’s 402 and 403. Where the confusion took
place is irrelevant to whether there’s confusion under the Lanham Act.
THE COURT [to Defendants’ counsel]: Where are you headed with this?
DEFENDANTS’ COUNSEL: The most recent case that we read . . . does
suggest that where the confusion occurs matters. . . . But [Hetronic’s
counsel is] exactly right, that is where I’m going. It was my understanding
this issue was still open. If Your Honor has already ruled on it, we can
perhaps at a break put that on the record and I’ll stop this. I thought this
was still open.
* * *
THE COURT: It’s [D]efendants’ position that the location of the
confusion is relevant for what purpose?
DEFENDANTS’ COUNSEL: For whether or not there is a Lanham Act
claim at all.
THE COURT: Well, I’ve -- for better or worse, I’ve already crossed that
bridge. And there may be a . . . case from last week, and if so, that’s really
not something that I can revisit in the middle of this trial, so the objection
will be sustained.
Id. at 3272–73 (emphasis added).
As noted, Hetronic now concedes that the district court never granted it
summary judgment on the extraterritoriality issue. Yet Hetronic contends—without
citing to the record—that “the trial court already had held (correctly) . . . that the
[Lanham] Act could apply extraterritorially.” Appellee’s Resp. Br. at 50.
Hetronic is mistaken. The only time the district court addressed the
extraterritoriality issue before trial was in denying Defendants’ motion for summary
judgment. But as Hetronic acknowledges, the court’s ruling concluded that there was
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 34

-- 34 of 67 --

35
a genuine dispute of material fact about whether Defendants’ foreign activities had
caused confusion among U.S. consumers.
After the jury rendered its verdict in Hetronic’s favor, Hetronic moved for a
worldwide injunction barring Defendants from selling their infringing products. In
granting that injunction, the district court considered the Lanham Act’s
extraterritoriality for the third time. This time, relying on the evidence established at
trial, the district court undeniably concluded that the Lanham Act reached
Defendants’ foreign conduct.
b. Determining the Scope of the Lanham Act’s
Extraterritoriality Presents a Question of Law
With that background in mind, Defendants argue that the district court erred in
two ways. First, Defendants insist that the district court should have resolved the
extraterritoriality issue as a matter of subject-matter jurisdiction before trial. Second,
because the district court didn’t do so, Defendants maintain that the court erred by
precluding them from arguing the issue at trial.
We agree with Defendants that the district court should have resolved the
extraterritoriality issue as a matter of law before trial, but we disagree that this issue
presents a question of subject-matter jurisdiction. Defendants’ confusion on this point
is understandable. Before 2010, every court—including the U.S. Supreme Court—
considered the Lanham Act’s extraterritoriality as a matter of subject-matter
jurisdiction. See, e.g., Steele, 344 U.S. at 281; McBee, 417 F.3d at 117 (collecting
cases). But in 2010, the Supreme Court clarified in Morrison that questions about the
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 35

-- 35 of 67 --

36
extraterritorial reach of a federal statute go to the merits, not jurisdiction. 561 U.S. at
254. In assessing the extraterritoriality of the Securities Exchange Act, the Court
explained that “to ask what conduct § 10(b) reaches is to ask what conduct § 10(b)
prohibits, which is a merits question.” Id. That same rationale holds true for the
Lanham Act. Derma Pen, LLC v. 4EverYoung Ltd., 736 F. App’x 741, 748 n.4 (10th
Cir. 2018) (unpublished) (citing Morrison and rejecting appellant’s suggestion that
the Lanham Act’s extraterritoriality was a question of subject-matter jurisdiction);
Trader Joe’s Co., 835 F.3d at 968 (“We hold that the extraterritorial reach of the
Lanham Act is a merits question that does not implicate federal courts’ subject-matter
jurisdiction . . . .”).
But to hold that the extraterritorial reach of the Lanham Act presents a merits
question isn’t to say that the question can’t be decided as a matter of law. To the
contrary, the Morrison Court decided a similar extraterritoriality issue as a matter of
law under Rule 12(b)(6), concluding that the petitioners “failed to state a claim on
which relief [could] be granted.” 561 U.S. at 273. And in considering the Lanham
Act’s extraterritoriality post-Morrison, the Ninth Circuit recently decided the issue as
a matter of law in reversing the district court’s 12(b)(6) dismissal of the plaintiff’s
trademark claims. See Trader Joe’s Co., 835 F.3d at 975, 977–78.
Consistent with how courts have previously handled this issue, we hold that
district courts should ordinarily decide questions about the scope of the Lanham
Act’s extraterritorial reach as a matter of law, preferably in the litigation’s early
stages. We think this the best course for several reasons. First, as just discussed,
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 36

-- 36 of 67 --

37
courts have always decided this issue as a matter of law since the Supreme Court
decided Steele and have continued to do so even after Morrison cleared up that it’s
not a question of subject-matter jurisdiction. See id.
Second, “the proper extraterritorial reach of a Lanham Act injunction is a
matter of statutory interpretation.” Derma Pen, 736 F. App’x at 748 n.4; see also
RJR, 136 S. Ct. at 2101 (“The scope of an extraterritorial statute . . . turns on the
limits Congress has (or has not) imposed on the statute’s foreign application.”
(footnote omitted)). We have “always considered” questions of statutory
interpretation as “quintessentially legal in nature.” United States v. McLinn, 896 F.3d
1152, 1156 (10th Cir. 2018) (citation omitted); see also Proctor & Gamble Co. v.
Haugen, 222 F.3d 1262, 1271 (10th Cir. 2000) (“The question here is one of statutory
interpretation and thus a pure matter of law . . . .” (emphasis added)). Judges, not
juries, decide purely legal questions. See McLinn, 896 F.3d at 1156. The
extraterritoriality of the Lanham Act usually presents just such a question.7
Even so, Defendants at times appear to frame the issue of whether their
conduct created a substantial effect on U.S. commerce as a factual dispute. But on
closer examination, we see only a legal dispute. For instance, Defendants insist that
they should have been able to cross-examine Joseph Scheuerer to show that his
7 Montreal Trading isn’t to the contrary. 661 F.2d at 870. There, we noted that
the trial court let the jury decide the subject-matter jurisdiction question about
whether the Sherman Act applied extraterritorially to reach the defendants’ conduct.
See id. at 866, 870. But we didn’t pass on the question whether the trial court should
have decided that issue as a matter of law. Id. at 870.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 37

-- 37 of 67 --

38
testimony related primarily to foreign customers. From that testimony, Defendants
sought to establish that no U.S. consumers were confused, so there couldn’t have
been a substantial effect on U.S. commerce. The problem for Defendants is that this
cross-examination testimony of Scheuerer wouldn’t have created a factual dispute.
Hetronic presented other evidence, discussed below, detailing instances of confusion
among U.S. consumers. Defendants never tried to argue that those examples never
happened or otherwise refute that portion of Hetronic’s evidence. Instead, Defendants
sought to show that most of the confusion occurred among foreign customers, in
effect arguing that even if there was some effect on U.S. commerce, it wasn’t
substantial. But weighing that argument—whether a defendant’s conduct created a
substantial effect on U.S. commerce—requires a legal determination that’s left to the
courts.
Actual factual disputes underlying the extraterritoriality question certainly can
arise. For example, a defendant could dispute whether (or how much of) its allegedly
infringing products entered the United States. Establishing that factual predicate
could affect the court’s determination of whether the defendant’s conduct had a
substantial effect on U.S. commerce. In those instances, the court may submit the
factual dispute to the jury while reserving the ultimate legal determination for itself.
We have expressed our preference for this procedure in dealing with issues that, like
the Lanham Act’s extraterritorial scope, usually constitute a question of law but may
involve factual disputes. Cf. Gonzales v. Duran, 590 F.3d 855, 862–63 (10th Cir.
2009) (Ebel, J., concurring) (“[I]f a district court submits the question of qualified
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 38

-- 38 of 67 --

39
immunity to the jury because there are disputed historical facts material to resolving
the immunity question, the district court should submit to the jury only the disputed
factual contentions underlying the immunity question and should reserve for itself the
legal question of objective reasonableness.”).
Having reaffirmed that the scope of the Lanham Act’s extraterritorial reach
generally presents a legal question of statutory interpretation, we now review the
issue de novo. McLinn, 896 F.3d at 1156 (citation omitted).
3. Applying the Framework
Our analysis proceeds in three steps. We begin by assessing whether any of
Defendants are American citizens. None are. Thus, to prevail, Hetronic must show
that Defendants’ foreign infringing conduct had a substantial effect on U.S.
commerce. The extraterritoriality issue turns solely on this question because
Defendants nowhere argue the third element—that applying the Lanham Act
extraterritorially would conflict with trademark rights under another country’s laws
(an issue we would normally consider only if a plaintiff first satisfied the substantial-
effect requirement). We conclude that Defendant’s foreign conduct had a substantial
effect on U.S. commerce.
“The substantial effects test requires that there be evidence of impacts within
the United States, and these impacts must be of a sufficient character and magnitude
to give the United States a reasonably strong interest in the litigation.” McBee, 417
F.3d at 120 (citations omitted). In applying this test, courts should keep in mind the
Lanham Act’s “core purposes”—protecting U.S. consumers from confusion and
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 39

-- 39 of 67 --

40
“assur[ing] a trademark’s owner that it will reap the financial and reputational
rewards associated with having a desirable name or product.” Id. at 121 (citing
Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 33–34 (2003)
(second citation omitted)).
To meet its burden, Hetronic points to three “great wells of effects on U.S.
commerce”: (1) Defendants’ direct sales into the United States; (2) Defendants’ sales
of products abroad that ended up in the United States; and (3) diverted foreign sales
that Hetronic would have made but for Defendants’ infringing conduct. See
Appellee’s Resp. Br. at 18–19, 23–28. We address each theory in turn and conclude
that Hetronic has sufficiently shown that Defendants’ conduct had a substantial effect
on U.S. commerce.
On appeal, the parties dispute the amount of Defendants’ direct sales into the
United States.8 But we needn’t resolve that disagreement because, regardless, a
foreign infringer’s direct U.S. sales don’t factor into our analysis of whether the
Lanham Act applies abroad. See McBee, 417 F.3d at 122. Applying the Lanham Act
8 Defendants assert that only Abitron Germany sold products directly into the
United States and that those sales totaled $16,670. But as Hetronic flags, that
assertion contradicts Defendants’ admissions both in their statement of undisputed
facts in their motion for summary judgment and in an offer of proof they submitted at
trial. Defendants represented in their statement of undisputed facts that their remote-
control sales into the U.S. totaled €202,134.12 and “were comprised of €185,463.52
of sales by Hetronic Germany, and €16,670.60 of sales by Abitron Germany.”
Appellants’ App. vol. 4 at 939. They made an identical representation in an offer of
proof at trial. Given Defendants’ failure in their reply brief to explain the disparity,
we accept its admissions in the district court as the true totals of their direct U.S.
sales.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 40

-- 40 of 67 --

41
to a foreign infringer’s direct U.S. sales isn’t an extraterritorial application of the
Act: “Courts have repeatedly distinguished between domestic acts of a foreign
infringer and foreign acts of that foreign infringer; the extraterritoriality
analysis . . . attaches only to the latter.” Id. (collecting cases). In other words, the
Lanham Act would encompass Defendants’ direct sales into the United States even if
we concluded that the Act didn’t apply extraterritorially to Defendants’ infringing
sales abroad. See id. So we turn to Hetronic’s two other theories.
First, Hetronic argues that many of Defendants’ foreign sales have ended up in
the United States. Numerous courts have recognized that a foreign defendant can be
liable for Lanham Act violations when its products find their way into the United
States, even if initially sold abroad: “Quite commonly, plaintiffs in these sorts of
cases can meet their burden by presenting evidence that while the initial sales of
infringing goods may occur in foreign countries, the goods subsequently tend to enter
the United States in some way and in substantial quantities.” McBee, 417 F.3d at 125
(collecting cases). Defendants acknowledge that over €1.7 million of their foreign
sales ended up in the United States (Abitron Germany: €1,026,482; Hetronic
Germany: €592,591; Hydronic: €120,344; Abitron Austria: €10,792). And when a
plaintiff presents evidence that “American consumers have been exposed to the
infringing mark”—here, in the form of over €1.7 million worth of products that
ended up in the hands of American consumers—“confusion and reputational
harm . . . can often . . . be inferred.” Id.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 41

-- 41 of 67 --

42
But we don’t need to rest on an inference of confusion. Hetronic submitted
evidence that U.S. consumers were confused about Hetronic’s products relationship
to the Abitron companies. See Supp. App. vol. 2 at 529–33 (former Abitron Germany
employee agreeing that “there were instances where [U.S.] customers were confused
about the relationship between Abitron and Hetronic”). For instance, U.S. consumers
would sometimes reach out to Abitron Germany to obtain Hetronic products under
the mistaken belief that Abitron manufactured and sold Hetronic products. See id. at
528–29. One U.S. customer emailed Abitron Germany about buying a “Nova-XL
Hetronic.” Id. at 530. An Abitron Germany employee instructed its U.S. sales
representative to “inform the customer that it can obtain an Abitron part from us, not
Hetronic.” Id. at 531. And one of Hetronic’s sales representatives testified that
“[a]lmost every week,” customers sent Abitron products to Hetronic USA for repair.
Id. vol. 3 at 651. Even Abitron Germany’s own U.S. distributor was uncertain about
the relationship between the Abitron companies and Hetronic.
Q: And when I mentioned the brand Hetronic, what’s your understanding
as to that brand? Is that a competitor brand of Abitron’s, or is that the
same thing?
A: I don’t really know, honestly. I know that Hetronic was based in
Germany, and then they changed their name to Abitron. Now, I am aware
that there was a company in Oklahoma called Hetronic
International . . . . Am I paying attention to whether it says “Germany” or
“International” or whatever? Generally, no, I really wasn’t. So to me it
was Hetronic.
Appellants’ App. vol. 13 at 3289. Hetronic’s counsel also showed Abitron Germany’s
U.S. distributor a photograph of an Abitron NOVA and a Hetronic NOVA side by
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 42

-- 42 of 67 --

43
side. When asked if he could “tell which one was Hetronic and which one was
Abitron” if they hadn’t been labelled, the distributor responded, “I would have no
idea, no.” Id. at 3294.
On this evidence alone—that millions of euros worth of infringing products
found their way into the United States and that Defendants’ efforts to sell those
products caused confusion among U.S. consumers—we could conclude that the
effects of Defendants’ foreign conduct are sufficiently substantial to give the United
States a reasonably strong interest in the litigation.
Defendants offer two rebuttals. First, Defendants argue that the €1.7 million
worth of products represented only 3% of Defendants’ total sales and that such a
small fraction can’t serve as a “springboard to call the rest of the $90 million of
purely foreign sales damages under the Lanham Act.” Reply Br. at 7 (internal
quotation marks omitted). But Defendants misunderstand the nature of our inquiry
here. We ask only whether the effects of Defendants’ foreign conduct produce
substantial impacts on U.S. commerce; it’s irrelevant what proportion of Defendants’
global sales entered the United States. Otherwise, billion-dollar-revenue companies
could escape Lanham Act liability by claiming that millions of dollars of their
infringing products entering the United States represented only a fraction of their
sales. But the United States would certainly have a strong interest in litigation
brought by an American company seeking to stem the flow of such substantial
amounts of infringing products. Besides, the Supreme Court has made clear that once
a court determines that a statute applies extraterritorially to a defendant’s conduct, as
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 43

-- 43 of 67 --

44
we do here, that statute captures all the defendant’s illicit conduct: “If § 10(b) did
apply abroad, we would not need to determine which transnational frauds it applied
to; it would apply to all of them (barring some other limitation).” RJR, 136 S. Ct. at
2101 (quoting Morrison, 561 U.S. at 267 n.9).
Second, Defendants argue that Hetronic failed to present evidence at trial of
Defendants’ infringing foreign sales that eventually entered the United States. But as
we explained above, this was an issue that the district court should have resolved as a
matter of law; it should have never reached a jury. And Defendants admitted long
before trial that about €1.7 million worth of their products reached the United States.
Considering that admission, we reject Defendants’ contention that Hetronic needed to
provide additional evidence on this point.
Next, Hetronic relies on a diversion-of-sales theory—the idea that Defendants
stole sales from Hetronic abroad, which in turn affected Hetronic’s cash flows in the
United States. Several courts have recognized that evidence of diverted sales evinces
a substantial effect on U.S. commerce: “The [effect-on-U.S.-commerce] criteria may
be met even where all of the challenged transactions occurred abroad, and where
‘injury would seem to be limited to the deception of consumers’ abroad, as long as
‘there is monetary injury in the United States’ to an American plaintiff.” Love v.
Associated Newspapers, Ltd., 611 F.3d 601, 613 (9th Cir. 2010) (first quoting Ocean
Garden, Inc. v. Marktrade Co., 953 F.2d 500, 503 (9th Cir. 1991); and then citing
Reebok Int’l, Ltd. v. Marnatech Enters., Inc., 970 F.2d 552, 554–55 (9th Cir. 1992));
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 44

-- 44 of 67 --

45
see also McBee, 417 F.3d at 126 (“Courts have considered sales diverted from
American companies in foreign countries in their analyses.” (collecting cases)).
In McBee, the court explained that “[e]vidence of economic harm to McBee in
Japan due to confusion of Japanese consumers is less tightly tied to the interests that
the Lanham Act intends to protect, since there is no United States interest in
protecting Japanese consumers.” 417 F.3d at 126. But the court still approved of the
diversion-of-sales theory because “American courts do . . . have an interest in
protecting American commerce by protecting McBee from lost income” due to a
foreign defendant’s infringing conduct. Id. Under that rationale, U.S. courts have an
interest in protecting Hetronic from the economic harm it suffered in the form of lost
sales that it would have made if it weren’t for Defendants’ trademark infringement.
Here, Hetronic presented evidence that Defendants’ conduct cost it tens of millions
of dollars in lost sales. Those lost revenues would have flowed into the U.S. economy
but for Defendants’ conduct infringing a U.S. trademark. Thus, this monetary injury
to Hetronic also caused substantial effects on U.S. commerce. See Love, 611 F.3d at
613 (citations omitted).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 45

-- 45 of 67 --

46
In response, Defendants contend that the diversion-of-sales theory applies only
when the defendant is a U.S. citizen.9 For that proposition, they rely heavily on Tire
Engineering & Distribution, LLC v. Shandong Linglong Rubber Co., 682 F.3d 292
(4th Cir. 2012). There, the Fourth Circuit rejected the plaintiff’s argument, stating
that “courts invoking the diversion-of-sales theory have required the defendants to be
U.S. corporations that conducted operations—including at least some of the
infringing activity—within the United States.” Id. at 311 (citations omitted). We find
Tire Engineering unpersuasive for three reasons.
First, though both of the cases Tire Engineering cites involved U.S.-citizen
defendants, neither court suggested—let alone held—that the diversion-of-sales
theory is inapplicable to foreign defendants. See Ocean Garden, 953 F.2d at 504; Am.
Rice, 701 F.2d at 414–15. Second, the Tire Engineering court ignored courts that
have conducted a diversion-of-sales analysis involving foreign defendants. E.g.,
McBee, 417 F.3d at 126. Third, restricting the diversion-of-sales theory to U.S.-
citizen defendants makes little sense; if anything, it applies with greater force to a
foreign defendant. When diverted sales that would have otherwise flowed to a U.S.
9 In their reply brief, Defendants also challenge Hetronic’s diversion-of-sales
theory on two other grounds—that applying the theory “exceeds the authority of the
Commerce Clause” and that Hetronic failed to prove its lost sales. Reply Br. at 13–
21. But we generally deem arguments raised for the first time in a reply brief waived.
United States v. Leffler, 942 F.3d 1192, 1197 (10th Cir. 2019). Defendants offer no
reason why we should depart from our usual rule, so we decline to consider these
additional arguments. Id. (“[T]o allow an appellant to raise an argument for the first
time in a reply brief would be manifestly unfair to the appellee who, under our rules,
has no opportunity for a written response.” (internal quotation marks and citations
omitted)).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 46

-- 46 of 67 --

47
company instead inure to a foreign defendant, the loss to U.S. commerce is clear. By
contrast, when the defendant is a U.S. citizen with a U.S. presence, the sales divert
from one U.S. company to another—either way, U.S. commerce benefits from the
sales revenue flowing into the U.S. economy. We thus reject Defendants’ argument
that plaintiffs may argue a diversion-of-sales theory only against U.S.-citizen
defendants.
Viewing the evidence as a whole, Hetronic has presented more than enough
evidence to show that Defendants’ foreign infringing conduct had a substantial effect
on U.S. commerce. Besides the millions of euros worth of infringing products that
made their way into the United States after initially being sold abroad, Defendants
also diverted tens of millions of dollars of foreign sales from Hetronic that otherwise
would have ultimately flowed into the United States. Moreover, though much of
Hetronic’s evidence focused on consumer confusion abroad, it also documented
numerous incidents of confusion among U.S. consumers. We thus conclude that
Hetronic has presented evidence of impacts within the United States of a sufficient
character and magnitude as would give the United States a reasonably strong interest
in the litigation. Accordingly, the Lanham Act applies extraterritorially here to reach
all of Defendants’ foreign infringing conduct.
B. Injunction’s Specificity
Defendants next argue that the injunction “lacks the specificity required by
[Federal Rules of Civil Procedure] 65.” Appellants’ Opening Br. at 32. We disagree.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 47

-- 47 of 67 --

48
Rule 65 of the Federal Rules of Civil Procedure requires that injunctions
contain “reasonable detail.” Fed. R. Civ. P. 65(d)(1)(C) (emphasis added).
Injunctions violate Rule 65 “when the delineation of the proscribed activity lacks
particularity, or when containing only an abstract conclusion of law, not an operative
command capable of enforcement.” CF & I Steel Corp. v. United Mine Workers of
Am., 507 F.2d 170, 173 (10th Cir. 1974) (internal quotation marks and footnotes
omitted).
The district court’s injunction goes far beyond an abstract conclusion of law
and easily satisfies Rule 65. The trial court enjoined Defendants from “[d]irectly or
indirectly using . . . Hetronic’s . . . Trade Dress, or any reproduction, counterfeit,
copy or colorable imitation thereof on or in connection with any products or
services.” Appellants’ App. vol. 10 at 2518. The injunction specifically defines trade
dress: “‘trade dress’ refers to the total image of a product, product packaging, product
label, product design, or a combination of these things,” including “features such as
size, shape, color or color combinations, texture, graphics, or particular sales
techniques.” Id. at 2515 n.1. Crucially, the court further states that the trade dress is
“the black and yellow color scheme and the design of the housings” of Hetronic’s
products. Id. at 2515. This provides ample detail to meet Rule 65’s requirements.
C. Injunction’s Scope
Despite the above, we conclude that the district court’s injunction is
improperly broad. Recall that the court’s injunction extends not only to countries in
which Hetronic currently sells its products, but to every country in the world. The
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 48

-- 48 of 67 --

49
Lanham Act—the statute on which the district court relied—cannot support such a
broad injunction here.
Hetronic dismisses Defendants’ “lengthy disquisition on trademark history and
geography” as “irrelevant to this case.” Appellee’s Resp. Br. at 30. But Defendants’
argument that trademark rights “are fundamentally geographical” is sound.
Appellants’ Opening Br. at 27. “[E]ven the owner of a federally registered mark—
who enjoys the presumption of nationwide priority—is not entitled to injunctive
relief except in the area actually penetrated through use of the mark.” Emergency
One, Inc. v. Am. Fire Eagle Engine Co., 332 F.3d 264, 269 (4th Cir. 2003) (emphasis
added) (internal quotation marks, citation, and footnote omitted); see also Hanover
Star Milling Co. v. Metcalf, 240 U.S. 403, 416 (1916) (“[A] trademark . . . extends to
every market where the trader’s goods have become known and identified by his use
of the mark. But the mark, of itself, cannot travel to markets where there is no article
to wear the badge and no trader to offer the article.”). Though Emergency One
involved a trademark dispute confined within the United States, it’s equally
applicable here: Hetronic isn’t entitled to injunctive relief in markets it hasn’t
actually penetrated.
In a footnote, Hetronic argues that “Defendants’ geographic argument is
doubly irrelevant because Hetronic obtained the marks in question by sale, not by
first use; rights thus flowed via contract rather than particular jurisdictions’ first-use
laws.” Appellee’s Resp. Br. at 31 n.7 (emphasis altered). If anything, Hetronic’s
argument on this point undermines the district court’s injunction. As Hetronic
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 49

-- 49 of 67 --

50
acknowledges, its rights against Defendants flow from contract—not necessarily
from trademark violations under the Lanham Act.
Consider an example. If Defendants begin tomorrow selling their remote
controls in a country in which Hetronic has no presence, Hetronic could hardly assert
a trademark claim against Defendants. How could there be market confusion, the
hallmark of a trademark claim, when there were no confusingly similar products
being marketed? Hetronic seems to argue that it could assert a contract claim against
Defendants because the parties’ agreements limited Defendants’ rights to use
Hetronic’s product marks (NOVA, ERGO, etc.). And Hetronic would probably be
right. But that contract claim wouldn’t necessarily support a trademark claim, much
less injunctive relief under the Lanham Act.
Accordingly, we narrow the injunction to the countries in which Hetronic
currently markets or sells its products. To the extent those countries have changed
since the district court entered the injunction, we remand for the court to modify the
injunction in accordance with this opinion.
II. Defendants’ Ownership Defense
A. Background
Leading up to trial, Defendants repeatedly argued that Hetronic’s claims failed
because Defendants owned all the disputed intellectual property, including the
products’ trademarks and trade dress. To explain Defendants’ rationale, we first
provide additional background about the products’ origins and Hetronic’s formation.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 50

-- 50 of 67 --

51
Hetronic was initially founded in Germany in the early 1980s as Hetronic
Steuersysteme GmbH. In 2000, Hetronic Steuersysteme’s founder, Max Heckl,
moved to the United States and formed Hetronic International, Inc. (the company we
have called “Hetronic”), which became the headquarters for Hetronic-related
companies. By this time, there were several Hetronic-related subsidiary companies,
including Hetronic Malta Limited and Hetronic USA.
In July 2000, Hetronic entered a research-and-development agreement with
Hetronic Steuersysteme, Hetronic Malta, and Hetronic USA to “pool their resources”
and to “share the costs equally between them” as they worked to further develop,
market, and sell radio remote controls. Appellants’ App. vol. 7 at 1617. The R&D
Agreement refers to Hetronic as the “Contractor” and refers to the other three
Hetronic companies collectively as “Developer.” Id. The R&D Agreement contains
this later-disputed provision:
Contractor acknowledges that the Developer [i.e., Hetronic
Steuersysteme, Hetronic Malta Limited, and Hetronic USA] is, and shall
remain, the sole owner of all that which is done, produced or developed
by the Contractor, including but not limited to the know-how, technical
information, designs, product descriptions, trade marks, trade names and
of all and any data or information that the Developer has supplied to the
Contractor or which may have been developed by the Contractor in
connection with the Work and of any improvements . . . made by either
the Developer or the Contractor during the term of this agreement or at
any other time if these relate to the Work, and acknowledges Developer’s
exclusive right, title, and interest in and to such property.
Id. at 1617–18 (emphasis altered).
By 2006, Hetronic Steuersysteme—Heckl’s original company—had a minor
role in the company’s wider operations. It sold to Hetronic its “Hetronic” trademarks
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 51

-- 51 of 67 --

52
registered in Germany, the United States, South Korea, Japan, China, Taiwan, and the
European Union. And because Hetronic Steuersysteme’s business “was focused on
the marketing, sales and assembly of [radio remote controls] in Germany,” it changed
its name to Hetronic Deutschland (which would later be purchased by Fuchs’s
company, Hetronic Germany). Id. at 1618.
In January 2008, years after the R&D Agreement was signed, Methode
Electronics, Inc., a Delaware corporation, sought to acquire all the Hetronic-related
companies. But during negotiations, Methode learned that Hetronic’s distributor in
Germany, Hetronic Deutschland, was embroiled in a tax dispute with the German
government, so Methode declined to purchase that company.
Before completing the sale to Methode, Heckl sought to consolidate all of his
companies’ intellectual property in Hetronic. So Hetronic Deutschland sold to
Hetronic the trademarks for the “Hetronic” name that it had registered in South
America and Malta. Heckl believed that when the sale to Methode was completed,
Hetronic had owned the rights to all the intellectual property held by the Hetronic-
related companies, including the NOVA and ERGO trademarks and their trade dress.
In September 2008, Methode completed its purchase of the Hetronic
companies. The purchase agreement included “All Intellectual Property owned by,
licensed by or used by any [Hetronic-related company not including Hetronic
Deutschland].” Id. at 1620. The agreement defined “Intellectual Property” as “[a]ll
trademarks, service marks, certification marks, trade dress, logos, trade names,
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 52

-- 52 of 67 --

53
Internet domain names, and corporate names, . . . including all goodwill associated
therewith.” Id. at 1621.
After the sale, Heckl continued to own and manage Hetronic Deutschland. But
in 2009, he considered selling the company. In response to a due-diligence inquiry
from Fuchs, Hetronic Deutschland represented that it had no “patents, utility models
or design rights . . . copyrights, trademarks, and/or respective applications.” Id. at
1623. Yet when Hetronic Germany bought Hetronic Deutschland in 2010, the
purchase agreement provided that “Seller sells and hands over to the Buyer . . . any
and all intangible assets . . . including, in particular, patents, trademarks, rights
relating to designs and utility models . . . that the Seller holds and can dispose
of . . . .” Id. at 1624.
Based on that series of transactions, Hetronic Germany alleges it believed that
it owned all the technology developed under the 2000 R&D Agreement as well as
“legacy” technology developed before the Agreement was executed. Id. at 1629. Its
rationale was as follows. Hetronic Germany is the successor of Hetronic
Deutschland, which, when it was known as Hetronic Steuersysteme, became a party
to the R&D Agreement. Under that agreement, Hetronic Steuersysteme—along with
Hetronic Malta and Hetronic USA—retained ownership over “the know-how,
technical information, designs, product descriptions, trade marks, [and] trade names.”
Id. at 1617–18. Though Hetronic Deutschland later sold to Hetronic the trademark
rights to the “Hetronic” name, Hetronic Germany maintained that the sale didn’t
include any other intellectual property. And because Methode didn’t purchase
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 53

-- 53 of 67 --

54
Hetronic Deutschland (or any of its assets, intangible or otherwise), Hetronic
Germany claimed that it owns the intellectual property that its predecessor, Hetronic
Deutschland, retained under the R&D Agreement. Defendants have continued to rely
on that same theory in defending against Hetronic’s trademark claims.
B. The District Court Correctly Barred Defendants from Raising Their
Ownership Defense
Based on their reading of the R&D Agreement, Defendants planned to assert
their ownership defense at trial. But just two months before trial, the EUIPO Board of
Appeal issued its decision in Hetronic’s favor, and Hetronic moved for summary
judgment on Defendants’ ownership defense.10 Relying on the Board of Appeal’s
decision in the EUIPO proceedings, Hetronic argued that preclusion principles barred
Defendants from claiming any ownership interest in the relevant intellectual
property. The district court granted the motion via oral ruling after a hearing, and,
after another hearing addressing Defendants’ “Motion to Clarify” (essentially a
motion to reconsider), the court prohibited Defendants from arguing at trial that they
owned any of the trademarks or trade dress. Defendants assert that the district court
erred in so ruling.
Because the district court construed Hetronic’s motion as one for summary
judgment, we review the district court’s ruling de novo. Savant Homes, Inc. v.
Collins, 809 F.3d 1133, 1137 (10th Cir. 2016) (citation omitted).
10 For reasons unimportant here, Hetronic initially moved under Rule 50(a),
but the district court rightly construed the motion as one for summary judgment.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 54

-- 54 of 67 --

55
The issue-prelusion dispute before us is atypical in that we’re considering the
preclusive effect of a foreign judgment. Federal courts recognize and enforce foreign
judgments if they meet due-process standards. See Phillips USA, Inc. v. Allflex USA,
Inc., 77 F.3d 354, 359 (10th Cir. 1996) (quoting Hilton v. Guyot, 159 U.S. 113, 202
(1895));11 Restatement (Second) of Conflict of Laws § 98 cmt. b (1971) (explaining
that valid “[j]udgments rendered in a foreign nation . . . will be accorded the same
degree of recognition to which sister State judgments are entitled”). The parties agree
that the judgments rendered in the EUIPO proceedings satisfy this standard, as do we.
But although we consider the preclusive effect of a foreign judgment, as a
federal court examining a federal-law question, we rely on the federal law of issue
preclusion. See Murdock v. Ute Indian Tribe of Uintah and Ouray Reservation, 975
F.2d 683, 687 (10th Cir. 1992) (footnote and citations omitted); cf. Blonder-Tongue
Lab’ys, Inc. v. Univ. of Ill. Found., 402 U.S. 313, 324 n.12 (1971) (discussing res
judicata and noting that “[i]n federal-question cases, the law applied is federal
11 This due-process standard is met if “there has been opportunity for a full and
fair trial abroad before a court of competent jurisdiction, conducting the trial upon
regular proceedings, after due citation or voluntary appearance of the defendant, and
under a system of jurisprudence likely to secure an impartial administration of justice
between the citizens of its own country and those of other countries, and there is
nothing to show either prejudice in the court, or in the system of laws under which it
is sitting, or fraud in procuring the judgment.” Phillips USA, 77 F.3d at 359 (quoting
Hilton, 159 U.S. at 202); see also Soc’y of Lloyd’s, 402 F.3d at 999 (quoting same
Hilton language).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 55

-- 55 of 67 --

56
law”).12 “[I]ssue preclusion bars a party from relitigating an issue once it has suffered
an adverse determination on the issue, even if the issue arises when the party is
pursuing or defending against a different claim.” Park Lake Res. Ltd. Liab. v. U.S.
Dep’t of Agric., 378 F.3d 1132, 1136 (10th Cir. 2004) (citation omitted). In the civil
context, four criteria must be met before a court may apply the doctrine of issue
preclusion:
(1) the issue previously decided is identical with the one presented in the
action in question,
(2) the prior action has been finally adjudicated on the merits,
(3) the party against whom the doctrine is invoked was a party, or in
privity with a party, to the prior adjudication, and
(4) the party against whom the doctrine is raised had a full and fair
opportunity to litigate the issue in the prior action.
Id. (citation omitted). Though Hetronic argues why it has met each element,
Defendants seriously contest only the first two elements. Focusing our discussion on
those elements, we conclude that the district court rightly precluded Defendants from
presenting their ownership defense to the jury.
12 At least one authority suggests that U.S. courts should apply foreign
preclusion law if the foreign rules “are substantially the same as the rules of the
[U.S.] court.” Restatement (Second) of Conflict of Laws § 98 cmt. f (1971). Under
that principle, it’s arguable that EU preclusion law should govern this dispute. But
the parties agree that federal issue-preclusion law applies, and they didn’t provide
any discussion of EU preclusion law. Given the lack of briefing on EU preclusion
law, we follow the parties’ lead and the authority we identify above in considering
this issue under federal issue-preclusion law.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 56

-- 56 of 67 --

57
Under the first element, we assess whether the issue Defendants seek to litigate
“is the same as the one addressed previously by” EUIPO. Murdock, 975 F.2d at 687.
That is, we aim “to prevent repetitious litigation of what is essentially the same
dispute.” Restatement (Second) of Judgments § 27 cmt. c (1982). Here, the issue—
whether Defendants own the disputed intellectual property—is essentially the same
one decided in the EUIPO proceedings. That becomes clear, though, only after
reading both the Cancellation Division’s decision and the Board of Appeal’s
decision.
Defendants are correct that the Cancellation Division didn’t decide the
ownership issue. Recall that Abitron Germany initiated the EUIPO proceedings,
arguing that the EU should nullify Hetronic’s “NOVA” trademark because Hetronic
had filed for the mark in bad faith (i.e., Hetronic supposedly knew that Abitron
Germany had a stronger claim to ownership of the mark). Both parties to that
proceeding based much of their arguments on their respective claims to ownership of
the intellectual property. But the Cancellation Division equivocated on the ownership
issue: “The arguments . . . give the impression that both [Defendants] and [Hetronic]
were authorized to use” the NOVA trademark. Appellants’ App. vol. 13 at 3180. So
that initial tribunal decided the dispute on a narrow basis. It concluded only that
Hetronic didn’t act in bad faith when it filed for (and obtained) the NOVA trademark
because Hetronic had a valid basis to believe that it owned the mark, regardless of
whether it actually had the superior claim to ownership. If the EUIPO proceedings
had ended with the Cancellation Division, issue preclusion would not apply.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 57

-- 57 of 67 --

58
But unlike the Cancellation Division, the Board of Appeal tackled the
ownership issue head-on. It framed the dispute this way: When a company transfers
all of its “business operation”—as the original Hetronic International did when
Methode acquired it—that necessarily includes “the right to a trademark acquired by
use.” Id. at 3112. In other words, though Abitron Germany tried to argue that
Methode’s purchase of Hetronic International didn’t include the rights to use the non-
registered “NOVA” trademark, the Board of Appeal concluded that it was impossible
to separate the rights to a company’s trademarks from the operation of the business as
a whole.
In reaching its decision, the Board of Appeal reasoned that “[t]he decisive
question is . . . whether the Hetronic business operation remained with [Abitron
Germany’s] legal predecessors. That is not the case.” Id. at 3112. Indeed, the Board
of Appeal reached the opposite conclusion, holding that “[i]t is clear from all the[]
agreements that Hetronic Deutschland, as one of the legal predecessors to [Abitron
Germany], had no rights to the company name [or] the German ‘Hetronic’
trademarks.” Id. at 3113. It based its ruling on its conclusion that Methode’s purchase
of Hetronic International “comprise[d] all of the intellectual property.” Id. at 3112
(emphasis added). In short, the Board of Appeal resolved the exact issue that
Defendants sought to dispute at trial: that when Methode bought Hetronic
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 58

-- 58 of 67 --

59
International, it obtained ownership of all the Hetronic-related intellectual property.13
Thus, the district court rightly concluded that the EUIPO proceedings resolved the
same issue that Defendants sought to dispute at trial.
Defendants’ contrary arguments fail to persuade us. They argue that the Board
of Appeal didn’t decide the same issue because the parties’ dispute before EUIPO
was limited to the NOVA trademark and no others. According to Defendants, because
the Board of Appeal’s decision didn’t mention EURO, GL, GR or any of the other
product marks, its decision governs only ownership of the NOVA trademark.
But we read the Board of Appeal’s decision the same way as the district court:
“ownership of the intellectual property at issue was very much an either/or
proposition. Either it all passed to [Hetronic] in 2008 or to [D]efendants in 2010.”
Supp. App. vol. 2 at 361. It’s evident that the Board of Appeal concluded that all the
intellectual property passed to Hetronic, not just the NOVA trademark. See
Appellants’ App. vol. 13 at 3112 (explaining that the relevant agreements “show that
the assets transferred . . . comprise all of the intellectual property, including all
Intellectual Property incorporated into the radio remote control products developed,
manufactured, marketed or sold by [Hetronic].” (emphasis added) (internal quotation
marks omitted)). Moreover, Defendants fail to explain how the ownership dispute
13 Several months after oral argument, Hetronic filed a Rule 28(j) letter
informing us that the General Court of the European Union had upheld the Board of
Appeal’s decision. In response, Defendants renewed their assertion that the General
Court, like EUIPO, lacked jurisdiction to decide the ownership issue. But as we
explain below, Defendants waived any argument about EUIPO lacking jurisdiction
by not raising it in the district court.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 59

-- 59 of 67 --

60
would differ as to the other trademarks. Indeed, Abitron Germany’s claim to the other
intellectual property would be based on the same theories, documents, and arguments
it presented vis-à-vis the NOVA mark and that the Board of Appeal rejected. See
Restatement (Second) of Judgments § 27 cmt. c (1982) (suggesting that in assessing
whether the previous tribunal decided the same issue, courts should ask if “there [is]
a substantial overlap between the evidence or argument to be advanced in the second
proceeding and that advanced in the first”).
Defendants fare no better on the second element. There, we consider whether
“the prior action has been finally adjudicated on the merits.” United States v. Rogers,
960 F.2d 1501, 1508 (10th Cir. 1992) (citation omitted). It has. After resolving the
parties’ dispute, EUIPO dismissed Abitron Germany’s petition and ordered it to pay
the costs of the proceeding.
Defendants nevertheless insist that the Board of Appeal’s finding concerning
ownership is mere dicta, and thus it didn’t actually decide the issue. True,
“[a]djudication on the merits requires that the adjudication be necessary to the
judgment,” so dicta wouldn’t suffice. Murdock, 975 F.2d at 687 (citations omitted).
But the Board of Appeal’s ownership ruling wasn’t dicta. Dictum refers to “[a]
judicial comment made while delivering a judicial opinion, but one that is
unnecessary to the decision in the case and therefore not precedential (although it
may be considered persuasive).” Dictum, Black’s Law Dictionary (11th ed. 2019).
Here, the Board of Appeal’s decision turned on its conclusions regarding who owned
the intellectual property: “[Abitron Germany] bases its allegation of bad faith on
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 60

-- 60 of 67 --

61
supposedly earlier rights in the mark ‘NOVA’. As already pointed out . . . , however,
it has no rights to a ‘NOVA’ trademark acquired by use.” Appellants’ App. vol. 13 at
3114. Stated differently, the Board of Appeal’s ruling that Hetronic owned all the
intellectual property was a necessary predicate to its conclusion that Defendants’
bad-faith claim failed. So the ownership ruling wasn’t dicta.14
In brief, because Hetronic has met each of the required elements, we affirm the
district court’s summary-judgment ruling on Defendants’ ownership defense.
III. District Court’s Evidentiary Rulings at Trial
Defendants challenge three of the district court’s trial rulings. First,
Defendants argue that the district court erroneously sustained Hetronic’s relevance
objection, precluding them from arguing that the Lanham Act didn’t reach their
foreign-sales activity. We already dealt with that issue above: Any error by the
district court was harmless because we conclude as a matter of law that the Lanham
Act reaches Defendants’ conduct. See Bridges v. Wilson, 996 F.3d 1094, 1099 (10th
14 Defendants raise a number of other arguments in passing—usually devoting
little more than a sentence to each—that we decline to address. First, they argue that
EUIPO lacked jurisdiction to decide the ownership issue. Defendants have forfeited
that argument by failing to raise it in the district court. And because Defendants
failed to identify plain error as the standard of review governing this new argument
(let alone contend that the argument survives that exacting standard), we decline to
consider it. See Grupo Cementos, 970 F.3d at 1282–83 (“[I]n order to avoid a waiver
on appeal, a party is required to identify plain error as the standard of review in their
opening brief and to provide a defense of that standard’s application.” (citations
omitted)). Second, addressing the third element, Defendants argue that issue
preclusion could bind only Abitron Germany, as the other Defendants weren’t parties
to the EUIPO proceedings. But like their jurisdictional argument, they didn’t argue
the third element in the district court, nor do they make the case that their argument
can survive plain-error review, so we consider that argument waived. Id.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 61

-- 61 of 67 --

62
Cir. 2021) (“[E]ven if the trial court is mistaken, it will not be reversed unless its
ruling results in substantial prejudice, or had a substantial effect on the outcome of
the case.” (alteration in original) (quotation omitted)).
Second, Defendants argue that the district court wrongly precluded them from
using their evidence that they owned the intellectual property for purposes unrelated
to the court’s issue-preclusion ruling. And third, Defendants contest the district
court’s exclusion of their damages expert. We reject both of these challenges in turn.
“Evidentiary rulings generally are committed to the very broad discretion of
the trial judge, and they may constitute an abuse of discretion only if based on an
erroneous conclusion of law, a clearly erroneous finding of fact or a manifest error in
judgment.” Leprino Foods Co. v. Factory Mut. Ins. Co., 653 F.3d 1121, 1131 (10th
Cir. 2011) (internal quotation marks and citation omitted). And “[e]ven if the court
finds an erroneous evidentiary ruling, a new trial will be ordered only if the error
‘affected the substantial rights of the parties.’” Id. (quoting Webb v. ABF Freight
Sys., Inc., 155 F.3d 1230, 1246 (10th Cir. 1998)).
A. Waiver-and-Acquiescence and Good-Faith-Belief-in-Ownership
Defenses
Despite the district court’s issue-preclusion ruling that Defendants couldn’t
assert at trial that they owned the intellectual property, Defendants argue that they
should have been allowed to introduce ownership evidence for a different purpose.
Specifically, Defendants sought to present a waiver-and-acquiescence defense to
Hetronic’s contract claims and a good-faith-belief-in-ownership defense to combat
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 62

-- 62 of 67 --

63
the willful-infringement element of the trademark claims. The district court didn’t
abuse its discretion in handling either of these issues.
First, the district court ruled—over Hetronic’s objection—that Defendants
could assert a waiver-and-acquiescence defense. But the district court clarified that
that defense “raises no issue as to whether defendants believed they owned the
trademarks or the technology”; “[t]he question is whether Hetronic had the factual
knowledge and subjective intent necessary to establish the acquiescence defense.”
Supp. App. vol. 2 at 362 (emphasis added). In other words, to present this defense
and show that Hetronic acquiesced to Defendants’ contractual breaches, Defendants
needed to prove that Hetronic believed that Defendants owned the intellectual
property—it was irrelevant whether Defendants believed that they owned it. Based on
that ruling, Defendants apparently chose not to pursue the defense. That was no fault
of the district court’s.
Second, Defendants challenge the district court’s refusal to permit them to
assert a good-faith-belief-in-ownership defense, but they ignore the district court’s
rationale. The district court prohibited Defendants from raising that defense, not
because of its preclusion ruling, but because Defendants had forfeited it: They had
failed to raise it in their answers, at summary judgment, or in their pretrial briefing.
And Defendants don’t challenge the district court’s conclusion that allowing them to
raise that defense on the eve of trial would have significantly prejudiced Hetronic.
We thus conclude that the district court rightly prevented Defendants from raising
this defense.
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 63

-- 63 of 67 --

64
B. Exclusion of Defendants’ Damages Expert
During the trial, Defendants sought to introduce testimony from their damages
expert, Alexander Demuth, that any damages the jury awarded under the Lanham Act
must be reduced by Defendants’ costs of goods (i.e., their expenses in producing their
remote controls). The district court permitted Demuth to testify but prohibited him
from opining about the costs-of-goods issue. Defendants appeal that ruling.
During discovery, Defendants “consistently claimed . . . that they could not
determine their costs of goods sold because their accounting system of ‘total cost
method’ does not contain the requisite information.” Supp. App. vol. 1 at 77
(citations omitted). Yet in his expert report, Demuth purported to calculate
Defendants’ costs of goods sold based on spreadsheets that Defendants had prepared
“after-the-fact” “in which they . . . ‘allocated’ total costs for the companies into
several categories—but not costs associated with particular sales.” Id. Hetronic
moved to exclude Demuth’s costs-of-goods testimony, asserting that it was based on
“unreliable data that defendants ginned up for Demuth after claiming for months that
they had no way to estimate their costs of goods sold.” Id. at 76.
At the Daubert hearing, the district court provisionally denied Hetronic’s
motion based on Defendants’ representation that “[a]n independent person from the
company will testify to the validity of the numbers.” Id. vol. 2 at 288 (“He will not
confirm these numbers are, in fact, accurate. That’s up to the company to confirm, to
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 64

-- 64 of 67 --

65
support his expert opinion.”). The district court conditioned its ruling on Defendants
verifying the underlying numbers upon which Demuth would base his testimony: “I
do conclude that . . . if the defendants do carry their burden of presenting evidence to
support . . . the cost of goods sold, then Mr. Demuth will be permitted to testify that
cost of goods sold should be deducted from any Lanham Act recovery of the
defendants’ profits.” Id. at 291–92 (emphasis added).
But by the time of trial, Defendants had failed to introduce any testimony or
evidence confirming the accuracy of the underlying numbers upon which Demuth
based his expert report. So, in an oral ruling near the end of the trial, the district court
prohibited Demuth from testifying about the costs-of-goods issue: “We don’t have
the witness that I was told [at the Daubert hearing] I would have . . . , but more
importantly, we don’t have . . . the independently admissible evidence that I was told
that we would have, and which I conclude is required under Section 35 of the
Lanham Act.” Appellants’ App. vol. 13 at 3334–35.
Complicating matters, the district court’s brief oral ruling doesn’t clearly
establish the legal basis for its decision. The parties advance competing—and equally
erroneous—theories. Defendants argue that the district court excluded Demuth’s
testimony under Rule 602 because he lacked “personal knowledge of the cost
information about which he testified.” Appellants’ Opening Br. at 49. But Defendants
misconstrue the court’s point about Rule 602. The court merely pointed out that
Demuth himself couldn’t testify about the accuracy of the underlying numbers
because he hadn’t verified them. Appellants’ App. vol. 13 at 3334 (“[Demuth] is not
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 65

-- 65 of 67 --

66
a Rule 602 percipient witness as to the reliability of the numbers supplied by [the
Abitron entities’ CEO].” (emphasis added)).
For its part, Hetronic contends that the district court excluded Demuth’s
testimony “under Daubert.” Appellee’s Resp. Br. at 54. But that’s equally incorrect.
The district court recognized that Demuth’s testimony sufficed under Rules 702 and
703 but explained that more was required under the Lanham Act:
It’s very likely that the basis that Mr. Demuth has offered for
testifying about cost of goods sold is sufficient for use by an expert under
Rule 703 for purposes of expert testimony under Rule 702. . . .
But it’s one thing for a source of information to be sufficient for
use by an expert under Rule 703 for purposes of Rule 702 expert
[testimony]; in my view, it is quite another thing for the jury to have
testimony and evidence that passes muster under the substantive demands
of Section 35 of the Lanham Act.
Appellants’ App. vol. 13 at 3334 (emphasis added). Thus, the district court appears to
have concluded that Defendants failed to “prove all elements of cost or deduction
claimed,” as required by the Lanham Act. 15 U.S.C. § 1117(a).
Though the district court’s precise rationale is unclear, “we may affirm the
district court for any reason supported by the record.” Spring Creek Expl. & Prod.
Co., LLC v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1032–33 (10th Cir. 2018)
(citation omitted). We have previously recognized that a district court may exclude
an economic expert if the expert’s “opinions lacked foundation because they were
based on the self-serving statements of an interested party.” Champagne Metals v.
Ken-Mac Metals, Inc., 458 F.3d 1073, 1080 n.4 (10th Cir. 2006) (brackets and
internal quotation marks omitted). That’s what happened here. It was the underlying
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 66

-- 66 of 67 --

67
data supplied to Demuth—not Demuth’s testimony itself—that was problematic.
After consistently asserting that they kept no costs-of-goods records, Defendants
suddenly produced just the financial records they needed to offset any potential
damages award. The district court was rightly skeptical of those fortuitous
documents. And even though the district court concluded that Demuth had used
reliable methods to form his opinion, his testimony wouldn’t be worth much if it was
based on unreliable, manufactured numbers. Defendants had ample time and
opportunity to authenticate the disputed numbers (as they promised they would), but
they never did. On these facts, the district court didn’t abuse its discretion in
excluding Demuth’s costs-of-goods testimony.
CONCLUSION
For the forgoing reasons, we affirm in part, reverse in part, and remand to the
district court to modify its injunction in accordance with our opinion.15
15 We also grant Defendants’ unopposed motion to file five documents under
seal. Each of the documents was marked as confidential under the district court’s
protective order, and we are satisfied that the parties have demonstrated “a real and
substantial interest that justifies depriving the public of access to the records.”
JetAway Aviation, LLC v. Bd. of Cnty. Comm’rs, 754 F.3d 824, 826 (10th Cir. 2014)
(citation and internal quotation marks omitted).
Appellate Case: 20-6057 Document: 010110565869 Date Filed: 08/24/2021 Page: 67

-- 67 of 67 --