Rockwell wins key judgment in counterfeit lawsuit

US group Rockwell Automation has been cleared to pursue an action against an Italian spare parts company it has accused of counterfeiting, referencing overseas sales that it claims infringed its trademarks.

The ruling is one of the first tests of the precedent set by a Supreme Court judgment a few weeks ago, which raised fears about the ability of US firms to pursue actions against counterfeiters overseas after concluding that federal trademark law does not apply to trademark infringement that takes place exclusively outside the US.

In that case, Hetronic – an Oklahoma-based manufacturer of remote control devices for construction equipment – accused its Austrian distributor Abitron of reverse engineering its products, manufacturing them and selling them on to customers as if they were genuine Hetronic products.

Even though the activity took place in Europe, Hetronic sued Abitron in the US for trademark infringement under the decades-old Lanham Act, winning $90 million in damages in a lower court judgment that went to appeal. Ultimately, SCOTUS ruled that Lanham’s jurisdiction only applied to the US, even though some infringing products were sold to American consumers.

In the Rockwell case, a Delaware court considered the impact of Hetronic vs Abitron at the request of Italian company Parcop, which operates a business called WiAutomation that Rockwell claims sold counterfeit Rockwell-branded products to customers in Europe as “new”, “new factory sealed” or “original product”.

Its complaint alleges that the products are unauthorised and “all materially different from genuine Rockwell products.”

Parcop had argued that the SCOTUS judgment meant that evidence about its trademark-infringing activities in Europe should not be considered by the court on the grounds of “extra-territoriality.”

That was rejected by the court in part because Rockwell has said it plans simply to present information about the activities as circumstantial evidence, and will not seek damages for foreign sales or apply the Lanham Act to foreign sales at trial.

“Hetronic does not prohibit Rockwell’s intended use of the foreign conduct and the parties should be prepared to proceed with the jury trial on July 24, 2023,” said Judge Gregory Williams in his ruling.

“Defendant’s request that Rockwell be ‘barred from relying on any evidence of foreign conduct in support of its claims’…is denied.”