The world was a much smaller place in 1946 when Congress passed the Lanham Act, the legal framework for U.S. trademark protection. Last week, the Supreme Court decided the Lanham Act is applicable almost exclusively to infringement on U.S. soil. Companies that expect to rely on Lanham to protect foreign trademark violations through U.S. lawsuits are well-advised to come up with another plan. Until Congress updates the code. Led by Sonia Sotomayor, four justices said it was appropriate to adopt a broader standard “when there is a likelihood of consumer confusion in the United States.”

Writing for the majority, Justice Samuel Alito said the 10th Circuit Court of Appeals erred in upholding $96 million in trademark damages for Hetronic International, an Oklahoma-based manufacturer of remote controls for cranes and other heavy equipment.

In reversing the lower court, SCOTUS “limited the reach of federal trademark law, making it harder for U.S. companies to sue foreign rivals who sell copycat products abroad,” writes The Wall Street Journal.

Hetronic Germany, the company’s distributor in Europe, was subsequently purchased by Abitron Germany GmbH.

“Hetronic sued Abitron and its affiliates in federal court in Oklahoma for making and selling Hetronic-branded products with unauthorized parts,” Reuters reports, adding that “a jury found in favor of Hetronic and awarded more than $115 million in damages, $96 million of which was for violating federal trademark law. That $96 million was the subject of the appeal to the Supreme Court.”

“U.S. legal provisions that prohibit trademark infringement extend only to the claims where the claimed infringing use in commerce is domestic,” Alito wrote for the court.

While the justices were split on how the law should properly be applied in the future, all nine agreed the lower courts incorrectly extended Hetronic trademark protection outside the U.S., absolving Abitron Austria for liability in the U.S. for infringement that occurred abroad. The opinion cites the “longstanding principle” that unless Congress expressly states a law governs activity outside the U.S. it is presumed to be domestic in scope.

Most entertainment companies get around this by registering trademarks in each territory in which they do business, suing where infringement takes place. Both are costly propositions.

Hetronic’s convoluted history in Germany — which appears to have involved transfer of IP and trademark rights and a separate R&D joint venture — made it far from a typical infringement case. Its lawsuit argued that quantities of German product were being exported to and sold in the U.S., confusing American customers.

“Sotomayor argued that foreign conduct that caused confusion in the U.S. — which the law was designed to protect — could result in Lanham Act damages,” writes Bloomberg Law, noting that Alito rightly saw that the lower courts had overreached, according to Holland & Hart IP attorney Timothy Getzoff, who said that instead of temperately returning to the status quo he “went five steps the other direction” and “threw 70 years of jurisprudence out the window.”

Alito, Bloomberg says, “aimed for a simple bright-line rule,” but wound up writing an opinion that “ignored the nuance of a global marketplace.”