# Reebok v. Marnatech: Extraterritorial Reach and Asset Freezes in Counterfeiting

> The Ninth Circuit reached counterfeit sales in Mexican border towns and upheld a pretrial asset freeze, a holding reshaped by Abitron in 2023.

Topic: Trademarks  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/reebok-v-marnatech-timberlane-extraterritoriality/


*Reebok International, Ltd. v. Marnatech Enterprises, Inc.*, 970 F.2d 552 (9th Cir. 1992), argued July 9, 1991, and decided July 2, 1992, sat for three decades at the center of two important lines of trademark practice: how far the Lanham Act reaches across national borders, and what pretrial tools a court can deploy to preserve an eventual recovery against counterfeiters. Writing for the panel, Judge Reinhardt affirmed a district court that had reached counterfeit Reebok sales in Mexican border towns and had frozen the defendants' assets pending final judgment. Both holdings became staples of anti-counterfeiting litigation.

Reading the case in July 2026 requires care, because its two holdings have aged very differently. The extraterritoriality holding, grounded in an antitrust-derived comity test, has been overtaken by the Supreme Court's 2023 decision in *Abitron Austria GmbH v. Hetronic International, Inc.*, which rewrote the framework for the Lanham Act's foreign reach. The asset-freeze holding, grounded in the court's inherent equitable power, remains viable within limits later set by the Supreme Court. The case is thus a useful lesson in how a single opinion can be part vintage and part current.

## At a glance

- **Case:** *Reebok International, Ltd. v. Marnatech Enterprises, Inc.*, 970 F.2d 552 (9th Cir. 1992)
- **Court:** U.S. Court of Appeals for the Ninth Circuit
- **Decided:** July 2, 1992 (Reinhardt, J., joined by Fernandez, J., and Smith, District Judge, sitting by designation)
- **Holding:** The Lanham Act reached counterfeit sales abroad that affected U.S. commerce under the *Timberlane* comity factors, and the district court could freeze the defendants' assets pending an eventual profits award.
- **Status:** The extraterritoriality holding is superseded by *Abitron* (2023); the asset-freeze holding remains good law, subject to *Grupo Mexicano* (1999).

## Counterfeit sneakers on the border

Reebok manufactures and sells athletic and fashion footwear in the United States and abroad and owns federally registered REEBOK trademarks. In 1989 it moved in the U.S. District Court for the Southern District of California for emergency relief against a group of defendants, referred to collectively as Betech, who, in the court's words, "sell counterfeit REEBOK shoes in Mexican border towns (such as Tijuana)." The critical link to U.S. commerce was economic. As the opinion put it, "Betech's sales of counterfeit REEBOK shoes decreased the sale of genuine REEBOK shoes in Mexico and the United States."

The district court entered preliminary injunctions ordering the defendants to stop counterfeiting, barring destruction of evidence, and restricting the transfer of their assets without court approval. The defendants appealed, including the asset freeze. The Ninth Circuit reviewed the legal premises of the injunctions de novo, including the existence of subject matter jurisdiction, and reviewed the decision to issue the asset freeze for abuse of discretion. It affirmed. Related district-court opinions appear at 737 F. Supp. 1515 (S.D. Cal. 1989) and 737 F. Supp. 1521 (S.D. Cal. 1990).

## The Timberlane comity test for extraterritorial reach

The starting point for the Lanham Act's foreign reach is *Steele v. Bulova Watch Co.*, 344 U.S. 280 (1952), where the Supreme Court held that the Act could reach a U.S. citizen's trademark-infringing conduct in Mexico that produced effects on U.S. commerce. *Reebok* invoked *Steele* for the proposition that the Lanham Act provides a "broad jurisdictional grant." Building on that foundation, the Ninth Circuit analyzed extraterritoriality through the comity framework it had borrowed from antitrust law in *Timberlane Lumber Co. v. Bank of America*.

The *Timberlane* test proceeds in three parts, which the court quoted: "first, there must be some effect on American foreign commerce; second, the effect must be sufficiently great to present a cognizable injury to plaintiffs under the federal statute; and third, the interests of and links to American foreign commerce must be sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority." The third prong opens into a multi-factor balancing that weighs, among other things, the degree of conflict with foreign law, the nationality and principal places of business of the parties, the relative significance of the effects on the United States, any explicit purpose to harm American commerce, and the relative importance of domestic versus foreign conduct.

Applied to the facts, the framework favored Reebok. The counterfeit sales had a direct effect on U.S. commerce by reducing genuine Reebok sales here, the resulting injury was cognizable under the Lanham Act, and the comity factors, including the parties' U.S. connections and the absence of a genuine conflict with Mexican law, supported an assertion of extraterritorial authority. The court affirmed the Lanham Act's reach to the border-town sales.

## The asset freeze and the court's equitable power

The second holding addressed a remedy question that recurs in counterfeiting cases: can a court freeze a defendant's assets before judgment so that a later award is not rendered worthless? The Ninth Circuit said yes, and grounded the power in equity. The Lanham Act authorizes an equitable accounting and disgorgement of an infringer's profits as a form of final relief. Because the court would have authority to order that equitable remedy at the end of the case, it also possessed the inherent equitable power to issue provisional remedies ancillary to that authority, including an order restraining the transfer of assets that might satisfy an eventual profits award. The asset freeze was not a freestanding attachment device; it was a tool to preserve a specifically equitable remedy.

That distinction became decisive seven years later. In *Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.*, 527 U.S. 308 (1999), the Supreme Court held that a federal court lacks authority to issue a preliminary injunction freezing a defendant's assets when the plaintiff seeks only money damages, a purely legal claim. Crucially, the Court confined its holding to legal claims and left intact the use of asset freezes to preserve equitable relief. Because *Reebok*'s freeze rested on the Lanham Act's equitable accounting remedy, it fell on the surviving side of that line. Courts have continued to rely on *Reebok* to freeze assets where the underlying claim seeks disgorgement or other equitable relief, so this holding remains good law within the *Grupo Mexicano* limit.

## What Abitron changed

The extraterritoriality holding has not fared as well. In *Abitron Austria GmbH v. Hetronic International, Inc.*, 600 U.S. 412 (2023), decided June 29, 2023, the Supreme Court discarded the varied effects-and-comity tests the circuits had built on *Steele* and replaced them with a two-step framework drawn from its extraterritoriality cases. Step one asks whether Congress gave a "clear, affirmative indication" that the provision applies extraterritorially, which the Court found lacking for the core infringement provisions, 15 U.S.C. §§ 1114(1)(a) and 1125(a)(1). Step two identifies the statutory "focus" and asks whether the conduct relevant to that focus occurred in the United States. The Court located the focus in the "use in commerce" of the mark and held that the Act reaches only domestic infringing uses in commerce. Along the way the majority described *Steele* as narrow and factbound, sidestepping the effects tests that had grown out of it.

The practical consequence for *Reebok* is direct. The Ninth Circuit's *Steele*-derived *Timberlane* comity test for Lanham Act extraterritoriality no longer states the governing standard. After *Abitron*, the question is not whether foreign conduct sufficiently affects U.S. commerce under a balancing of comity factors, but whether the infringing "use in commerce" was itself domestic. A modern plaintiff on facts like Reebok's would have to frame its case around domestic uses in commerce rather than the downstream U.S. economic effects of foreign sales.

## Open questions

- **How much of the border-town scenario survives Abitron?** Whether cross-border counterfeit sales can be reached now turns on identifying a domestic "use in commerce," a line the Supreme Court did not fully define and that lower courts are still drawing.
- **What counts as a domestic use in a counterfeiting supply chain?** Importation, domestic resale, and in-country display may qualify, but the boundaries relevant to counterfeiters who sell just across the border remain unsettled.
- **How far does the equitable asset freeze extend?** *Reebok* and *Grupo Mexicano* mark the poles, yet the precise reach of pretrial freezes tied to disgorgement claims continues to be litigated case by case.

## Implications for inventors and businesses

- **Do not rely on the old effects test for foreign infringement.** After *Abitron*, build the case around infringing "use in commerce" that touched the United States, not the domestic economic effects of foreign sales.
- **The asset freeze remains a live tool, if you plead equity.** A claim for an accounting or disgorgement of profits supports a pretrial freeze under *Reebok*. A claim for money damages alone does not, under *Grupo Mexicano*.
- **Register and enforce abroad.** With the Lanham Act's foreign reach narrowed, foreign trademark registrations and local enforcement in the countries where counterfeiting occurs are now essential complements to U.S. litigation.
- **Move early to preserve recovery.** Counterfeiters dissipate assets quickly. Seek provisional equitable relief at the outset, framed around the disgorgement remedy, to keep a later award collectible.

## Frequently asked questions

**What did Reebok v. Marnatech hold about the Lanham Act reaching foreign sales?**
The Ninth Circuit applied the Timberlane comity factors and held the Lanham Act reached counterfeit Reebok sales in Mexican border towns because they had a direct effect on U.S. commerce, presented a cognizable injury, and involved U.S.-connected defendants without a real conflict with Mexican law. That effects-and-comity approach to extraterritoriality has since been displaced by the Supreme Court's 2023 decision in Abitron Austria v. Hetronic.

**Is Reebok v. Marnatech still good law after Abitron?**
Only in part. Its extraterritoriality holding, built on the Steele-derived Timberlane comity test, no longer states the governing standard after Abitron Austria v. Hetronic, which replaced circuit effects tests with a domestic "use in commerce" focus. But its separate holding upholding a pretrial asset freeze rests on the court's inherent equitable power and remains cited, subject to the limit in Grupo Mexicano.

**Why could the court freeze the defendants' assets before final judgment?**
Because the Lanham Act authorizes an equitable accounting and disgorgement of an infringer's profits as final relief, the court could use its inherent equitable power to issue provisional remedies, including an asset freeze, to preserve that ultimate remedy. The Supreme Court later held in Grupo Mexicano that such freezes are unavailable when a plaintiff seeks only money damages, so the power turns on the presence of an equitable claim.

## Authorities and sources

- Opinion, *Reebok International, Ltd. v. Marnatech Enterprises, Inc.*, 970 F.2d 552 (9th Cir. 1992), vLex: https://case-law.vlex.com/vid/reebok-intern-ltd-v-891112803
- Docket and citation record, *Reebok International, Ltd. v. Marnatech Enterprises, Inc.*, 970 F.2d 552 (9th Cir. 1992), CourtListener: https://www.courtlistener.com/opinion/9009032/reebok-international-ltd-v-marnatech-enterprises-inc/
- *Steele v. Bulova Watch Co.*, 344 U.S. 280 (1952), Cornell Legal Information Institute: https://www.law.cornell.edu/supremecourt/text/344/280
- *Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.*, 527 U.S. 308 (1999), Cornell Legal Information Institute: https://www.law.cornell.edu/supct/html/98-231.ZS.html
- Slip opinion, *Abitron Austria GmbH v. Hetronic International, Inc.*, No. 21-1043 (U.S. June 29, 2023): https://www.supremecourt.gov/opinions/22pdf/21-1043_7648.pdf
- Faegre Drinker, "Supreme Court Decides Abitron Austria GmbH v. Hetronic International, Inc.": https://www.faegredrinker.com/en/insights/publications/2023/6/supreme-court-decides-abitron-austria-gmbh-v-hetronic-international-inc