A Ruling in Costco v. Omega

Back in early August here, I talked about Costco v. Omega, a case scheduled to be heard by the Supreme Court during this session, which could have a huge potential on the publishing industry.

JCK, a jewelers' website, summarized the case here:

The case began in 2004, when Omega sued Costco in federal court in California over its sales of grey market watches. The term refers to a practice in which retailers buy brands from unauthorized dealers located overseas and resell them at lower prices in the United States.

The case differed from past fights in that Omega used copyright infringement to fight its case. Since Omega watches sold by Costco carry the watch company’s copyrighted icon, the company argued that selling them without its authorization violates U.S. copyright law. But Costco argued that the case could impede the ability of retailers to sell products without authorization ...

Justice Elena Kagan recused herself from the decision, leaving eight justices, who split 4-4 in a decision handed down on Monday, December 13.

A split means the lower court's ruling is upheld, Omega wins, and this case did not create a precedent.

According to Publishers Weekly here:

The Association of American Publishers (AAP) had "filed an amicus brief in September urging the Supreme Court to uphold the Ninth Circuit ruling in favor of Omega, maintaining that allowing Costco to sell the watches would in essence 'legalize the importation of books that were manufactured abroad for distribution in foreign markets and never intended for sale in the United States'.”

As I explained in my previous post, a decision passed by the Supreme Court on June 1, 1908 established what is called the "first-sale doctrine":

... one who has sold a copyrighted article, without restriction, has parted with all right to control the sale of it. The purchaser of a book, once sold by authority of the owner of the copyright, may sell it again, although he could not publish a new edition of it.

Publishers Weekly shared consumer groups' perspective on the case who wanted Costco to prevail:

“What happens to Netflix, Amazon and eBay if they have to find out where each item was made, whether it has a copyright logo made outside of the U.S., and then buy licensing rights from the copyright owner if the item was made abroad?"

Although this case did not establish a precedent, it is likely another case will come along to do so.