Trademark and Copyright Litigation Update


Supreme Court Evenly Split on Copyright First-Sale Case: On December 13, 2010, an equally-divided Supreme Court issued its decision in Costco v. Omega, 131 S. Ct. 565 (2010), thereby affirming the Ninth Circuit?s decision in U.S. Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008), that the copyright first-sale doctrine does not apply to imported goods manufactured abroad. Justice Kagan did not participate in the decision.

Under the first-sale doctrine of the Copyright Act, 17 U.S.C. §109(a), a copyright holder has exclusive control over an item?s first sale. After the first sale, any subsequent owner may resell the item without interference. Costco purchased Swiss-made Omega watches manufactured and sold to authorized distributors abroad. Following their importation into the U.S., they were resold at prices that undercut Omega?s U.S. dealers. The question was whether Omega could rely on the first-sale doctrine to prevent resale in the United States. As we wrote in our June 2010 edition, the Ninth Circuit held it could because the Copyright Act does not recognize foreign sale of an item manufactured abroad. It concluded that for purposes of the Copyright Act, an item?s first sale in the United States is its first sale. The Supreme Court affirmed, but no precedent was set because the Court was evenly split. At least in the Ninth Circuit, however, the decision strengthens copyright owners? control over sales of their products and undermines U.S. resellers? ability to sell imported goods bearing logos or designs protected in the U.S.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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