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20 April 2010

US Supreme Court Grants Certiorari in Costco Wholesale Corp. v. Omega

Under the Copyright Act’s first sale doctrine, codified at 17 U.S.C. § 109(a), the owner of any particular copy “lawfully made under this title” may sell or otherwise transfer ownership of that copy without the authorization of the copyright owner. In Quality King Distributors, Inc. v. L’anza Research International, Inc., 523 U.S. 135 (1998), the Supreme Court held that the first sale doctrine is applicable to imported copies. Id. at 138. In the decision below, the Ninth Circuit limited Quality King to its facts, which involved domestically manufactured goods that were sold abroad and then imported back into the United States, and held that the statutory phrase “lawfully made under this title” applies only to domestically manufactured goods. On April 19, 2010, the Supreme Court granted certiorari in Costco Wholesale Corp. v. Omega, S.A., No. 08-1423, to decide whether the first sale doctrine applies to imported goods manufactured abroad.

This case is important to any retailer, importer or distributor of copyrighted goods manufactured overseas. Offshore product manufacturing is increasingly common, and businesses need to know whether goods lawfully produced and sold abroad are subject to a copyright infringement action if imported into the United States without the authorization of the copyright owner.

The respondent in Costco, Omega S.A., sought to prevent Costco from reselling watches that incorporated a copyrighted design. The watches were manufactured abroad and originally sold by Omega to authorized foreign distributors. In the decision below, the Ninth Circuit reversed the district court’s grant of summary judgment to Costco under a first sale defense, holding under Ninth Circuit precedent that § 109(a) grants first sale protection only to copies legally made and sold in the United States, and not to copies that “were made and first sold abroad.” 541 F.3d 982, 986.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on June 10, 2010, and amicus briefs in support of the respondent will be due on July 12, 2010. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, D.C. office.

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