SCOTUS Hears Costco v. Omega Today

Today, the U.S. Supreme Court will hear a copyright case that could have major implications for art museums and institutions in the U.S. I mentioned this case this past July, writing a brief review of a keen observation made by Cornell’s Peter Hirtle. You can read the July entry here.

The U.S. Supreme Court (“SCOTUS”) will hear Costco v. Omega, a “first-sale doctrine” decision from the Ninth Circuit that upheld Omega’s right to prevent Costco from selling legitimate Omega watches it had purchased from a gray-market importer. SCOTUS will consider whether Omega’s copyright strategy holds water.

The implications go far beyond manufactured goods. At the core of the dispute is the so-called “first-sale doctrine,” dating back to a 1908 Supreme Court decision involving publisher Bobbs-Merrill, which tried to use its copyright to prevent the sale of its books for less than $1. The Supreme Court rejected that idea, saying once the publisher had sold a book, the new owner could resell it for whatever price he wanted, or even lend it out for free (see: public libraries). Congress later wrote the first-sale doctrine into copyright law[.]

The bottom line in this case is whether the “first sale doctrine” means the copyrighted work has to be made in the U.S., or whether it means the copyrighted work could be made abroad? In other words, does U.S. copyright law have extraterritorial powers? Tough call. My prediction: SCOTUS upholds the Ninth Circuit’s decision.

Forbes Magazine has a good article on this mess here, including what this would mean to Netflix lovers like myself.

UPDATE: December 13, 2010.

With Justic Kagan recusing herself, SCOTUS went 4-4 over this issue, so we still have 9th Circuit decision that holds water.

1 comment on this post.
  1. pacelegal:

    The first sale doctrine in copyright is very important. It will have big implications for the secondary market in goods sold through online auction sites. Most of these companies won’t concede publicly that they liquidate excess stock otherwise they wouldn’t survive.

    In Copad SA v Christian Dior Couture SA & Ors, Vincent Gladel, as liquidator of Société industrielle lingerie (SIL) and Société industrielle lingerie (SIL)Christian Dior won their case in the European Courts against SIL despite the trademark exhaustion doctrine.

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