Doctrine of First Sale and the U.S. Supreme Court

The Willamette Law School’s “United States Supreme Court News: Willamette Law Online” service, with case summaries and law updates, tells us about this latest U.S. Supreme Court decision:

“On December 13th, 2010 the United States Supreme Court issued a decision in the case sumarized below:

Copyright Law (The first sale doctrine of 17 U.S.C. §109(a) does not apply to goods manufactured abroad and later imported into the United States).

From Willamette Sup Ct Report, 11/8/10:

Costco Wholesale v. Omega S.A. (08-1423)
Argued: 11/08/10
Court Below: 541 F. 3d 982 (9th Cir. 2008) Full Text

COPYRIGHT (Whether the first-sale doctrine, which allows the owner of a copyrighted good to sell the item without permission of the copyright owner, applies to imported goods manufactured abroad).

The dispute arises out of Omega’s efforts to prevent Costco from reselling watches originally sold by Omega to authorized foreign distributors. These distributors imported the watches and sold them to Costco, who then sold the watches to consumers at well below Omega’s suggested retail price. The Ninth Circuit held that the Copyright Act grants the copyright holder complete control over the resale, redistribution, and importation of any work they manufacture abroad, even after those works are sold to others.

Costco argues that the Ninth Circuit’s holding is inconsistent with both the plain language of the Copyright Act and the Supreme Court’s interpretation of it in Quality King. The plain language of the statute codifying the first-sale doctrine, 17 U.S.C. § 109(a), does not distinguish between goods manufactured domestically or foreign, so long as they are “lawfully made under this title”. Omega itself made and sold the watches to distributors, which qualifies as lawfully made. Omega argues that Costco violated 17 U.S.C. § 602(a), which prohibits the importation of a foreign work without the authority of the copyright owner. However, Quality King ruled that the first-sale doctrine was an exception to this general rule. [Summarized by: Thomas Martin]”

See also OYEZ and the SCOTUS blog for more information and news about the U.S. Supreme Court.