Supreme Court Does not Decide Costco v. Omega Int’l Exhaustion Case

Costco v. Omega (Supreme Court 2010)

In Costco, the Supreme Court was asked to apply the first sale doctrine of copyright law in the context of international sales. Costco had purchased legitimate Omega watches abroad and then imported them into the US.  The watches included a small copyrighted design on the back surface and Omega argued that the importation and further distribution of the watches constituted copyright infringement.  Ordinarily, the purchaser of a legitimate copy of a work can lawfully resell the copy based on the first sale doctrine (also known as copyright exhaustion). The trick, however, is that copyright is territorial in nature and the first sale abroad arguably did not “exhaust” the US copyright. The 9th  Circuit had sided with Omega — holding that the first sale doctrine did not apply to foreign manufactured copies that were purchased abroad.

Without opinion, and in a 4–4 split, the Supreme Court has affirmed the 9th  Circuit decision. However, because of the 4–4 split, the case will not be seen as precedent-setting. Thus, as Ryan Vacca wrote in an e-mail this morning: “Our unanswered questions . . . remain unanswered.”

 

91 thoughts on “Supreme Court Does not Decide Costco v. Omega Int’l Exhaustion Case

  1. Humpty Dumpty is gone

    It’s sad to to take what’s left,
    and smash it just to scatter,
    whatever that was left,
    as if it didn’t matter.

    I accept the way my life unfolds,
    I live it every day.
    But to destroy what matters most to me,
    Is gone this very day.

  2. Do you still think the situation so “gibberish”?

    No, it’s just your peculiar brand of English, D-M. But thanks for your patience.

  3. The question is whether it’s a geographical limitation on the manufacture.

    Asked and answered – see my previous post at 01:31 PM.

    Funny, how you now turn into a jester, Cynical. Do you still think the situation so “gibberish”? There is a word for your actions:

    Overcompensation.

    I know it’s scary when concepts get you confused, but it’s OK. Take your time with them. Ask questions. And don’t feel bad, even esteemed Supreme Court Justices find all this patent law to be gobbledygook at times.

  4. True again sarah – your wisdom is earned through the coin of personal tragedy – all the more valuable for that. And that’s also why I am surprised that my main man seems to abandon his throne of equity here – Equity, er um, e(Q)uity (sorry Cy), needs to vanquish the unfairness of this situation – no matter what the letter of the law lay under. Where hides my warrior king?

    As for “It’s a sad story.

    Lay it on me sarah.

    Unlike others who would quash you, I supports you all the way.

  5. But wouldn’t Overexaltation of (B)enefits (U)nder the (a)ct only cause extraterritorial exhaustion in cases where the (B)enefits were actually actualized, rather than in cases where the (B)enefits were unactualized? – since unactualized (B)enefits are e(Q)uated with unactualized (B)urdens, and further since everybody knows that unactualized (B)urdens cannot exhaust extraterritorial exhaustion.

    E(Q)uitably speaking, of course (and naturally expecting e(Q)uity to be fully actualized, otherwise, both (B)urdens and (B)enefits are (B)ereft).

  6. Shouldn’t benefits be (B)enefits?

    Ah, perhaps, but you’re assuming that e(Q)uity demands the equating of the (B)enefits with the (B)urdens. Overexaltation of unactualized (B)enefits (U)nder the (a)ct can cause extraterritorial exhaustion.

  7. Cy,

    Shouldn’t benefits be (B)enefits?

    And wouldn’t that then make Quality King – (q)uality (k)ing?

    It’s a good thing all of this occured before Michael R. Thomas invented geography.

  8. Costco v. Omega would appear to be a correct application of a badly written law.

    You make a lot of sense, IANAE. But doesn’t (E)quity demand the extraterritorial (A)ctualization of the benefits AND the (B)urdens?

    D-M, wouldn’t you agree?

  9. Clearly, “under the act” is not a geographical limitation.

    Not on the first sale. The question is whether it’s a geographical limitation on the manufacture.

    The products in Quality King had found their way “back” into the United States, so Quality King is not precedent on this point, except insofar as it makes a distinction between copies made under the US copyright and copies made under foreign copyright – the very distinction at the center of Costco v. Omega.

    Costco v. Omega would appear to be a correct application of a badly written law.

  10. Even “abstract” ice cream bring the chuckles…

    But Iza keep that stuff away from the Eskimo’s site – I done heard that be one temptation he can’t say no to.

  11. Now I know it is you that has the August 26, 1995 Search Hal. Ralph was asking for the White House and the USPTO. I couldn’t figure was he Red or was he Blue.
    It was all look out BEELOWW for the red till you produced the Search.
    Can I have a copy of it for my book Hal? Please pretty please.

  12. As Gene Quinn point out at
    link to ipwatchdog.com

    The Supreme Court explained in Quality King:

    The owner of goods lawfully made under the Act is entitled to the protection of the first sale doctrine in an action in a United States court even if the first sale occurred abroad. Such protection does not require the extraterritorial application of the Act.

    Clearly, “under the act” is not a geographical limitation.

    Gibberish (or if you prefere (G)ibberish) indeed.

    Perhaps those who are cynical should be less so.

  13. Oh, your not (f)ooling me, (C)y, – Ya really are (N)oise, aren’t ya?

    Wassa matta – your new gig preventin ya from writing your famous four page law review articles here?

  14. Where can one find a picture of this copyrightable Omega logo?

    On the back of an Omega watch. I think they’re on clearance at Costco.

  15. Ya know, this abstract cake and ice cream is pretty tasteless.

    Don’t you mean (B)enefit and (B)urden, Noise?

    Hmmm, Cy, ya seem to have a fetish about our old friend Noise. Perhaps too much of a fetish. Perhaps you are Noise.

    Ohh, I loves me a good sockpuppet conspiracy mystery.

  16. The fact that it is importation that brings it “into” the jurisdiction does not make a difference when you eliminate the geographical reference when understanding what it means to be “made under.” Once you have registered the item “under” the law, you have created the possibility of both benefit and burden. The possibility is indeed actualized at the importation event, but that actualization activates both the benefit and the burden.

    Don’t you mean (B)enefit and (B)urden, Noise?

    Gibberish.

  17. IANAE,

    It’s subtle point, so I understand why you keep missing it.

    Compare your two statements:

    1) A copy made abroad is exactly nothing at all to do with US copyright law

    and

    2) the importation that brings it into the jurisdiction of the US law

    The fact that it is importation that brings it “into” the jurisdiction does not make a difference when you eliminate the geographical reference when understanding what it means to be “made under.” Once you have registered the item “under” the law, you have created the possibility of both benefit and burden. The possibility is indeed actualized at the importation event, but that actualization activates both the benefit and the burden.

    Equity dictates that you cannot separate the benefit from the burden.

    Ping, your cake and ice cream await.

  18. IANAE,

    Ya have been spending too much time with the Diehrists.

    As the master of equity, I expects you to be all about the courts weighing the burdens and benefits. That same copy made abroad is the one that Omega be seekin the benefit. It is the item and its history that be under discussion, right? The facts of this case, as it were. It be the one that done been already sold. Either that item has the benefit or it do not. If it has the benefit, along with it comes the burden. Equity tells ya that ya can’t split up that package.

    Now. Does that get me some cake and ice cream?

  19. It would seem more congruent that the moment that Omega registered for all the rights and remedies it wanted, it brought the work of authorship “under the law”.

    That’s all well and good, but the relevant section of the statute refers to a “copy” made under the law. A copy made abroad is exactly nothing at all to do with US copyright law, no matter how good a copyright you might also happen to have in the US. It’s only the importation that brings it into the jurisdiction of the US law, and the US copyright holder has a right to object to such importation.

    Of course, that’s a ridiculous result on the facts of this case, and if it were up to me I’d say that lawful purchase from the copyright holder anywhere in the world effects a worldwide implied license (including a license under US law) and thereby prevents the remedy against importation due to “the authority of the copyright owner”. But the Circuit decision is not a particularly strained interpretation of the statute as drafted.

  20. Because there actually is a statute, and the statute is limited to copies made under the US copyright.

    Above at Dec 14, 2010 09:43 AM, M. Slonecker attempted to explain that Omega registered the copyright “under the US law” in order to avail itself of all rights and remedies available to it for the work “under US law”.

    He also explained that “the original work of authorship [was] made outside the United States”.

    There is some confusion here in so far as thinking that made “under the law” has a geographical limitation, that somehow items can be first made outside of the United States and evade certain parts of the law (burden), but then be registered “under the law” to obtain all “other” rights and remedies (benefit).

    Hence, the “have your cake and eat it too” comment.

    In order to selectively apply protections and at the same time argue that the limitations do not apply (having the benefit without the burden) seems highly inequitable. It would seem more congruent that the moment that Omega registered for all the rights and remedies it wanted, it brought the work of authorship “under the law”. After all, it is seeking protection of items made after the registration date and not on the “original” work. In fact, all the items made that are copies of the original work (and the items actually under suit here), were made after the registration and thus (dismissing the geographical where-made factor), were made “under the law”.

    I hope this brings understanding to the nuance of the question.

  21. Since there is no statute, why does the court use tortured logic to limit exhaustion to first in sale in the US regardless of if someone has already paid for the license to use such patent?

    Because there actually is a statute, and the statute is limited to copies made under the US copyright.

    I suppose the court could have used enhanced interrogation techniques on logic to interpret the statute to cover foreign-made copies. Or they could have interpreted the buyer’s implied license to be worldwide. It actually sounds like four of the justices were leaning that way. Maybe we’ll find out next time.

  22. “The courts do have the ability to do this and I’m puzzled why they decided to draw an arbitrary line.

    Posted by: but what about | Dec 15, 2010 at 07:33 PM”

    I’ll suggest two reasons: reluctance to extend U.S. law to have extraterritorial effect, and the extreme pro-copyright bias of some members of the Court (think Grokster and Eldred v. Ashcroft–the latter was where SCOTUS upheld the abominable Sonny Bono Copyright Term Extension Act).

  23. Inane – The courts don’t get to amend the statutes, that’s why. -

    But the courts did create the exhaustion doctrine. Why not extend the sale into the US as the licensed sale? Since there is no statute, why does the court use tortured logic to limit exhaustion to first in sale in the US regardless of if someone has already paid for the license to use such patent?

    The courts do have the ability to do this and I’m puzzled why they decided to draw an arbitrary line.

  24. As to DIGs and 4-4 splits, recusals are problematic and don’t allow easy solutions. For example, some state supreme courts permit judges to be specially assigned when one or more judges/justioes has recused themselves. In Maryland, the Chief Judge of the Court of Appeals has broad power to specially assign judges. There was a case a few years ago involving a high-powered, well-connected lobbyist, and a majority of the Court was recused; there were five out of seven specially assigned judges. (Link: link to mdcourts.gov)

    One or more recusals is routine in Maryland, and the normal procedure is to specially assign retired Court of Appeals judges, in reverse order in which they retired (Maryland imposes mandatory 70-years-old retirement on judges). In practice, that is problematic, because the retired judges can’t be compelled to sit, and they are scattered all over the State. As a result, a judge who is fourth in line actually sits in more cases in the Court of Appeals than any other judge (probably more than the others combined). Although there is no evidence of malfeasance, it makes some observers uncomfortable because the Chief Judge has too much power simply to stack the Court. Probably because Maryland is a one-party state, nobody pays attention to this moral hazard, but I can guarantee that there’s no way SCOTUS would ever adopt a similar practice.

    One thing they did, however, was to permit certain decisions of the Circuit Courts of Appeals to have precedential authority just as if they had been decided by SCOTUS. There was a leading antitrust case where that happened back in the 1940s, involving Alcoa, decision IIRC was by Judge Learned Hand of the Second Circuit. The reason Congress adopted a statute permitting the practice was there were so many recusals from SCOTUS that the Court didn’t have a quorum, at least as to that case, and it was deemed a very important case.

  25. Here is the pet. for writ of cert. in the Enzo case: link to aipla.org.

    The pet. make as broad attack on the Fed. Cir. interpretation of Section 112, p. 2; but it also points out that the real problem here is the use of functional language in claims. They cite such cases as Holland Furniture v. Perkins Glue, 277 U. S. 245 (1928) in fn. 12.

    link to supreme.justia.com

    It would be interesting if the Supremes would take up the tension between cases holding claims with functional limitaions invalid as indefinite and Section 112, p. 6, which expressly authorizes them, but limits their scope to the disclosed embodiments and equivalents.

  26. Worldwide exhaustion makes sense and I don’t understand why courts allow a company to double charge for IP.

    The courts don’t get to amend the statutes, that’s why.

    It doesn’t have to make sense, it only has to be the law. If the law doesn’t make sense, talk to that other group of government employees who can’t even get a majority with 59 votes out of 100.

  27. Can anyone explain how territorial exhaustion makes sense?

    $

    And I was just handing out some kudos in my stylish backhanded way to the blind, mange-stricken three-legged squirrel who found a nut yesterday. Keep you homo fantasies to yourself there bucko.

  28. What? 6 needs gum after doing what with ping? Seriously, what is up with you two.

    This is a punt. Worldwide exhaustion makes sense and I don’t understand why courts allow a company to double charge for IP. Can anyone explain how territorial exhaustion makes sense?

  29. I don’t know about agreeing with you, although I did tell everyone that you brought what was on everyone’s mind up first. But I do know I need this gum all day everyday for the rest of my life or until I tire of it. It only has 5 cal. and 0 sug.

  30. In other news let me tell you guys about the new mint chocolate chip flavored sugar free gum from EXTRA. THAT’S INNOVATION YOU CAN SINK YOUR TEETH INTO!

  31. “And why would that be better than simply deferring to the majority at the appellate court, when it’s that close a question?”

    Because one court is the USSC and one court is not? It all goes back to the “deciding” issue ping raised. We pay them, ostensibly, to make decisions not waffle or “leave things as they are, i.e. undecided”. The court is setup to not have ties already, this is just another way of setting it up to do that.

  32. Maybe they should just give the most senior judge on the decision 2 votes in the event of a tie?

    And why would that be better than simply deferring to the majority at the appellate court, when it’s that close a question?

    It seems to me that it’s a good idea to refrain from setting a precedent when the issue is that close. I vote for leaving things as they are. But then, my concerns are secondary to ping’s.

  33. Are you suggesting that the Court…

    No. I am suggesting that ties not be allowed – go back into the cloistered chambers and hammer something out.

    Sudden death, baby. In playoff time – aint no such thing as “tie”.

    And let’s be clear – “my” satisfaction is paramount. A distant second – and one that at least should be of concern of the court, is the rest O society. The Court is there to decide, not to tie. BE DECISIVE.

    6, – two votes? nah – how abouts some brass knuckles?

  34. “You’re not making any sense. Are you suggesting that the Court figure out what the vote is going to be before they take the case, so that they avoid getting a tie?”

    Maybe they should just give the most senior judge on the decision 2 votes in the event of a tie?

  35. It’s a pure punt. Actually it’s worse than a punt – it’s a first down fumble. Did they really need to take this case in the first place to give this result? Some serious deck chair rearrangin here.

    You’re not making any sense. Are you suggesting that the Court figure out what the vote is going to be before they take the case, so that they avoid getting a tie?

    Returning to the football analogies (it’s probably not a great idea to play football up there among the deck chairs – somebody is going to get hurt), it’s not a punt or a fumble. It’s simply a tie game. And the lack of precedential value is simply how it works, not some strategic decision made by the Court. It may be unsatisfying, but both “teams” presumably gave it their best effort. The fact that you’re not satisfied shouldn’t (and doesn’t) affect the Court.

  36. Fun times at that last link Ned – horsemen follies galore.

    Re: Helen and my main man: my observation is that Helen is correct. Why take a decision under cert and spit out this meaningless gar_bage?

    As my pal Hal notes:
    (As a 4-4 per curiam affirmance, the Supreme Court decision has no precedential value.)

    It’s a pure punt. Actually it’s worse than a punt – it’s a first down fumble. Did they really need to take this case in the first place to give this result? Some serious deck chair rearrangin here.

    Might as well put some of those deck chairs in the cabin, “my cabin boy” – well at least the decision brought me some chuckles here.

  37. “But he was plainly arguing that a 102(e) rejection (not a 103) was somehow invalidated by his having a common assignee.”

    Sounds like a novel legal theory. Wrong, but novel.

  38. “Are you talking about the exclusion of commonly assigned prior art that qualifies only under 102(e) from use in 103(a) rejections as provided by 103(c)?”

    Nope, I’m aware of 103(c) exclusions.

    I simply could not believe the guy was arguing what he was. But he was plainly arguing that a 102(e) rejection (not a 103) was somehow invalidated by his having a common assignee. I made it clear that I thought such a thing would only depend upon inventorship as opposed to who the assignee was but he insisted. That case ended up getting allowed when his client decided to take what I offered though and I never heard more about it.

  39. And page 14 – IANAE – you left out the best quote of all!

    “Finally, in Diehr, the Court established a limitation on the principles articulated in Benson and Flook.”

    It gets even better. If you keep reading after that sentence, you can learn what the limitation actually was (machine or transformation, basically), and you can also learn that it wasn’t nearly limiting enough to save Bilski or anyone else who isn’t positively claiming an actual manufacturing process.

    limitation = cabin

    Was the word “cabined” a part of the decision? Nope. Just one more big neon sign saying you never actually read the case.

  40. “Can someone help me out with something right fast about 102(e)?”

    Are you talking about the exclusion of commonly assigned prior art that qualifies only under 102(e) from use in 103(a) rejections as provided by 103(c)? In that case, common inventorship is irrelevant. If the reference you are using in your 103(a) rejection qualifies as prior art only under 102(e), and is commonly assigned, or was subject to an obligation of assignment, to the assignee of the application being examined, then you can’t use the reference.

  41. It must be difficult reading, with all the tears in the way!

    Finally, in Diehr, the Court
    established a limitation
    on the principles articulated in Benson and Flook.

    limitation = cabin, my little cabin boy!

    !!! BILSKI 14 !!!

    Inventors win!

    !!! BILSKI 14 !!!

  42. And page 14 – IANAE – you left out the best quote of all!

    Finally, in Diehr, the Court established a limitation on the principles articulated in Benson and Flook.

    limitation = cabin, my little cabin boy!

    !!! BILSKI 14 !!!

    Inventors win!

    IANAE’s lose!

    !!! BILSKI 14 !!!

  43. Tell us just what did the majority say in using all three cases?

    They spent all of pages 13 and 14, and the top of page 15, discussing all three cases, opening with “the Court resolves this case narrowly on the basis of this Court’s decisions in Benson, Flook, and Diehr,” and closing with “In light of these precedents, it is clear that petitioners’ application is not a patentable “process.””

    They also took care to point out that “The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook.” As if it wasn’t obvious enough that Bilski’s finding of abstractness would rely more heavily on the Benson and Flook precedents that found abstractness, rather than the Diehr precedent that didn’t. Whatever limitation Diehr imposes clearly wasn’t limiting enough to save Bilski.

    On page 16, they conclude: “The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr.”

    Sure sounds like all three cases still matter, doesn’t it?

    Was the word “cabined” a part of that?

    No, actually, it wasn’t. You really should consider reading the decision at least once.

    The world laughs!

    Indeed.

  44. And surely, IANAE, you being the poor loser that you are, have read the Bilski decision many times and weeped each and every time.

    Tell us just what did the majority say in using all three cases? Was the word “cabined” a part of that?

    The world laughs!

    Actual Inventors win!

    !!! BILSKI 14 !!!

  45. Can someone help me out with something right fast about 102(e)?

    I have a reference, 102(e) dated only shall we say, but it is by the same assignee.

    Question is, what effect does it being by the same assignee have?

    I mean, I remember how I was taught, and that was that the assignee shouldn’t matter just for 102(e), only common inventors matter. But I had an attorney arguing the other day that if the assignee was the same then the 102(e) was invalid. I told him that I didn’t believe that to be true and I’d check up on it. I did, and nobody believes him. So, I turn to you attorneys of the interwebs, what say you? Has this been discussed in any cases that you know of off hand?

  46. We got the supremacy of Diehr over Benson and Flook.

    Actually, we didn’t. The Supremes were pretty clear about that. The Diehr exception to Benson and Flook is the exact same thing the Supremes said is no longer the test for 101 – “application to a known structure or process”, specifically “an industrial process for the molding of rubber products”. The only parts of the decision that mentioned an expansive view for new technologies like software were the parts signed by only four justices.

    Not to mention how explicit they were about Benson and Flook still being controlling authority, mentioning all three cases in a single breath. In the parts signed by all five justices.

    But you don’t need me to tell you that, do you? It’s been half a year. Surely you’ve read the Bilski decision at least once by now.

  47. Remember Bilski?…What did we end up getting?

    We got something you and your ilk cannot stand.

    We got the supremacy of Diehr over Benson and Flook.

    Actual Inventors Win!

    !!! BILSKI 14 !!!

    I don’t think the legislator could possibly have had an intention

    Of course you don’t because you don’t get it. The law plainly includes sections discussing Business Method Patents. The Supreme Court could not wish those sections away even though you and your ilk do so here. The Supremes got it. Pay Attention.

    !!! BILSKI 14 !!!

  48. Helen: This case should not have been published at 4-4. And without opinion at that. It should have been continued to have been debated behind closed doors with additional hearings if that were needed.

    Remember Bilski? It wasn’t too long ago. That one took extra debate behind closed doors, and so forth. What did we end up getting? A dissent-turned-sort-of-majority signed by four-and-a-half judges and a majority-turned-concurrence signed by a few others, with no clear guidance. That one was 9-0, and they still gave absolutely no clarity on the central issue of the case.

    I’d rather wait for a full panel and a clean majority, thank you very much.

    Max: Course, if the legislator does not have an intention, there’s a problem.

    In Bilski, I don’t think the legislator could possibly have had an intention, though he could possibly form one now if pressed to do so.

    In this case, the legislator clearly had an intention, but would probably intend differently today.

    In both cases, I wouldn’t hold my breath waiting for legislation unless Congress considers the resulting decisions shockingly bad and the corrective legislation politically expedient. I guess it depends on whether Republicans buy their Omega watches from Costco. And don’t forget that the legal issue in Costco v. Omega isn’t really settled yet, because the Supremes can still decide the issue 5-4 either way in a future case.

  49. It may be worthwhile to mention that Omega is a Swiss subsidiary of the Swiss company Swatch. Its watches are designed and manufactured in Switzerland. The US is merely a sales territory for Omega watches, with the company having a chain of authorized US retailers.

    It may also be worthwhile to mention that a distinction must be drawn between the watch itself and the logo. It is not where the watch itself is manufactured that is the relevant consideration. What is relevant is where the “original work of authorship”, i.e., the logo, is manufactured. In Omega’s case the original work of authorship is made outside the United States.

    By registering the “original work of authorship” in the United States with the US Copyright Office, Omega has availed itself of all rights and remedies available to it for the work under US law, and one of those rights is, of course, associated with importation of the work.

    Frankly, the more fundamental question I have with this matter is the possibility that trademark and copyright law are being conflated, with that I happen to believe is in fact a trademark being concurrently classified as an original work of authorship.

    It is disappointing that I have not read in any of the briefs to date anything dealing with the distinction between trademarks and copyrights, nor have I read anything dealing with whether or not the logo, per se, is even eligible for protection under US copyright law.

  50. Typical backwards saddle comments there Maxie

    Exactly how does a 4-4 decision produce clarity? Which side of the fence should the legislature move? And you want to rejoice? That’s pretty thick – even relatively thick, no less.

  51. I recall an important UK Supreme Court decision in the 1960′s in a patent matter, that came down (shockingly) as a 3:2 verdict. When, shortly afterwards, Europe wrote its Patent Convention, it took pains to ensure that, on that issue at least, the statute would be clear. I think that 5:4 verdicts (as in Bilski) and 4:4 verdicts, as here, serve a useful function, that of waking folks up to the need for a Statute that makes the legislator’s intention clearer.

    Course, if the legislator does not have an intention, there’s a problem. Take for example the position in Europe, on whether replacement auto body parts should enjoy copyright (design patent) protection.

    Perhaps we should all rejoice, when today’s law is so mature and sophisticated that a full 50% of learned commentators think it is OK, while the other 50% think it should be changed but cannot agree what the change is that has to be made.

  52. Shameful.

    Someone needs to remind the Supremes that their decisions have effect beyond the immediate case.

    This case should not have been published at 4-4. And without opinion at that. It should have been continued to have been debated behind closed doors with additional hearings if that were needed.

  53. Did I say how she wanted to decide it? It’s no less ironic if her personal view is that foreign sales of foreign-manufactured goods shouldn’t exhaust the copyright: although that view (which was the view of the 9th circuit) prevailed here, there still is no SCOTUS ruling settling the matter.

    Anyone notice how much more intelligent the conversation in this thread has been in comparison to most threads on this blog? I wonder if it has to do with my son staying out of this thread.

  54. This is indeed a serious matter, if the Supreme Court has stayed undecided on the issue. It seems that 9th Circuit sole consideration for deciding the matter was protection of national commercial interests having ramifications of collection of royalty and taxes.

    When reviewed by legal lens, it can be strongly argued that the origin of the copyright in the logo first arose in US itself, when Omega gave the right to the manufacturer overseas under a commercial agreement. So, even though watches were manufactured outside USA, the applicability of “doctrine of exhaustion” or “first sale doctrine” will commence from the moment the right to use the copyright in logo was granted by Omega to the overseas manufacturer.

    I welcome thoughts from others about this argument.

  55. Ironic that by virtue of Kagan’s arguing for exhaustion in this case as solicitor general she kept herself from being able to decide it as she wanted when she had the chance. But she’s young, as far as judges go, she may get another bite at the apple during her career.

    I hope so. It will stop people getting their kids’ Mickey Mouse underwear seized at customs when they re-enter the country.

    How do we know that this is what she wanted, versus what her client wanted? We do understand that the lawyer and the client are different, right? And that a judge is different than either?

  56. Last I looked there is nothing illegal about removing a “work of art” from the substrate on which it appears.

    Well, there’s the expense of removing a tiny detail from what I assume are a large number of individually-packaged watches in an aesthetically reasonable way. Costco probably didn’t think they would be a problem, and they might have been more worried about the implications of passing off an altered watch as an original Omega.

  57. This is my third piece of cake | Dec 13, 2010 at 02:51 PM

    Why should you have to remove the logo at all…

    Bear in mind, in this case the “logo” is a small symbol placed on the back of the watchcase. Remove it and the imported watches would no longer bear the “work of art”. Last I looked there is nothing illegal about removing a “work of art” from the substrate on which it appears.

  58. Your minor detail does not trump my minor detail. In fact, your minor detail is the very inrony of my minor detail.

    But try again if you like!

  59. Copyright does in fact exist. Your right to bring suit in a federal court does not.

    Just a minor detail, but didn’t the copyright holder win this case?

  60. Copyright does in fact exist. Your right to bring suit in a federal court does not. Try to imagine a right without a remedy.

    It’s just one of those nuisance vagaries in something called law.

  61. Why should you have to remove the logo at all M. Slonecker? Do you habitually remove all labels and insignia from articles you have fully purchased? It is not as if illegal copies of anything were being made and affixed to goods. These were the actual goods bought and paid for. The lesson here is muddled at best, and a waste of everyone’s resources – It also is not as if only the label was in trade here. Such a thinly veiled restraint of otherwise perfectly legitimate trade only reinforces the wrong golden rule.

  62. By admitting that the item wasn’t made under the act, do you not then, of necessity, disclaim the benefit that you are seeking?

    Copyright subsists in works authored anywhere in the world. That is to say, it is not limited to works or copies made “under this title” (in the US).

    The question before the court pertained to a provision of 17 USC 109, namely what is meant by “made under this title”? The word “made” refers to the copyrighted work itself (the “logo” as a piece of art), and not to the article (the watch) upon which the work of art was affixed.

    Section 109 appears to refer to a “copy … made under this title”, so it would seem to depend on whether the manufacture of that particular article would have been a potential infringement under US law. Which is pretty silly, if you think about it.

  63. IANAE | Dec 13, 2010 at 01:57 PM:

    The question before the court pertained to a provision of 17 USC 109, namely what is meant by “made under this title”? The word “made” refers to the copyrighted work itself (the “logo” as a piece of art), and not to the article (the watch) upon which the work of art was affixed.

    I am not familiar with the pleadings before the district court, but I have to wonder if any challenges were made to the legitimacy of the work of art (the “logo”) qualifying for protection under Title 17 (based upon the briefs to SCOTUS I believe the answer is “no”)? I also have to wonder why the importer did not simply have the work of art (the “logo”) removed before importation?

  64. Is there any difference between a 4-4 summary affirmal and “dismissed as improvidently granted” (DIG)? Any reason why the Court would pick one over the other?

    Yes. They only pick the first one when it’s a 4-4 tie.

  65. How does something “not “made” under the U.S. Copyright Act” cry for protection under that Act?

    If you are going to bring a copyright violation into court, do you not have to submit that the item of pertinence deserves the protection that you are invoking? By admitting that the item wasn’t made under the act, do you not then, of necessity, disclaim the benefit that you are seeking?

  66. Is there any difference between a 4-4 summary affirmal and “dismissed as improvidently granted” (DIG)? Any reason why the Court would pick one over the other?

  67. The question was whether the manufacture abroad meant that the article was not eligible for the first sale doctrine because it was not “made” under the U.S. Copyright Act.

    Ummm… isn’t pretty much everything sold in the US with some kind of logo or design on it manufactured abroad?

    What of little Billy and the made-in-Guatemala Mickey Mouse undies his mom lawfully bought from the copyright owner at Disney World? He’s not actually entitled to cross the border with those on, is he? And what happens when he outgrows them and mom tries to unload them at a garage sale or hand them down to Billy’s little cousin?

    Does this poor family have any defense other than de minimis non curat lex? I don’t think airport security is particularly receptive to that one, nor are the “copyright trolls”.

  68. Dennis, one correction. The problem was not that the first sale occurred abroad. Under Quality King, the location of the sale is irrelevant, and foreign sales exhaust. The question was whether the manufacture abroad meant that the article was not eligible for the first sale doctrine because it was not “made” under the U.S. Copyright Act.

  69. she may get another bite at the apple during her career.

    I hope so. It will stop people getting their kids’ Mickey Mouse underwear seized at customs when they re-enter the country.

    Assuming those fancy TSA scanners have a setting that lets them stop seeing through stuff at the underwear level.

  70. So the CAFC’s holding in the Fujiphoto line of cases remains intact for now: exhaustion of patent rights by sale of the patented good only applies if the goods are first sold in the USA.

    Ironic that by virtue of Kagan’s arguing for exhaustion in this case as solicitor general she kept herself from being able to decide it as she wanted when she had the chance. But she’s young, as far as judges go, she may get another bite at the apple during her career.

  71. David French writes:

    For a similar case in Canada see:

    Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37, [2007] 3 S.C.R. 20

    link to scc.lexum.umontreal.ca

    The defendant imported Toberlone chocolate bars from a licensed source in Europe. The packages carried copyrighted art – artistic logos. The exclusive Canadian distributor and exclusive Canadian copyright licensee, as appointed by the world copyright owner, sued the defendant for effecting sales of “genuine” product in Canada in violation of the rights of an exclusive licensee under the Canadian Copyright Act.

    The decision is too complex to explain. The Judges split up into four groups, two Justices dissenting, with overlapping theories, some bordering on esoteric if not bizarre. In the result the copyright licensee lost. But some dicta left open the possibility of closing the gap in exclusive rights by reorganizing the allocation of rights between countries.

    Enjoy reading the decision, if you can persist in reading it through.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>