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.”