Earlier today, the United States Supreme Court granted a request by Costco, the wholesale retailer, to review a federal appellate decision involving the first-sale doctrine under copyright law, in connection with the purchase and resale by Costco of Omega brand watches that were purchased on the gray-market (also known as parallel imports). In general, the first-sale doctrine allows the owner of a particular copy of a copyrighted work which was “lawfully made” to resell that copy without permission from the copyright holder.
In the proceedings below, Costco argued that it could not be held liable for copyright infringement for reselling the gray-market goods, after the initial foreign sale of the goods by Omega to another entity (which then re-sold the watches to Costco via the so-called “gray-market”). The trial court ruled in Costco’s favor, but that ruling was overturned on appeal.
The appellate court below, the Ninth Circuit Court of Appeals, ruled that the first-sale doctrine did not apply to imported goods manufactured abroad, and thus Costco did not have a defense under the first-sale doctrine to resell the gray-market Omega watches without Omega’s authority. The United States Supreme Court will now likely determine whether the first-sale doctrine applies to imported goods that are manufactured abroad, including the gray-market goods at issue in the case.
The decision of the Ninth Circuit Court of Appeals can be found here.