Costco Wholesale Corp. v. Omega, S. A.

(Redirected from Omega S.A. v. Costco Wholesale Corp.)

2010 United States Supreme Court case

Costco Wholesale Corp. v. Omega, S. A.
Supreme Court of the United States
Argued November 8, 2010 Decided December 13, 2010
Full case name	Costco Wholesale Corporation v. Omega, S. A.
Citations	562 U.S. 40 (more)131 S. Ct. 565; 178 L. Ed. 2d 470; 96 U.S.P.Q.2d 2025
Decision
Case history
Prior	541 F.3d 982 (9th Cir. 2008); cert. granted, 559 U.S. 1066 (2010).
Court membership
Chief Justice John Roberts Associate Justices Antonin Scalia · Anthony Kennedy Clarence Thomas · Ruth Bader Ginsburg Stephen Breyer · Samuel Alito Sonia Sotomayor · Elena Kagan
Case opinion
Per curiam
Kagan took no part in the consideration or decision of the case.
Laws applied
Copyright Act of 1976

Omega S. A. v. Costco Wholesale Corp.

Court	United States Court of Appeals for the Ninth Circuit
Full case name	Omega S. A. v. Costco Wholesale Corporation
Decided	September 3, 2008
Citation	541 F.3d 982
Case history
Prior action	Appeal from C.D. Cal. (2007 WL 7029735)
Subsequent actions	Affirmed by an equally divided Supreme Court, No. 08-1423, 562 U.S. 40 (2010).
Court membership
Judges sitting	Barry G. Silverman, Johnnie B. Rawlinson, Milan D. Smith, Jr.
Case opinions
Majority	Smith, joined by Rawlinson, Silverman

Omega S. A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008), was a case decided by the Ninth Circuit Court of Appeals that held that in copyright law, the first-sale doctrine does not act as a defense to claims of infringing distribution and importation for unauthorized sale of authentic, imported watches that bore a design registered in the Copyright Office. It is contrasted with Kirtsaeng v. John Wiley & Sons, Inc.

Factual background

The plaintiff, Omega SA, is a luxury watchmaker based in Switzerland that distributes its watches through authorized retailers. The Omega watches feature a copyrighted globe design on the back of the watch. The defendant Costco obtained the watches through the gray market: Omega would sell the watches to authorized distributors, third parties would buy the watches and sell them to the New York state company ENE Limited, and ENE would sell the watches to Costco. Omega did not authorize the importation or resale in the United States, and Omega sued for copyright infringement under 17 U.S.C. §§ 106(3) and 602(a). Costco asserted that the first-sale doctrine precluded any infringement claims against them. The trial court ruled in favor of Costco.

Ninth Circuit decision

The Ninth Circuit reversed the trial court. The court cited Ninth Circuit precedents that interpreted the first-sale doctrine as applying only to goods made in the United States. The court found its interpretation to be consistent with the Supreme Court case Quality King v. L'anza, which held that the first-sale doctrine was a defense to an infringement claim based on unauthorized importation of copyrighted materials made within the United States. The court noted that the first-sale doctrine only covered the resale of copies obtained lawfully, and declined to apply the Copyright Act extraterritorially and ascribe lawfulness to copies made outside of the United States. Because the Omega watches at issue were made outside of the United States, the court held that the first-sale doctrine could not act as a defense and that Costco was liable for infringing Omega's importation rights.

Supreme Court case

Certiorari to the Supreme Court of the United States was granted on April 19, 2010. Justice Kagan took no part in the consideration or decision of the case. She was the Solicitor General before the case came to the Supreme Court. The remaining Justices split 4–4, which means the Court affirms the Ninth Circuit's decision.

Subsequent history

On remand to the district court, both Costco and Omega moved for summary judgment on the issue of copyright misuse. Judge Terry Hatter found for Costco, holding that Omega's application of a copyrighted work to an uncopyrighted watch for the purpose of controlling importation of the uncopyrighted good constituted copyright misuse.

On January 20, 2015, the Ninth Circuit Court of Appeals upheld the district court judgment, including awarding attorney's fees to Costco.

Impact

The decision has been characterized as a loss for consumers in the sense that manufacturers will better be able to control the prices of their goods when the grey market cannot serve as competition. Also, the distinction drawn in the case between goods manufactured inside the United States and goods manufactured outside could be a possible motivation for companies to locate their manufacturing outside of the United States, where the first-sale doctrine would not stand as an obstacle to suing grey market importers.

As a 4–4 decision, however, Omega only operates as mandatory authority in the Ninth Circuit and does not set a nationwide precedent.

In December 2011, petitions for certiorari in two cases from the Second Circuit with a similar issue were filed in the Supreme Court, providing the Court with another opportunity to revisit the still-unresolved issue in Omega: Kirtsaeng v. John Wiley & Sons, Inc. and Liu v. Pearson Education In 2013, the U.S. Supreme Court reversed lower court rulings and ruled that Kirtsaeng's sale of lawfully-made copies purchased overseas was protected by the first-sale doctrine. Liu and another Pearson case were subsequently remanded to the lower courts to rehear, in light of Kirtsaeng.

References

^ Omega S. A. v. Costco Wholesale Corp., 541 F.3d 982, 990 (9th Cir. 2008).
^ Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013).
Omega, 541 F.3d at 984.
Omega, 541 F.3d at 986.
Omega, 541 F.3d at 987.
Supreme Court Docket File, No. 08-1423
Costco Wholesale Corp. v. Omega S. A., 562 U.S. 40 (2010).
^ Siegal, Matthew; Shah, Binni N. (February 2012). "The Saga of Omega v. Costco Wholesalers Corp." (PDF). IP Strategist. pp. 2–3. Archived from the original (PDF) on July 14, 2014. Retrieved April 12, 2012.
Omega S. A. v. Costco Wholesale Corp., no. 04-05443, (E.D. Cal. Nov. 9. 2011), order. ("Here, Omega concedes that a purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted. Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.") Retrieved April 12, 2012.
Omega S. A. v. Costco Wholesale Corp., 776 F.3d 692 (9th Cir. 2015).
Field, Abigail. Supreme Court Rules Against Consumers in Costco vs. Omega. Daily Finance, 13 December 2010.
Black, Ryan; Epstein, Lee (Spring 2005). "Recusal and the "Problem" of an Equally Divided Supreme Court". Journal of Appellate Practice and Process. 7 (1): 75–99, 81. Archived from the original on March 13, 2012. Retrieved April 12, 2012.
Kirtsaeng v. John Wiley & Sons, Inc., no. 11-697, petition for certiorari (docket). December 5, 2011. Retrieved April 12, 2012.
Liu v. Pearson Education, Inc., et al., no. 11-708, petition for certiorari (docket). December 8, 2011. Retrieved April 12, 2012.
"Order List: 568 U.S." (PDF). U.S. Supreme Court. March 25, 2013. p. 1. Retrieved October 20, 2015.

External links

Ninth Circuit Court of Appeals (2008)

Text of Omega S. A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008) is available from: Findlaw Leagle
Oral argument (July 15, 2008)

Supreme Court (2010)

Text of Costco Wholesale Corp. v. Omega S. A., 562 U.S. 40 (2010) is available from: Google Scholar Justia Oyez (oral argument audio) Supreme Court (slip opinion) (archived)
Docket
Oral argument: recording Archived May 31, 2013, at the Wayback Machine, transcript (November 8, 2010)
SCOTUSBlog entry

Statutes

Pre-1976	Copyright Act of 1790 Copyright Act of 1831 Copyright Act of 1870 International Copyright Act of 1891 Printing Act of 1895 Copyright Act of 1909
1970s	Copyright Act of 1976
1980s	Berne Convention Implementation Act of 1988
1990s	Visual Artists Rights Act (1990) Copyright Remedy Clarification Act (1990) Copyright Renewal Act of 1992 Audio Home Recording Act (1992) Uruguay Round Agreements Act (1994) No Electronic Theft Act (1994) Copyright Term Extension Act (1998) Fairness in Music Licensing Act of 1998 Digital Millennium Copyright Act (1998) Online Copyright Infringement Liability Limitation Act WIPO Copyright and Performances and Phonograms Treaties Implementation Act
2000s	Family Entertainment and Copyright Act (2005)
2010s	Unlocking Consumer Choice and Wireless Competition Act (2014) Music Modernization Act (2018)
2020s	CASE Act (2020)

Precedents
and rulings

Supreme Court	Wheaton v. Peters (1834) Baker v. Selden (1879) Trade-Mark Cases (1879) Burrow-Giles Lithographic Co. v. Sarony (1884) Banks v. Manchester (1888) Callaghan v. Myers (1888) Bobbs-Merrill Co. v. Straus (1908) White-Smith Music Publishing Co. v. Apollo Co. (1908) Williams & Wilkins Co. v. United States (1975) Sony Corp. of America v. Universal City Studios, Inc. (1984) Feist v. Rural (1991) Campbell v. Acuff-Rose Music, Inc. (1994) Quality King v. L'anza (1998) Eldred v. Ashcroft (2003) MGM Studios, Inc. v. Grokster, Ltd. (2005) Costco Wholesale Corp. v. Omega, S. A. (2010) Golan v. Holder (2012) Kirtsaeng v. John Wiley & Sons, Inc. (2013) American Broadcasting Cos., Inc. v. Aereo, Inc. (2014) Star Athletica v. Varsity Brands (2017) Fourth Estate v. Wall-Street.com (2019) Georgia v. Public.Resource.Org, Inc. (2020) Google LLC v. Oracle America, Inc. (2021) Andy Warhol Foundation v. Goldsmith (2023)
Appeals courts	Berlin v. E.C. Publications, Inc. (2d Cir. 1964) Roth Greeting Cards v. United Card Co. (9th Cir. 1970) Eltra Corp. v. Ringer (4th Cir. 1978) Walt Disney Productions v. Air Pirates (9th Cir. 1978) Midway Manufacturing Co. v. Artic International, Inc. (7th Cir. 1983) Apple Computer, Inc. v. Franklin Computer Corp. (3d Cir. 1983) Fisher v. Dees (9th Cir. 1986) Whelan v. Jaslow (3d Cir. 1986) Vault Corp. v. Quaid Software Ltd. (5th Cir. 1988) Rogers v. Koons (2nd Cir. 1992) Computer Associates International, Inc. v. Altai, Inc. (2d Cir. 1992) American Geophysical Union v. Texaco, Inc. (2nd Cir. 1995) Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc.(9th Cir. 1997) Itar-Tass Russian News Agency v. Russian Kurier, Inc. (2d Cir. 1998) Sony Computer Entertainment, Inc. v. Connectix Corp. (9th Cir. 2000) Nunez v. Caribbean Int'l News Corp. (1st Cir. 2000) A&M Records, Inc. v. Napster, Inc. (9th Cir. 2001) Veeck v. Southern Building Code Congress Int'l (5th Cir. 2002) Kelly v. Arriba Soft Corp. (9th Cir. 2002 / 2003) In re Aimster Copyright Litigation (7th Cir. 2003) NXIVM Corp. v. Ross Institute (2d Cir. 2004) BMG Music v. Gonzalez (7th Cir. 2005) Bill Graham Archives v. Dorling Kindersley, Ltd. (2nd Cir. 2006) Blanch v. Koons (2nd Cir. 2006) Perfect 10, Inc. v. Amazon.com, Inc. (9th Cir. 2006) Cartoon Network, LP v. CSC Holdings, Inc. (2nd Cir. 2008) Ahanchian v. Xenon Pictures, Inc. (9th Cir. 2010) Penguin Group (USA) Inc. v. American Buddha (2d Cir. 2011) Monge v. Maya Magazines, Inc. (9th Cir. 2012) Viacom International Inc. v. YouTube, Inc. (2d Cir. 2012) Seltzer v. Green Day, Inc (9th Cir. 2013) Authors Guild, Inc. v. Google, Inc. (2d Cir. 2015) Lenz v. Universal Music Corp. (9th Cir. 2015) Naruto v. Slater (9th Cir. 2018)
Lower courts	Folsom v. Marsh (C.C.D. Mass. 1841) Elektra Records Co. v. Gem Electronic Distributors, Inc. (E.D.N.Y. 1973) Broderbund Software Inc. v. Unison World, Inc. (N.D. Cal. 1986) Playboy Enterprises, Inc. v. Frena (M.D. Fla. 1993) Bridgeman Art Library v. Corel Corp. (S.D.N.Y. 1999) RealNetworks, Inc. v. Streambox, Inc. (W.D. Wash. 2000) Mannion v. Coors Brewing Co. (S.D.N.Y. 2005) Arista Records LLC v. Lime Group LLC (S.D.N.Y. 2010) Capitol Records, LLC v. ReDigi Inc. (S.D.N.Y. 2013) Equals Three, LLC v. Jukin Media, Inc. (C.D. Cal. 2015) Hachette v. Internet Archive (S.D.N.Y. 2023)

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