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Washington Journal of Law, Technology & Arts

Abstract

Some manufacturers seek to prevent unauthorized importation and sale of their foreign-made products, called “gray market” goods or “parallel imports,” through copyright law. U.S. copyright law prohibits importation of copyrighted works without the copyright owner’s permission. At least one manufacturer, Omega, sought to extend this protection to its watches, a useful product, by affixing copyrighted logos. In Costco v. Omega, S.A., Omega claimed Costco violated its distribution right by selling the watches in the U.S., while Costco contended that a first sale abroad had extinguished Omega’s rights. The case reached the U.S. Supreme Court, which affirmed by an evenly divided court the Ninth Circuit’s holding that the first-sale doctrine does not apply when products are initially made and sold abroad. The Court’s decision suggested that copyright law might offer businesses a potent method to fight parallel importation. However, on remand the district court granted summary judgment to Costco on the rationale that applying a copyrighted logo to an otherwise useful product constituted copyright “misuse.” While Omega has appealed, the district court’s decision suggests a critical limitation on producers’ use of copyright to protect utilitarian goods from unauthorized importation and sale.

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