Appellate court rejects use of copyright to block Costco’s sale of Omega watches

In 2004, Costco bought some Omega watches from a third party in New York and sold them at a discount in its U.S. stores. The watches, otherwise sold only in Europe, had a small globe design on the back, and Omega sued Costco, arguing that the sale of the watches violated Omega's copyright in the globe design. Over abut a decade, the case went up to the U.S. Supreme Court and back down again. With a ruling yesterday from the Ninth Circuit Court of Appeals, it may finally be over.

The Ninth Circuit held that under a 2013 decision of the Supreme Court in a case called Kirtsaeng v. John Wiley & Sons, Inc., the "first sale doctrine" barred Omega’s claim. Under that doctrine, Omega’s copyright distribution and importation rights expired after an authorized first sale of the watches in a foreign jurisdiction.

In a concurrence, Judge Wardlaw explained that she would have ruled for Costco on the ground that Omega's claim constituted "copyright misuse"—which was the theory on which the district court had granted summary judgment to Costco. "Omega attempted to use the copyrighted Globe Design to decrease competition in the U.S. importation and distribution of its watches by it and its authorized dealers—an obvious leveraging of a copyright to control an area outside its limited monopoly on the design," she wrote.

The bottom line is that if you buy a watch, you own the watch. You can sell it, trade it, or … wear it.

Leave a Reply

Your email address will not be published.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