WASHINGTON, D.C. - (Mealey's)
The reach of the Copyright Act's first-sale doctrine, codified at 17 U.S. Code Section 109(a), was debated November 8th
by an eight-member panel of the U.S. Supreme Court in a dispute over watches
lawfully manufactured abroad and sold domestically by a wholesale warehouse
chain (Costco Wholesale Corporation v. Omega S.A., No 08-1423, U.S. Sup.; See
5/3/10, Page 4).
Justice Elena Kagan was
recused from the case, which pits petitioner Costco Wholesale Corp. against
respondent and watchmaker Omega S.A.
In Quality King Distribs.
Inc. v. L'Anza Research Int'l Inc. (523 U.S. 135, 138 ) [enhanced version available to
lexis.com subscribers / unenhanced version available
from lexisONE Free Case Law], the
Supreme Court touched upon the affirmative defense of fair use in a case
involving goods manufactured domestically, sold abroad and then re-imported.
In that ruling, it was decided that Section 109(a) provides an exception to Section 602(a)(1)'s general ban on the unauthorized
importation of copyrighted works but that Section 602(a)(1) would retain
significant effect because the fair use doctrine applies only to copies
"lawfully made under this title" and not to copies made under foreign law.
The Ninth Circuit U.S. Court
of Appeals - which ultimately found in favor of Omega in the instant dispute,
reversing the U.S. District Court for the Southern District of California -
concluded that Quality King is limited to its facts and that the
first-sale doctrine does not apply to goods that are manufactured abroad and
then imported to the United States.
The Supreme Court granted certiorari
Arguing that a fair use
defense is indeed available to Costco, petitioner's attorney Roy T. Englert Jr.
of Robbins, Russell, Englert, Orseck & Untereiner in Washington, opened oral arguments by calling
the instant dispute a "repeat" of Quality King and accusing the Ninth
Circuit of altering the doctrine to make it "uniquely favorable to foreign
manufacturing of copyrighted goods."
is wildly implausible that Congress had any such intent," Englert told the high
Aaron M. Panner of Kellogg,
Huber, Hansen, Todd in Washington, representing Omega, argued in contrast that
Costco's position would "eliminate any practical effect for Section 602(a)(1)
by making it not apply to legitimate copies," an outcome he deemed "quite
inconsistent with the structure of the Copyright Act."
Panner suggested that the first-sale doctrine should "be read in harmony" with
Section 602(a)(1) so that Section 602(a)1) is given "sufficient room to perform
the function that it was intended to perform - which is to ensure that a U.S.
copyright owner could protect domestic distribution rights against competition
from legitimate foreign copies."
precisely what's at issue here," he added.
[Editor's Note: Full
coverage will be in the Nov. 15 issue of Mealey'sTM Litigation Report: Intellectual Property. In the meantime,
the oral argument transcript is available at www.mealeysonline.com
or by calling the Customer Support Department at 1-800-833-9844.
Document #16-101115-015T. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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