Market Mayhem: Sale of Gray Market Goods Heads to the Supreme Court

The design is deliberately inconspicuous. It's just half a centimeter long, and it is placed on the underside of a watch--thus remaining unseen.

The design's importance, however, may be huge. It is at the heart of a case that could affect billions of dollars in commerce.

Omega's Mess

Omega isn't the only company to wield copyright law against gray market goods. A large--and growing--number of businesses are using this tactic to keep gray market goods from entering the U.S.

The 9th Circuit, in Omega S.A. v. Costco Wholesale Corp., agreed with Omega's interpretation of the statute. A three judge panel held in September 2008 that applying the first sale doctrine to goods made overseas "would impermissibly apply the Copyright Act extraterritorially."

Most federal district courts that have considered the issue have reached the same result. But some district courts have disagreed, ruling that copies made overseas with the approval of U.S. copyright owners were "lawfully made under this title."


Steven Seidenberg

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