The Supreme Court has granted certiorari to decide Costco Wholesale Corp. v. Omega, S.A., in which Omega sued Costco when it bought a shipment of Omega watches from another importer and sold them for below Omega's suggested retail price. Omega is claiming that Costco's sale infringes on their copyright of the Omega logo on the back face of the watch.
Costco 's affirmative defense is that Omega is precluded from bringing a copyright action after a sale due to the Doctrine of Exhaustion, or "first sale" rule, under which certain rights are "exhausted" after a sale of the copyrighted good. While the "first sale" rule certainly applies to goods purchased within the United States and subsequently resold within the United States, at issue here is whether or not the rule applies to goods bought abroad and then resold in the United States, as Costco did in this case.
Essentially, Omega is attempting to use the copyright associated with their logo to engage in price discrimination for different countries, as their watches typically sell for less outside of the United States. Costco Wholesale Corp. v. Omega, S.A. is set to be heard by the Supreme Court this fall and could have a major impact on companies throughout the world utilizing similar pricing schemes. Maier and Maier will be monitoring any developments in this upcoming case.
