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Who cares about Costo Corp. v. Omega?

By Georgia Harper

So, the Supreme Court has agreed to hear a case posing the question of whether someone who busy items manufactured abroad under license from U.S. copyright owners can ship them back to the U.S. for resale here in reliance on the so-called "first sale" doctrine codified in Title 17, Sec. 109. Specifically, the question posed is whether such items are should be considered as having been " lawfully made under this title." Back in 1998, in Quality King Distributors Inc., v. L'Anza Research International Inc., 523 U.S. 135, and held that where licensed goods are made in the U.S. and then shipped overseas for sale, they can subsequently be reimported without running afoul of copyright law. Then, the court didn't have the question of genuine foreign-manufactured copies before it. Now (the other shoe having dropped) it does. Quality King was a case in which a manufacturer relied on copyright claims in the labels on relatively inexpensive shampoos and other personal care products in an unavailing attempt to prop up the higher prices it sought to charge consumers in the U.S. market by excluding competition from large discounters who can engage in international arbitrage. The situation in Costco is similar, except that the goods in question -- luxury watches -- are a lot pricier. (Apparently, Costco was offering "grey market" Omega watches with an SRP of almost $2,000 for $700 less!) But whether the goods are high-end or low-end, it's obvious that in situations like this the copyright tail is merely wagging the price-discrimination dog. The real value of the goods to makers and buyers is not a function of the L'Anza label or the engraved Omega "Globe Design" symbol. Buyers of shampoos, watches, batteries and so forth obviously have a stake in the outcome of the case. Presumably, consumer organizations will weigh in with amicus briefs supporting Costco's side of the rather technical legal argument. But why should any of this matter to those who persist, however unfashionably, to insist that copyright is (or should be) mainly about culture? For the answer, take a look at the musical treasures advertised on websites of Bear Family Records GmbH and Document Records, two German companies that specialize in box sets and other comprehensive reissues of U.S. folk, blues, country and rock music. In some cases, these compilations could be made because the music and sound recordings are in the public domain in Europe. In others, the German companies have licensed foreign rights to this sometimes obscure material from U.S. copyright owners, often at a bargain price. If you and I were to order directly from Bear Family or Document Records sites, we might rely on the Section 602 statutory exemption for the "importation of one copy or phonorecord of any one work at any one time for personal use." But commercial enterprises -- whether bricks-and-mortar stores or on-line vendors -- don't have that justification available. So if you take a look at Amazon.com, you'll see only a paltry few of the thousands of these interesting German "archival" releases available there. If this kind of material is going to be made more generally available in the U.S., it will be because the scope of the "first sale" doctrine is clarified. If Costco wins in the Supreme Court, for example, the result could be that U.S. retailers would feel empowered to purchase licensed foreign-made copies of books, records and other materials -- many otherwise unavailable in this country -- and make them available to U.S. consumers. The financial stakes may be small -- relative to what's in play between international brand manufacturers and big box stores -- but the cultural stakes could be significant. NEXT TIME: Are we ready to revisit the issue of first sale in the digital environment?

Full post as published by ©ollectanea on April 27, 2010 (boomark / email).