Revisiting the First Sale Doctrine

January 18, 2011, 06:12 PM

In a recent 4-4 decision issued on December 13, 2010, the Supreme Court of the United States affirmed a 2008 decision by the Court of Appeals for the Ninth Circuit (Ninth Circuit), limiting application of the first sale doctrine to products manufactured in the United States. The case involves a lawsuit filed by Omega S.A. (Omega) against Costco Wholesale Corporation (Costco) regarding Omega watches manufactured in Switzerland and later sold in California at Costco. Omega filed a copyright infringement action against Costco based on Costcos acquisition and sale of the watches. Omega and Costco filed cross motions for summary judgment, and the district court granted Costcos motion for summary judgment. In describing the first sale doctrine, the Ninth Circuit cited to Nimmer on Copyrights and stated that once a copyright owner agrees to the sale of a particular copy of its work, it cannot later exercise the distribution right regarding such copy. The Ninth Circuit held that the first sale doctrine did not apply to the Omega watches because Omega made copies of the Omega Globe Design in Switzerland, and Costco sold the copies without Omegas authority in the United States. The Supreme Court affirmed the Ninth Circuits conclusion that the first sale doctrine refers only to copies legally made in the United States. —Kristan B. Burch