Supreme Court lets ban on “gray market” imports stand

by Stephan Kinsella on December 13, 2010

As a followup to my Leveraging IP, see this report by arstechnica:

Supreme Court lets ban on “gray market” imports stand

By Nate Anderson | Last updated about 4 hours ago
The Supreme Court has upheld a ban on unauthorized “gray market” imports—products sold legally in other countries, but not authorized by their maker for US sale. Any manufacturer who makes items overseas and slaps a copyrighted logo on them can go after importers who don’t play by the company’s rules. What about US “first sale” rights? They don’t apply.

Retailing giant Costco got its hands on several boatloads of expensive Omega watches through gray market middlemen and sold them cheap, but Omega sued for copyright infringement. Because the watches weren’t made in the US, Omega said that they did not qualify for first sale rules, which let companies and buyers do what they like with a product after purchasing it. Instead, Omega argued that all foreign-made, copyrighted products could only be sold in the US with the manufacturer’s permission. (An earlier Supreme Court case held that first sale protections do apply if the item was made in the US, even if it is then sold overseas and re-imported without permission.)

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Slim934 December 14, 2010 at 2:42 pm

Omega won on appeal. The appeals court said that extending first sale protection to foreign-made, foreign-sold goods “would impermissibly apply the Copyright Act extraterritorially.” And, so long as the goods carry a copyrighted logo (in this case, Omega’s globe symbol), the maker can sue for copyright infringement if the product is sold in the US without authorization.

…..doesn’t the fact that they are giving the manufacturer the right to determine what can be done with products they do not own (resale wise) already show that the Copyright Act is being applied extraterritorially?

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