In the Ninth Circuit decision of Omega, S.A. v. Costco Wholesale Corp., the court ruled that the first sale doctrine does not apply to imported works manufactured abroad. Costco appealed, and oral arguments before the United States Supreme Court took place in early November. The case was based on the following activity: Costco resold Omega watches, sold by Omega outside the United States at a relatively low price, without authorization. These watches featured a small etching of a copyrighted image, so Omega argued that Costco’s acts constituted infringing importation.
The first sale doctrine, codified in 17 U.S.C. § 109(a), provides: “. . . the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” The function of this statutory provision is to limit the copyright holder’s exclusive right to distribution. Without the first sale doctrine, a copyright holder would have an actionable claim, for instance, against a consumer selling a book or CD at a garage sale.