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The Courts United States

First-Sale Doctrine Lost Overseas 775

Posted by samzenpus
from the you-buy-nit-you-keep-it dept.
Max Hyre writes "In a 4-4 decision, the US Supreme court let stand the Ninth Circuit's decision that the First-Sale Doctrine (which says once you buy something, the maker gets no say in what you do with it) only applies to goods made in the US. That Omega watch you bought in Switzerland last year? It's yours now—forever. You can't sell it without Omega's permission."
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First-Sale Doctrine Lost Overseas

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  • by just_another_sean (919159) on Wednesday December 15, 2010 @03:41PM (#34564778) Homepage Journal

    That is the most absurd and arbitrary distinction I've ever heard. A law of convenience if I ever heard of one. One step closer to stripping our rights in the name of international legal harmony.

    • by Massacrifice (249974) on Wednesday December 15, 2010 @03:48PM (#34564890)

      Just wait till the chinese manufacturers start toying with one. Want to sell your used motherboard on craigslist? Sorry, no can do, this luxuriuously ASUS-branded product was sold to YOU and only YOU.

      Considering the amount of stuff that gets produced abroad, I suspect this decision will soon be so full of holes and exceptions that it wont be an issue.

      • but what about the store / supplies that first payed for it?

    • But wait, it gets better! This decision is based on a copyright claim over the tiny fucking logo on the back of the watch! Ridiculous barely begins to describe it.

  • by mark72005 (1233572) on Wednesday December 15, 2010 @03:41PM (#34564782)
    "In a 4-4 decision, the U.S. Supreme court let stand the Ninth Circuit's decision that the First-Sale Doctrine (which says once you buy something, the maker gets no say in what you do with it) only applies to goods made in the US. That Omega watch you bought in Switzerland last year? It's yours now—forever. You can't sell it without Omega's permission."

    How are those last two sentences related to the rest of the summary?
    • by TubeSteak (669689)

      "In a 4-4 decision, the U.S. Supreme court let stand the Ninth Circuit's decision..."

      As I understand it, a 4-4 vote is the same as if the court never heard the case.
      The end result is that the case only stands as precedent in the 9th Circuit.
      Obviously, other juridictions will take this into account, but it is not binding upon them.

      • That is correct. A tie vote sets no precedent.

        I looked up a little more on this case in particular. Costco bought the watches from a New York-based company that bought them from people that had bought them from authorized distributors. Omega contends that the initial purchaser was not authorized to resell or import them to the United States, so any subsequent sale was unauthorized and hence illegal. Omega brought suit on the basis of control of the Omega logo.

        This troubles me not so much as an issue of

      • The summary you see is a heavily-edited version of the one I submitted. My submission read

        In a [...] 4-4 non-decision

        :-/

  • by alexo (9335) on Wednesday December 15, 2010 @03:42PM (#34564800) Journal

    And you can't pass it on without my permission!

  • by Compaqt (1758360) on Wednesday December 15, 2010 @03:42PM (#34564808) Homepage

    that they based it on copyright law: an Omega logo on the watch.

    I thought it would be something like a signed contract, or buying from a foreign wholesaler, then importing to the US.

    But the copyright on the logo?

    • by jimicus (737525) on Wednesday December 15, 2010 @04:21PM (#34565378)

      It's a common way to circumvent laws which attempt to encourage competition.

      Let's consider three parties: Manufacturer, Retailer and Customer.

      Broadly speaking, laws governing the contracts between Manufacturer, Retailer and Consumer generally say something like:

      The contracts between "Manufacturer and Retailer" and "Retailer and Customer" are wholly separate, and Manufacturer cannot impose subsequent conditions on the contract between "Retailer and Customer". (In other words, Apple can't demand their retailers sell at a specified price).

      Usual Solution: Manufacturer doesn't write anything into the contract along those lines, but have internal processes that ensure if the retailer does try and do this, subsequent orders from the retailer are mysteriously "delayed" and/or include a line in the contract giving Manufacturer the right to stop selling to Retailer at any time and for no reason whatsoever.

      Retailer is free to source products from anywhere in the world (the "grey market"), they're not obliged to buy from local distributors

      Solutions: Sure, but most warranty law deals with the contract between Retailer and Customer. The manufacturer is under no obligation to even offer a warranty - and they often won't with grey market products (which they identify by serial number). Which means that if the product breaks, that's the retailer's problem. Of course, this isn't terribly effective for a lot of things these days - Costco deal in sufficient quantities that they can live with this quite happily.

      What else can the manufacturer do? Localise products: ensure that only products destined for the US market get the necessary sticky labels showing they meet safety standards (even if they're all identical) - but this doesn't work very well for designer watches and handbags.

      Copyright - ah, that's a good one. The manufacturer obviously holds copyright over their name and various aspects of their products, which means nobody else can use it without their permission. Obviously, no manufacturer in their right mind is going to sue everyone who sells their products for copyright infringement - but they can sue people who they don't want selling their product.

  • by DoofusOfDeath (636671) on Wednesday December 15, 2010 @03:42PM (#34564814)

    It seems like the dominant trend in U.S. legislation is that if favors rich corporiations and individuals, at the cost of what seem like basic freedoms of common citizens.

    Does anyone know, historically, whether all countries have this trend? And if so, historically, what things (if any) have lead to the reversa of these trends? I.e., does it require a reboot (i.e., full-blown revoluion), or is even that never enough?

    • Russia moved from totalitarianism to freedom relatively blood- and revolution-free.

      Here in the US we could solve the problem by amending the Constitution to strike the copyright clause. Or else change the words from an indefinite length to a fixed length (say 14 years). I don't get paid for work I did two decades ago, and I don't think any other professional should either.

      • Good luck (Score:5, Interesting)

        by betterunixthanunix (980855) on Wednesday December 15, 2010 @03:55PM (#34565004)
        Until people wake up and realize that they do not owe copyright owners anything, nothing will change. I had a conversation a few weeks ago with a person who used to work for the recording industry, and when I suggested that there might not be any ethical problem with downloading unauthorized copies of music and movies, he became so emotional that the conversation ended with him demanding that I never speak to him again. When the people "on the other side" of the issue are fighting like it is a matter of life and death, what hope do the rest of us have when most people just do not see copyright as being a particularly big deal?
        • Re:Good luck (Score:5, Insightful)

          by commodore64_love (1445365) on Wednesday December 15, 2010 @04:29PM (#34565480) Journal

          "I don't get paid for work I did two decades ago. Why should you?"

          "Um... uh... well..."

          "That's what I thought. There is no justifiable reason to extend copyright beyond about 10 years. There is no reason why you should get an annual payment for the rest of your life for work you did when you were age 20 or 30. *I* don't get that privilege of lifelong income. I work. I get paid. I might get a bonus at the end-of-the-year or decade for work well done, and that's the end of it. The same should be true for you."

          • Re:Good luck (Score:5, Interesting)

            by Eric S. Smith (162) on Wednesday December 15, 2010 @04:33PM (#34565540) Homepage

            "I don't get paid for work I did two decades ago. Why should you?"

            A possible response: "Because work that I did two decades ago is still valued and in demand, while nobody cares what you did yesterday."

            • Re:Good luck (Score:5, Insightful)

              by nospam007 (722110) * on Wednesday December 15, 2010 @05:11PM (#34566104)

              Really? What about house builders, infrastructure?

              Should the people who built a highway get money from every user for the rest of their lives?

              Should the painter who did the exterior of my house get a say on allowing me to repaint it in a different color?

               

              • Re:Good luck (Score:5, Interesting)

                by Overzeetop (214511) on Wednesday December 15, 2010 @05:33PM (#34566538) Journal

                You can!

                Here's what you do - build a house on your own dime, then rent it to people. You can get income for the rest of your life, for doing nothing!

                Now, here's the rub: When you do something like that, you usually have to pay a tax to the government on an annual basis based on the total value of the property - just a couple percent. Maybe that's what we need for copyright?

            • A possible response to that: “If people will only take your work if it is free, what does that tell you about its value or demand?”

          • by jgtg32a (1173373)
            The publisher is still getting paid for work done 10 years ago.
          • by dachshund (300733)

            *I* don't get that privilege of lifelong income. I work. I get paid.

            Many musicians don't. Get paid, that is. Or get bonuses. They make stuff and hope that people will buy it, and that the tiny bit of income they make off of this will add up as people discover their work over the years.

            I'd be willing to support a model where musicians get good salaries and bonuses, then we all make their recordings public domain --- sort of like government-funded academic research. But I'm not sure who's going to pay f

        • I think the best argument I've heard so far (granted, it's my own argument, so I'm inclined to like it, but still ...) is "cultural heritage". My generation doesn't have any. Nor does my parents' generation. My great grandfathers and -mothers were born between 1908 and 1920, and they barely have any.

          You know all these great authors, who have enriched our lives? Not part of our heritage. At all. Well, a few of them are. When did they die? Add 70 years and see if that number is lower than the current year. If

  • So Almost Nothing? (Score:3, Interesting)

    by eldavojohn (898314) * <eldavojohn.gmail@com> on Wednesday December 15, 2010 @03:43PM (#34564818) Journal

    only applies to goods made in the US.

    So nothing then? Why pick a Swiss watch? Why not go with something like a Nike football. Good ole' American Nike making American football, right? Wrong [answers.com]. I bet all the clothes on me right now came from Vietnam or Cambodia or Thailand or some other Asian fabric powerhouse. Donating them to a Goodwill store to be resold would be ... illegal?

    Furthermore the article notes CostCo but what about Wal-Mart and Target. They resell these same articles of clothing as a middleman. Do they have some special contract protecting them from the largest copyright lawsuit to ever hit the retail industry?

    This is so bizarre and just another indication of how copyright is seriously broken. If I understand the article, it's just because there's an Omega emblem on the watch? So since CostCo now owns that watch, they can chip the logo off and sell it for whatever price they want? This makes about as much logical sense as smearing my face with my own feces before a job interview.

    Is there any lawyer out there with some background in this that might tell me what implications this holds for something like clothing being sold at Wal-Mart on the cheap? Or does it need to have an MSRP on it? How does this apply to software developed here but pressed overseas? So many questions I could dream up to ask about this new court decision.

    • Bad Summary (Score:5, Informative)

      by pavon (30274) on Wednesday December 15, 2010 @03:59PM (#34565064)

      The summary is written is misleading. The distinction made by the Ninth Circuit depends both on where an item was made as well as where it was sold. If you legally purchase a foreign made product in the US (ie from an authorized reseller like Walmart), then the right of first sale still applies. However, you can't buy foreign products in a foreign country and then resell them in the US without permission.

      I still think it's a bad decision but the summary makes it out to be even worse.

      • Re:Bad Summary (Score:4, Insightful)

        by eldavojohn (898314) * <eldavojohn.gmail@com> on Wednesday December 15, 2010 @04:09PM (#34565206) Journal
        Thank you for the further explanation. I did read the article (the original SCOTUS blog) and it said:

        Under other provisions of copyright law, importing a copy of a protected work amounts to an infringement of the copyright if the copy was made abroad and brought back into the U.S. without permission.

        Emphasis mine. What is "permission?"

        So what I'm asking is whether or not Wal-Mart signs agreements with Vietnamese companies that say they can bring them into the United States and did CostCo, like, drop the ball on that one? Did they smuggle them in their coat over to the US? I assume they passed customs from both countries, what level is this illegal on?

        How on Earth would this deal go down any differently for Timex watches made in China sold in CostCo? Are you telling me that CostCo was making money by purchasing Omega watches at MSRP in Switzerland and then reselling them below MSRP in the United States? I'm not an economist but something sounds really strange in that case. This is what the SCOTUS Blog said:

        The case involved a company, Omega S.A., that makes watches in Switzerland and sells them around the world through authorized distributors and retailers. Costco, a membership warehouse club that sells brand-name merchandise to members at prices lower than its competitors, had bought Omega's Seamaster watch abroad and re-sold it in the U.S. Costco's price was $1,299, about a third less than Omega's suggested retail price of $1,999.

        Does anyone else think this sounds like Omega struck a deal selling thousands of watches to CostCo only to find out that when people saw them for $1300 they perceived a devaluation of the one they bought at the mall for two large? I mean, it sounds like Omega is trying to force CostCo to maintain a minimum profit margin. That's not capitalism. It's becoming more and more clear that copyright and capitalism are mutually exclusive concepts. And I'm guessing that this is some bizarre abuse of copyright that any foreign manufacturer could hold over the largest retailer/reseller's head. Evidently it happens on a smaller basis [amazon.com] with Omega.

        • Re:Bad Summary (Score:5, Informative)

          by infalliable (1239578) on Wednesday December 15, 2010 @04:36PM (#34565584)

          Basically, the decision said that a company can enforce regional pricing and distribution structures through a (broad) interpretation of copyright laws.

          Omega has various pricing depending on region. Overseas they were cheap and expensive in the US. CostCo bought them from a low priced region overseas and imported them to the USA. The ruling was they couldnt do that as it violated the copyright, despite the fact they were legally purchased overseas.

      • by gstoddart (321705)

        However, you can't buy foreign products in a foreign country and then resell them in the US without permission.

        I hope to hell they clarify this and limit its scope to importing large quantities and doing this for purposes of commerce. Because, this would mean that you can't sell anything you own without "permission" of the copyright owner.

        I mean, if I personally bought an Omega watch (*drool*), I hope to hell I still retain right of first sale and could sell it if I so chose.

        Essentially if this applies to

  • SCOTUS is losing it. (Score:3, Interesting)

    by Jane Q. Public (1010737) on Wednesday December 15, 2010 @03:44PM (#34564832)
    Nothing illustrates the collective ridiculousness of the current Supreme Court than this decision.

    So now, foreign companies have vastly greater control of their products in your home than American companies do.

    That is not exactly a decision that is in the best interest of the American people.
    • by DragonWriter (970822) on Wednesday December 15, 2010 @04:19PM (#34565346)

      Nothing illustrates the collective ridiculousness of the current Supreme Court than this decision.

      So now, foreign companies have vastly greater control of their products in your home than American companies do.

      Only those goods that were not only made but also purchased in a foreign country, and which were purchased subject to an agreement which, if the purchase was made in the US, would be unenforceable because the violate the doctrine of first sale.

      Essentially, this means certain commercial aspects of US copyright law don't apply to sales of goods where the copyright isn't a US copyright and the sale agreement isn't executed within the jurisdiction of the U.S.

      This probably doesn't affect any foreign-made products in most peoples homes; the issue really mostly affects goods bought abroad for resale.

    • You and the article are missing the point of the ruling. Manufacturers price discriminate by selling the products at higher prices to countries that can afford a higher price. For instance, watches sold in America cost more than watches sold in Paraguay. The question is whether or not the first sale doctrine can stop someone from buying cheaper watches in Paraguay then selling them into the United States. The Ninth Circuit said that it does. I disagree, but it's not as retarded as giving foreign companies t

  • by Sonny Yatsen (603655) * on Wednesday December 15, 2010 @03:44PM (#34564836) Journal

    The headline is overstating things a lot. The First-Sale Doctrine isn't lost overseas. Since this is a 4-4 tie decision by the Supreme Court, only the lower court decision is upheld. There is no precedential force behind the decision at all. Thus, the only thing that can be said about this is that Costco loses this particular instance, but the right of First-Sale overseas remains in effect since this decision isn't useful for any subsequent precedent.

    http://www.slate.com/id/2109077/ [slate.com] --- A good analysis of what happens when a tied decision occurs.

  • by crow (16139) on Wednesday December 15, 2010 @03:50PM (#34564932) Homepage Journal

    The problem with allowing third-party imports to be sold is that consumers will buy the items, expecting the manufacturer to support them (providing warranty service at a minimum). If the product in question is not sold directly domestically, then the manufacturer may not be prepared for the support. Further, the product may have been sold in a country where the cost and level of support is different.

    The solution is to require that any imports not authorized by the manufacturer must be clearly advertised as not supported by the manufacturer, with all service provided by the importer.

  • by Z8 (1602647) on Wednesday December 15, 2010 @04:01PM (#34565094)
    There they have a different system [wikipedia.org] where creators have more control of their works.
  • by PatPending (953482) on Wednesday December 15, 2010 @04:19PM (#34565336)
    For the 81 cases listed for the October Term 2010 [scotusblog.com], Kagan [wikipedia.org] is recused 31 times or 38% of the cases.

    Why? Partly because she was the Solicitor General [npr.org]:

    SHAPIRO: How common is it for a new justice to have to recuse from the number of cases that Kagan is recusing herself from?

    TOTENBERG: Well, it's not common because, at least more recently, we haven't had top Justice Department officials migrating to the court. But it's happened many times in our history. Justice Thurgood Marshall, who was solicitor general, for example, recused himself from about half the cases the court heard in his first year. But that high number was largely because he remained SG until he was confirmed.

    And Kagan didn't do that. She stopped being SG right after her nomination. So, this high number of recusals, I think, is front loaded. She'll probably be recused from about a third of the docket this year, and then next year her recusals will plummet to zero or something close to that.

    One interesting thing, Ari, is that there are a number of cases that she's reused herself from that she really had nothing to do with. And these are cases that generally involve commercial disputes. And the Justice Department filed a notice that it was taking no position, and these are just routine evaluations. They're done by lower-level lawyers but she signed the filing, so she's taking herself out of those cases.

    SHAPIRO: And when she's recused and there are eight justices on the Supreme Court, what happens then?

    TOTENBERG: Well, the case goes forward, as usual. And if there's a four-to-four tie, the lower court opinion is automatically affirmed without the Supreme Court issued any opinion, then presumably the issue can come up in another case, later, where Kagan can participate.

  • by wcrowe (94389) on Wednesday December 15, 2010 @05:06PM (#34566028)

    PJ O'Rourke wrote a great book on politics and economics called Eat The Rich. In his book, he examines a number of different political systems and concludes that so long as there is rule of law and private property rights, almost any political system can function. This is true of capitalism, socialism, communism, and even fascism. Take away either of those two components -- rule of law or private property rights -- and you've got trouble.

    This story is just another example of our disappearing private property rights. The basic test of ownership is disposal. If you have the right to dispose of an item in some way, through sale, donation, alteration, or destruction (safely, of course), then you own it. If you are prohibited from doing any of these things, then it is not really yours.

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