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Costco Prevails in First Sale Case Thanks to Copyright Misuse

November 15, 2011Article
IP Watchdog

On Monday, December 13, 2010, the United States Supreme Court issued a non-decision in the matter of Costco Wholesale Corporation v. Omega, S.A. The Per Curiam decision simply read: “The judgment is affirmed by an equally divided Court. Justice Kagan took no part in the consideration or decision of this case.”  That meant that the 2008 decision of the United States Court of Appeals for the Ninth Circuit remained unchanged.  But this was not the last to be heard of this controversial case.

On November 9, 2011, the United States District Court for the Eastern District of California, per Senior Judge Terry J. Hatter, Jr., granted Costco a summary judgment victory due to the fact that Omega engaged in copyright misuse.  Yes, the plot thickened.  The district court originally granted summary judgment to Costco on the basis of the first sale doctrine, which was overturned by the Ninth Circuit and then affirmed by the Supreme Court in the tie decision, or non-decision of December 2010.  That meant that the case would proceed because the first sale doctrine summary judgment victory was erased.  But not so fast!  Judge Hatter had other ideas!

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