Supreme Court Evenly Split in Costco v. Omega

On December 13, 2010, after much anticipation in the case of Costco Wholesale Corporation v. Omega, S.A., No. 08-1423, it was announced that the eight Justices of the high court that considered the merits were evenly split, four to four.

Previously discussed on this blog here and here, the Justices considered whether the first sale doctrine of the Copyright Act, which allows a copyright holder to exclusively control the first sale of an authorized copy, should be interpreted to provide a defense for parallel importers bringing into the U.S. copyrighted material manufactured and first sold abroad. Justice Elena Kagan had recused herself because, in her previous role as Solicitor General, she filed a brief with the Court recommending denial of certiorari of the case, ultimately allowing an equal split among the other Justices.

Because no decision was reached, no national precedent is set and the lower court decision from the Ninth Circuit, holding that the first sale doctrine is not applicable to goods manufacture and first sold abroad, remains in force within the Ninth Circuit’s jurisdiction. The slip opinion, which does not address the merits but merely affirms the lower court decision, is available here.

While this turn of events is, for the time being, good news for the prevailing party, Omega, how this issue will ultimately be decided by the Supreme Court remains an open question. With the ever increasing internationalization of commerce, it is likely only a matter of time before this issue again makes its way before the high court. While it may be tempting to conclude that Justice Kagan’s recommendation to deny certiorari in this case is an indication that she would have sided with those other Justices who voted to affirm, she took that position as an attorney for her client and it may or may not reflect her personal views of the issue. Justice Kagan is a blank slate, judicially speaking, and it is probably not wise to place any bets on how she will operate on the bench at this point. And who is to say just who will be sitting on the Supreme Court when this issue is taken up anew? For now, it remains an unanswered question that will continue to give pause to importers and brand owner alike, at least those outside the Ninth Circuit.

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