Monday, December 13, 2010

Costco v. Omega afffired by equally divided US Supreme Court

 Costco v. Omega has been affirmed by an equally divided US Supreme Court - without any reasons.

Here is the entire judgment. There are no reasons and no indication of who voted which way.

This means that the 9th Circuit opinion stands - but today's decision has no precedential  value. It cannot be read as an endorsement of 9th Circuit's decision.

This is a big setback for American retailers and consumers. It will be interesting to see if there is a push for Congress to weigh in here. However, given the maximalist mood in the USA, one cannot predict what Congress will do here. The lobbying would be intense on both sides. The USA might want to look at what we have in Canada - which is a separate regime for books that allows for exclusivity in order to protect Canadian publishers for cultural reasons. 

Canada, as we know from the factually similar Kraft decision, affirms the exhaustion principle, at least where the foreign manufacturer retains ownership of copyright - which will normally be the case. (disclosure - I acted for the Retail Council of Canada as an intervener in the Supreme Court case, where we made the prevailing arguments).


However, there is language in Bill C-32 that may inadvertently compromise the principle of exhaustion and free trade. Hopefully, this will be fixed. Otherwise, Canadians could be very unhappily surprised by higher prices, less competition and less selection.

HK

PS - New appointed Justice Kagan  recused herself from this case  "presumably because she had been involved with it previously as solicitor general", Reuters reports here.

Interesting to speculate "what if" Justice Stevens had still been on the Court.


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SUPREME COURT OF THE UNITED STATES
No. 08–1423
COSTCO WHOLESALE CORPORATION, PETITIONER
v. OMEGA, S. A.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[December 13, 2010]
PER CURIAM.
The judgment is affirmed by an equally divided Court.
JUSTICE KAGAN took no part in the consideration or decision of this cas

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