Costco, Omega, and The Supreme Court

http://www.watchtime.com/2010/04/u-s-supreme-court-will-examine-costco-sale-of-omega-watches/

"Gray market" decision coming. From the article:

"In a case that could have wide-ranging implications for so-called
“gray-market” goods, the U.S. Supreme Court has agreed to decide whether
manufacturers can use U.S. copyright law to prevent their foreign-made
goods from appearing on web sites and store shelves at U.S. discounters
such as Costco, Amazon, Target, and others"

Lotta AD's are probably sweating as this is how they DUMP what they cant sell...hmmmm.

The watch companies started gray market by making retailers buy a minium stock order.if they didn't move product,no money and they lose the brand,so they sell it out the back door to buyers.omega has a copyright in the usa and thats what is being used for this suit.Everything hinges on the definition of whats considered a used product.Costco states that when they buy them,they are now second hand merchandise.But costco sells them as new.That might bite them later,depending how the suit plays out.omega is saying that because the watches were purchased in bulk,that its not considered a used product and can't then be sold by companies that aren't in omegas network of dealers.Should be fun to watch,but doesn't effect me at all.

Anomaly wrote:

Lotta AD's are probably sweating as this is how they DUMP what they cant sell...hmmmm.

Even if Omega prevails, it won't stop grey market. The way this case was fought by Omega will only prevent American resellers from importing grey market items from overseas. It doesn't prevent them from getting watches from other American dealers.

Omega used copyright law in this case. I'm not a lawyer, but I have some experience with and knowledge of copyright law. I don't think copyright law was ever intended to be used in this manner. I think the supreme court could find with Costco. The original court sided with Costco. The 9th circuit appeal court sided with Omega. The supreme court decided to take the case, going against the advice of the Solicitor General. So the supreme court must think that either Costco's case has merit worth consideration or that the law used in the case needs some examination for clarifiction. Fundamentally, this case tests whether the spirit of copyright law at is odds with the spirit of right of first sale laws.

Also, if Omega wins, it will state that US law offers higher protection to foreign companies than to US companies - there's something unAmerican about that. American companies will be given another incentive to move manufacturing jobs overseas.

The case could go either way so I won't bet on an outcome. But if Omega wins, there will plenty of people pushing for a change to copyright law or right of first sale law or both.

Don't really understand everything in this case,
but it's pretty interesting, that's for sure !
Going to have to keep tabs on this one.
Thanks alot for the update !

I am a big fan of Omega and all this copyright matter is very interesting.
Didn't Panerai have a big stink up with replicas, recently? The grey market in Seikos has not hindered its sales at all. I know the Euro watch companies are very protective of their products. I guess they wish to maintain their perceived high status watches and keep the retail prices high as a monopoly. Warranties would be void if watches were bought at Cosco etc????
In anycase, I could never afford a brand new Omega. I did just win a used Seamaster quartz from the Japan auctions for $400....hahha!

I can not see Omega as a winner in this case. If Omega wanted to stop the gray market, their case should be against the retailers who sold to Costco in the first place. Even if they did go after the retailer, are there any grounds for copyright infringement? Hard to beleive there is.

This is simply a case of wanting your cake and eating it too. THEY make the watches. THEY are VERY anal about "supply channels". THEY are arses about who gets their watches and how many they MUST take. Now THEY want to stop the Grey Market? Geez, anyone with a brain (and that may preclude our SC from seeing this) can see that Omega could stop all this in a second if they didn't treat their ADs like scum and force them to take too many watches in order to prop up Omega (and Swatch's) bottom line.

in Canada, Seiko does the same thing...make jewelry stores buy Seiko stock...this means those stores have stopped ordering many Seiko models, leaving the field for Citizen watches (usually the navigator styles) to be bought on consignment...meaning the stores do not have to buy the watches outright....stupid Seiko marketing strategy if you ask me...

I just can't see the copy right infringement. Maybe I am slow but I would not bet on Omega in this case I don't think.

Northwestguy wrote:

I can not see Omega as a winner in this case. If Omega wanted to stop the gray market, their case should be against the retailers who sold to Costco in the first place. Even if they did go after the retailer, are there any grounds for copyright infringement? Hard to beleive there is.

John pretty much summed up my opinion. I hope the court finds in favor of Costco. They did'nt steal the watches but bought them from an AD and are reselling them. Omega ought to go after the dealer who sold to Costco.

Seiko already started pulling out of retail stores in the usa.They're opening up seiko stores that will offer the higher end.The Ananta series was designed for the usa market.North America keeps seiko running.They are just now changing their image here and that entails stores and pulling out of chain stores.That will be good for us.I like the higher end seikos but I have to send them to seiya to get the seiko warranty so they go to asia.

merichar wrote:

Northwestguy wrote:

I can not see Omega as a winner in this case. If Omega wanted to stop the gray market, their case should be against the retailers who sold to Costco in the first place. Even if they did go after the retailer, are there any grounds for copyright infringement? Hard to beleive there is.

John pretty much summed up my opinion. I hope the court finds in favor of Costco. They did'nt steal the watches but bought them from an AD and are reselling them. Omega ought to go after the dealer who sold to Costco.

omega has the serial numbers.If they audited any store,they'd know.If they bought one from jomashop or authentivwatches.com and ran the numbers,they'd pinpoint the store.I think they don't want to go that far though.As long as I'm getting 30 to 35% off,I don't care who wins.

Northwestguy wrote:

I can not see Omega as a winner in this case. If Omega wanted to stop the gray market, their case should be against the retailers who sold to Costco in the first place. Even if they did go after the retailer, are there any grounds for copyright infringement? Hard to beleive there is.

Supposedly the dealers in this case are in Egypt and Paraguay. Totally different laws will apply in each case. But often the manufacturer has a written Dealer Agreement that clearly states they will lose their dealership if they sell their stock to grey market. Presumedly, if such agreements are legal in Egypt and Paraguay (they are severely limited in the USA) then those source dealers have probably lost their dealership status.