High court to look at Costco sale of Swiss watches

  • Mon Apr 19th, 2010 9:34am
  • News

Associated Press

WASHINGTON — The Supreme Court is stepping into a legal fight over Omega’s effort to stop Costco from offering the Swiss maker’s watches for up to a third less than they cost elsewhere.

The case has important implications for discount sellers like Costco and Target as well as eBay, Amazon and other companies that form an estimated $58 billion annual market for goods that are purchased abroad, then imported and resold without the permission of the manufacturer.

The justices said today they will hear Costco’s appeal of a lower court ruling that sided with Omega in its attempt to invoke U.S. copyright law to halt the discount sales. Omega owns a U.S. copyright on the Omega Globe Design symbol that is engraved on its watches at the time they are made.

The high court has previously ruled that copyright protections do not apply to goods made in the United States, sold abroad and then imported back into the country for resale. At issue in this case are items that are manufactured overseas, sold by their maker abroad and then brought back here for resale.

This means of purchase, importation and resale is sometimes called the secondary-goods or gray-goods market, and it is a big part of Costco’s business.

Roy Englert, Costco’s lawyer, said in court papers that there is no basis in law for “the distinction between goods made at home and those made abroad.”

In response, Omega said that the ruling by the 9th U.S. Circuit Court of Appeals in San Francisco was faithful to copyright law, which is designed to “prevent the importation, without the authority of the U.S. copyright holder, of genuine copies made and sold overseas.”

The Obama administration said it was troubled by aspects of the appeals court ruling, but urged the justices to stay out of the case.

The case, to be argued in the fall, is Costco Wholesale Corp. v. Omega, S.A., 08-1423.

In other matters today, the court:

— Decided to review the case of a fired hospital worker who claims he lost his job over his service in the U.S. Army Reserve. Vincent Staub, a lab technician at Proctor Hospital in Peoria, Ill., won $57,640 in damages from a jury that found he was fired because of his military service, only to have a federal appeals court throw out the judgment. The justices said today they will consider reinstating the award.

The court could use the case to settle an unresolved question about whether an employer can be found liable for discrimination when a biased supervisor does not make employment determinations but influences the decision-maker.— Rejected an appeal from a Texan on death row for nearly three decades who said he did not receive a fair trial when he was convicted of murdering a teenager. The court left in place the murder conviction of Delma Banks in the shooting death of a 16-year-old in northeast Texas. A divided federal appeals court in New Orleans upheld the conviction.

— Left in place the conviction of a man despite the admission of an affair between his trial judge and the prosecutor. The justices did not comment in turning down the appeal of Charles Dean Hood. A Texas appeals court threw out Hood’s death sentence earlier this year on a point unrelated to the affair. Hood was seeking an entirely new trial based on the once-secret romantic relationship between the trial judge, Verla Sue Holland, and Tom O’Connell, the former district attorney in Collin County.

— Seemed to split sharply on whether a law school can legally deny recognition to a Christian student group because it won’t let gays or non-Christians join. The court heard arguments from the Christian Legal Society, which wants recognition from Hastings College of the Law. Lower courts threw out a lawsuit trying to force the school to make it a campus organization.

Chief Justice John Roberts and Justice Samuel Alito questioned the school’s lawyer sharply, saying that being forced to admit someone who doesn’t share their beliefs was a threat to the group. But Justices Ruth Bader Ginsburg and Sonia Sotomayor pressed the group’s lawyer on notion that if they can ban gays, other groups can legally ban women and minorities.