Copyright law gives publishers, record labels and other creators unusual control over the works they produce. It also includes an important balancing principle: Much of that control evaporates once a work has been sold, leaving buyers free to resell, rent, lend or give away their purchases. This "first sale" doctrine provides a crucial legal umbrella for libraries and secondhand stores, to name just a few of the beneficiaries.
The doctrine has been undermined, however, by new technology and court rulings. One example of the latter is the U.S. 9th Circuit Court of Appeals' decision that the first-sale rule doesn't apply to items purchased outside the U.S. An appeal to the Supreme Court foundered this week, when the eight justices who heard the case announced that they were irrevocably split.
The issue was whether big-box retailer Costco could sell discounted Swiss Omega watches obtained from companies that had purchased them outside the U.S. The watches had a copyrighted logo engraved on the back, giving Omega the legal basis to sue Costco for infringement. Specifically, Omega accused Costco of violating a provision in the 1976 Copyright Act that bars the unauthorized importation copyrighted works in quantity.
The 9th Circuit agreed with Omega that this provision trumped the first-sale doctrine. With limited exceptions for personal, nonprofit or governmental use, it ruled, no copyrighted product manufactured outside the U.S. can be imported without the copyright owner's permission.