If you bought your Omega watch at Costco, Omega wants you to know they’re not happy about it. They’re not happy that you can buy Omega watches at Costco for a third less than you can at other retailers. They are so not happy about it that they are suing Costco, in fact. Apparently, this suit not only has the obvious implications for Costco, but also for other retailers like Target, Amazon, and even eBay 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. This is what is known as the secondary-goods or gray-goods market and is a big part of Costco’s business.
Omega’s suit revolves around copyright issues, since they are US copyright holders of the Omega Globe Design symbol that is engraved on the watches when they are manufactured. The 9th Circuit Court of Appeals in San Francisco already ruled on the case (case is Costco Wholesale Corp. v. Omega, S.A., 08-1423) in favor of Omega. Omega believes that the court ruling fairly upheld the copyright laws which are designed to “prevent the importation, without the authority of the U.S. copyright holder, of genuine copies made and sold overseas.” However, as you can guess, Costco feels differently so they have appealed the decision to the Supreme Court. Costco believes that since 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 that they have a viable appeal. Costco’s lawyer, Roy Englert, said in court papers that there is no basis in law for “the distinction between goods made at home and those made abroad.” We’ll have to wait until this fall to see if the Supreme Court agrees or not.