[A2k] Howard Knopf on Costco v. Omega

Manon Anne Ress manon.ress at keionline.org
Mon Dec 13 11:55:36 PST 2010



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.

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