On Monday (Patriots Day in New England) the Supreme Court granted certiorari in Costco v. Omega. I’ve provided a rundown of the case in late March so I will dispense with the background. A couple of comments on the Supreme Court’s decision to grant cert:
The most interesting part of blogging cases is watching the conversation between the different branches of government and the many layers of our judicial system. I was somewhat surprised when the Supreme Court invited the Solicitor General’s Office to brief cert but upon reflection it made sense. Congress, in enacting the Pro-IP Act, arguably re-framed a core component of copyright law without substantial debate before passage. The invitation by the Supreme Court may have been an attempt to force the Executive to take a position on an issue that was not given discussion before enactment.
To that end, I question whether the Supreme Court’s decision to grant cert in Costco is rooted in forcing debate on the contours of the first-sale doctrine. Oral arguments will provide a spotlight, even if the Supreme Court has no intention of disturbing the Ninth Circuit’s (and all of the other district courts’ that have addressed the issue) interpretation of Sections 109 and 602. If Congress does not amend the provisions in the near future it will likely become a lasting component of American copyright law, given the momentum it takes to pass any law in the U.S. The granting of cert, then, could be an attempt by the Supreme Court to ensure that the contours of the first sale doctrine accurately reflects current Congressional intent before momentum takes hold.
I would not be surprised if the Supreme Court’s opinion contains language on issues that are not directly at bar, such as whether parties can raise 109(a) as a defense in cases involving foreign-made copies so long as a lawful sale has occurred, or about the viability of the defense of copyright misuse.
The Solicitor General’s Office led with the argument that cert should be denied because there was no circuit split, instead of with its statutory analysis. The petitioners made the argument in opposition that the Court should grant cert because there was no circuit split, and unless the issue was addressed post-haste, it would likely become accepted cannon. I made the observation in my previous post on Costco that the Supreme Court appears to grant cert in copyright cases for issues that fundamentally affect the structure of copyright law, and circuit splits play a modest part of the evaluation process. The decision of the Supreme Court to grant cert in Costco provides more support for this contention.
The American Federation of Musicians, which is affiliated with the AFL-CIO, presumably favors the Ninth Circuit’s interpretation that Section 109 does not limit distribution rights in works manufactured outside of the United States. But the Ninth Circuit’s decision, Costco argued, will negatively impact American manufacturing, which I would assume is closer to the core of the AFL-CIO’s lobbying efforts. The AFL-CIO (AFM) elected not to brief on cert. It will be interesting to see if they jump in on merits. A petition could provide a signal of how much, if at all, labor unions are concerned about the Ninth Circuit decision’s possible negative impact on American manufacturing.
Previous posts on Costco v. Omega:
- Solicitor General recommends denial of cert in Costco v. Omega
- Supreme Court asks SG to brief Costco v. Omega
- Copyright at the Supreme Court this week
- Moral Panics, Costco, Salinger v. Colting, and the elimination of the fee for expedited filing if litigation is pending
- Supreme Court docket roundup of copyright cases
Court Documents:
- Petition of Writ of Certiorari (Costco)
- Brief of Amicus Curiae Public Citizen in Support of Petitioner
- Brief of Amici Curiae Public Knowledge, Electronic Frontier Foundation in Support of the Petition
- Brief of Amici Curiae Entertainment Merchants Association and National Association of Recording Merchandisers in Support of Petitioner
- Brief for EBay Inc. as Amicus Curiae in Support of Petitioner
- Brief Amicus Curiae Retail Industry Leaders Association, National Association of Chain Drug Stores, Amazon.com, Gamestop Corp., Movie Gallery, Inc., Quality King Distributors, Inc., Target Corporation,in Support of Petitioners
- Brief for Respondent in Opposition (Omega)
- Reply Brief for Petitioner (Costco)
- Supplemental brief for Petitioner (Costco)
- Solicitor General brief recommending denial of cert
- Omega’s renewed motion for summary judgment in the Central District of California
- Ninth Circuit opinion
Recent scholarship from the 
6 Comments
Shourin – thank you for great insight and commentary on this issue.
Shurin – You write that Congress “arguably reframed a core component of copyright law” in amending 602 in the PRO-IP Act. I understand it’s “arguable” int he sense that Omega cited that language in its argument, but I found that aspect of Omega’s argument particularly weak. I’m curious what significance, if any, you acribe to the new PRO-IP Act language in 602.
I don’t think it changes the existing language. If you look at 602(b) prior to the PRO-IP Act, it contains precisely the same language as does the “new” 602(a). What difference doe sit make, do you think?
Thanks for the kind words, Mary.
Paul:
The Copyright Act post Quality King arguably grants exclusive importation rights, as provided in Section 602, to two sets of works. The first are works that are made in a noninfringing way abroad, lawfully transfered abroad and then shipped without authorization into the U.S. The second class are pirated works that are made in the U.S. or abroad.
If you were to argue that the first sale doctrine as codified in Section 109 limits a copyright owner’s ability to enforce the exclusive right of distribution in works that were lawfully transferred abroad, as Costco has, the importation right in 602(a)(1) would be meaningless unless it applied only to pirated works. Before passage of the PRO-IP Act, Costco had a puncher’s chance at arguing that the importation rights granted in 602 only applied to pirated works.
The PRO-IP Act added a section that specifically addressed pirated works, 602(a)(2). The only remaining way to read 602(a)(1), if it is given any meaning, is that it applies to all works. If 602 applies to works that are lawfully made and transferred abroad, it would also be rendered meaningless unless Section 109 is read only to apply to works that are manufactured in the US. Does this make sense?
[Corrected typo catch made by Paul.]
Great post, Shourin.
Shurin, thanks for the reply (and I certainly appreciate your analysis too). I’m not sure if there’s a typo in your reply, but the PRO IP Act did not “add[] a section that specifically addressed pirated works, 602(b).” Sec. 602(b) existed prior to the PRO IP Act, and began as follows: “In a case where the making of the copies or phonorecords would have constituted an infringement of copyright if this title had been applicable, their importation is prohibited. ” The wording is the same, post PRO IP.
What the PRO IP Act added is 602(a)(2), which contains virtually identical language to 602(b), but borrows sentence structure from 602(a)(1):
“602(a)(2) Importation into the United States or exportation from the United States, without the authority of the owner of copyright under this title, of copies or phonorecords, the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable, is an infringement of the exclusive right to distribute … under Section 106.”
I’m assuming that the change you’re referring to is the addition of 602(a)(2), but if so, then it seems as though you’re arguing (or perhaps I should say that others are arguing — you yourself seem somewhat agnostic) that whereas the previous law (602(b))merely said importation of items that would have been infringing if the act had applied was prohibited, the new law says (in 602(b)) such importation is prohibited and also (in 602(a)(2)) that it is actionable as a violation of the distribution right.
I understand how the use of “if this act had applied” language can be read to suggest that Congress was somehow acknowledging that the act doesn’t “apply” to items made abroad. (I think that’s a pretty weak argument, since the language was already in 602.) I can also see how, by adding language in 602(a)(2) that specifically focuses on pirated work, the PRO IP Act changes could highlight a contrast with the existing language in 602(a), i.e. because the new language is different, and focuses on priated works, one might infer that the old language must have referred to both pirated and non-pirated unauthorized imports. Is that what you mean?
Paul, thanks for the correction — I did reference the incorrect provision. I will respond to your comment more adequately in a post tomorrow.
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[...] of Costco v. Omega, about which I wrote last year. There are some up-to-date details on the case here on the Exclusive Rights blog, but the basic controversy is about whether or not the US “First Sale” doctrine applies [...]
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