As I mentioned in my previous post on Costco v. Omega, I would not be surprised if the Supreme Court’s opinion addresses issues that are outside of the narrow confines of the question presented. One of the issues that the Court may address is the definition of importation in Section 602 of the Act. Omega alleged that Costco committed copyright infringement directly under Section 106(3), and through importation of the watches under 602(a), which invokes the Section 106(3) exclusive right of distribution.
The interesting thing about this play is that Costco didn’t import the watches under a traditional use of the term. Costco acquired the watches from a third-party who brought the watches into the United States. The Copyright Act does not define importation or exportation, or distribution for that matter. According to Omega’s Renewed Motion for Interlocutory Summary Judgment:
Any party in the chain of distribution may be held liable for copyright infringement otherwise a distributor could avoid liability simply by using a straw to import the unauthorized copies. UMG Recordings, Inc. v. Disco Azteca Dist., Inc., 446 F. Supp. 2d 1164, 1173 (E.D. Ca. 2006) (“Disco Azteca”), citing Columbia Broadcasting Systems, Inc. v. Scorpio Music Dist., Inc., 569 F. Supp. 47, 48-49 (E.D. Pa. 1983) (“CBS”). Lack of intent or knowledge of the infringement is no defense to infringement. Educational Testing Service v. Simon, 95 F. Supp. 2d 1081, 1087 (numbered paragraph 33) (C.D. CaL. 1999). See also Parfums Givenchy, Inc. v. Drug Emporium, Inc., 38 F.3d 477, 482 (9th Cir. 1994) (“Parfums Givenchy”).
In C & C Beauty, the plaintiff owned a copyright in a two-dimensional artistic design on the box containing Amarige perfume which was manufactured abroad. 832 F.Supp. at 1381. Defendant was an importer of grey market products who imported and distributed the perfume products including the box containing the copyrighted design. Id. at 1382. The court recognized the validity of the plaintiffs copyright based on the prima facie evidence of the copyright registration. Id. at 1383. The Court looked at the pleadings and affidavits and found no question of fact regarding the actions of the defendant importing and distributing the perfume .
with the copyrighted box acquired abroad, without plaintiffs consent. Id. The Court found the test for infringement under § 602(a) had been met. ¡d. (Parfums Givenchy is based on the same set of facts as C&C Beauty. Id. at 1382.)
The Ninth Circuit did not address the issue of whether the receipt of unauthorized imported goods was an importation because it was outside of the scope of the appeal. The District Court had found that all of the claims were barred by the first-sale doctrine, sidestepping the importation issue.
I think raising the argument was a strong tactical play regardless of whether it’s successful. By arguing that Costco’s actions were an importation, Omega forced the District Court, Ninth Circuit and Supreme Court to evaluate how the meaning of Section 109 is informed by Section 602.