™ ™ Copyright © 2009,  AFTA™ - American Free Trade Association  U.S. SUPREME COURT GRANTS CERTIORARI IN PARALLEL MARKET CASE The Supreme Court, on April 19, 2010, agreed to consider whether parallel market imports of foreign-made products are lawful in the United States under federal Copyright law; imports which were largely ruled illegal by a federal appellate court.  This is the third case in which the Supreme Court has addressed parallel market issues since AFTA was formed, and there is much work that must be done to make this the third Supreme Court victory for the parallel market industry. The case is Costco Wholesale v. Omega, S.A. which involves Costco’s sale of genuine Omega watches manufactured in Switzerland. The watches included a small copyrighted design on the back side of the watch face.  Omega claimed (and the appeals Court held) that Costco infringed upon its U.S. copyrights in the copyrighted design because Omega had never consented to the importation of the watches into the United States. The lower Court rejected Costco’s claim that the “first sale” doctrine protected its resale of these genuine articles.  If the Supreme Court affirms the appellate court decision, virtually any foreign-made product bearing a US copyright can be barred from importation into the United States. However, if reversed (i.e. if the Court holds in favor of Costco), manufacturers will no longer be able to threaten importers, distributors and resellers of genuine goods with lawsuits alleging violation of U.S. copyright laws. It is encouraging that the Supreme Court accepted this case for review. Had it not, the Appellate Court decision prohibiting this form of parallel market trade would be the nation’s leading legal interpretation. It is also significant because the Supreme Court accepts only a very small percentage of the cases filed under its discretionary jurisdiction (“certiorari”), and here, the Court decided to grant certiorari over the objections of the US Department of Justice, which argued that the law clearly prohibited the Costco imports.  AFTA and others filed briefs stating otherwise. AFTA must act now to file friend-of-the-court briefs and fight on behalf of the industry.  AFTA needs to make sure that the Supreme Court does not make the same mistake made by the Appellate court.  In 1998 (Quality King v. L’Anza Distributors), the U.S. Supreme Court told manufacturers that they could not use the U.S. copyright law to stop re-importation of U.S. manufactured products.  In 2010, AFTA needs to make sure that the U.S. Supreme Court tells manufacturers, once and for all, that, no matter where they elect to produce their products, the American consumer has the continuing right to a freely competitive domestic marketplace. There is no time to waste.  The briefing schedule will run quickly, as Oral arguments are expected this Fall.  AFTA must get aggressive and its membership must be engaged.  If you are not already an AFTA member, please join immediately by clicking on the Membership tab at the top of this page, or by contacting Lauren Perez directly at lperez@strtrade.com. For further information about this case, please click on the Public Information tab.