Copyright_-_Omega_Case

I. Discuss the policy reasons for the Omega holding. The Ninth Circuit holding in Omega seems awkward and misguided because of its haphazard departure from the fundamental property principle that one has the right to alienate property. Although U.S. copyright grants an author a monopoly in an artistic work, the right is limited, among other restrictions of the Copyright Act, by the first sale doctrine, as codified in §106. The Ninth Circuit holding reflects a pro business/ pro price discrimination philosophy. It is difficult to hypothesize about the court’s policy motivations in holding that Omega did not exhaust its downstream rights when it sold its products to authorized international dealers. One explanation may relate to the expanding international market for parallel goods and the rampant copyright violation enabled by evolving technologies, including the Internet. The court may have been signaling 1.) A desire to restrain the market behavior and 2.) Sympathy with businesses who face distribution control issues as a result of the market/copyright dynamics. However, the Omega holding is misguided because the Ninth Circuit essentially condoned the use of copyright law to limit international competition. Companies, who manufacture and distribute goods internationally, are now able to manipulate prices and prevent gray market sales. Companies have been given an invincible monopoly that survives downstream sales. Naturally, companies want to maximize profits. However, the court’s objective should be not to protect pricing discrimination, but rather, it should be to apply a policy that supports the primary purpose of copyright: to create more artistic works. In essence, the Ninth Circuit decision amounted to a restriction on the alienability of tangible products that are otherwise lawfully bought and sold, simply because the product included a copyrighted symbol. II. Analyze the prediction of how SCOTUS will rule in light of its previous holding in Quality. In light of the holding in Quality King, it is predicted that the SCOTUS will overturn the Ninth Circuit holding in Omega. In Quality King, the Supreme Court limited the right of copyright holders to bar parallel imports of U.S. manufactured copyrighted materials. A Supreme Court affirmation of the Ninth Circuit would create a devastating wake on global secondary markets. It would paralyze used bookstores, for example. Furthermore, it would create a logistical infrastructure nightmare with regard to how to identify the manufacturer origin, the relevant copyright law (domestic/international), and the chain of sales to determine whether the sale (and business) is compliant. Such a holding would unfairly and unnecessarily encumber the successive bona fide purchaser, a purchaser typically protected under traditional property law. Additionally, it would be impractical to enforce. This is a complex issue given the nature of the world markets, the incestuous distribution practices of some companies, and the burden on the bona fide purchaser. However, at the core of the issue may be one fundamental corporate trait: greed. In the present case, Omega wants to have its cake and eat it too. It wants to engage in pricing discrimination among developed and developing nations. Furthermore, it wants to exercise control over the downstream sale of its watches, non-copyrighted products. It is accomplishing this goal through the use of a copyright claim that has nothing to do with protecting creative expression and everything to do with enabling abusive monopolistic practices. In conclusion, SCOTUS will likely overturn Omega, because at its heart, it is a global competition case. Omega is using a copyright claim to assert control over the downstream distribution of its tangible products. There is no intent to protect creative expression and there is no true infringement. Omega needs to accept the risks associated with its pricing policies. Additionally, it needs to accept the fact that its policies created the market for parallel imports.