International brand owners, take note. On Monday, December 13, 2010, in Costco Wholesale Corp. v. Omega S.A., 562 U. S. ____ (2010), the Supreme Court announced that it was evenly divided on whether to affirm or reverse a Ninth Circuit decision concerning gray market goods, thereby leaving that decision intact. As a result, at least in the Ninth Circuit, brand owners will now be able to rely on Section 602(a) of the Copyright Act to prevent the importation of gray market goods that are manufactured outside the United States.
Gray market goods are authentic products intended for distribution outside the United States that find their way into the U.S. market. To the consternation of brand owners and licensors, due to brand owners’ different pricing models for domestic/international products and currency fluctuations, importers are sometimes able to offer gray market goods in the U.S. at discounted prices, undercutting products intended for sale in this country.
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