A tie vote by the Supreme Court on Dec. 13 means that watch brand Omega can prevent “grey market” versions of its watches from being sold at retailer Costco.
The court evenly split 4-4 on the case of Costco Wholesale Corp. v. Omega S.A, in effect upholding a September 2008 U.S. Court of Appeals, Ninth Circuit ruling in favor of Omega. Justice Elana Kagan sat out the case.
Because the court did not issue an opinion, this ruling will not have the power of precedent, which means the grey market issue has not been settled, commentators said.
The case began in 2004, when Omega sued Costco in federal court in California over its sales of grey market watches. The term refers to a practice in which retailers buy brands from unauthorized dealers located overseas and resell them at lower prices in the United States.
The case differed from past fights in that Omega used copyright infringement to fight its case. Since Omega watches sold by Costco carry the watch company’s copyrighted icon, the company argued that selling them without its authorization violates U.S. copyright law.
But Costco argued that the case could impede the ability of retailers to sell products without authorization, and court briefs supporting Costco were filed by eBay, which argued that the ruling “permit[s] copyright owners to control downstream sales.”
Costco did not respond to a request from JCK for comment. The Swatch Group, Omega's parent, sent out a statement saying it "commend[s] the decision as it provides a legal mechanism to help control the spread of grey market trading."