The Supreme Court on Monday said Costco could be liable for copyright infringement for selling foreign-made watches without the manufacturer's authorization.

The high court – ruling 4-4, with Justice Elena Kagan recused – was interpreting the so-called "first-sale" doctrine (.pdf) of U.S. copyright law. Until Monday's ruling, the doctrine was thought to allow the purchaser of a copyrighted work to re-sell the work without the copyright holder's permission. That's why we have used bookstores, record stores, GameStop (.pdf) and even eBay. (.pdf)

However, because there was no majority decision, Monday's ruling solely affirms a lower court's decision against Costco and does not adopt a nationwide precedent.

"It's as if the court never took the case in the first place. We have to wait for another case like this to come along," said Thomas Goldstein, the SCOTUSblog founder who has argued nearly two dozen cases before the high court.

The case before the justices was brought by Costco, which was selling the Omega Seamaster watch for about $1,300, well below the $2,000 recommended U.S. price.

Omega, of Switzerland, sued Costco for copyright infringement, because Costco was obtaining the watches from unauthorized European dealers that sold them far cheaper than U.S.-based Omega distributors. Omega copyrighted the watch design in the United States by imprinting the company's emblem on the underside of the timepiece.

The justices upheld a lower court decision saying the first-sale doctrine did not apply to goods produced overseas.

Costco, in its appeal of the 9th U.S. Circuit Court of Appeals' ruling, told the Supreme Court that the decision effectively urges U.S.-based manufacturers to flee the United States (.pdf) to acquire complete control over distribution of their goods in the American market.

Under the ruling, if hardware manufacturers adopt Omega's distribution and legal tactics, it might be copyright infringement to re-sell your used computers, mobile phones and tablet computers produced in China.

The Obama administration, with Kagan as solicitor general, had taken Omega's side, writing that the "Copyright Act does not apply outside the United States." (.pdf) If it did, the administration told the justices in a friend-of-the-court filing, that would be an "extraterritorial application of U.S. regulatory statutes."

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