The Supreme Court has upheld a ban on unauthorized "gray market" imports—products sold legally in other countries, but not authorized by their maker for US sale. Any manufacturer who makes items overseas and slaps a copyrighted logo on them can go after importers who don't play by the company's rules. What about US "first sale" rights? They don't apply.

Retailing giant Costco got its hands on several boatloads of expensive Omega watches through gray market middlemen and sold them cheap, but Omega sued for copyright infringement. Because the watches weren't made in the US, Omega said that they did not qualify for first sale rules, which let companies and buyers do what they like with a product after purchasing it. Instead, Omega argued that all foreign-made, copyrighted products could only be sold in the US with the manufacturer's permission. (An earlier Supreme Court case held that first sale protections do apply if the item was made in the US, even if it is then sold overseas and re-imported without permission.)

Omega won on appeal. The appeals court said that extending first sale protection to foreign-made, foreign-sold goods "would impermissibly apply the Copyright Act extraterritorially." And, so long as the goods carry a copyrighted logo (in this case, Omega's globe symbol), the maker can sue for copyright infringement if the product is sold in the US without authorization.

A set of public interest groups argued earlier this year that upholding this approach could create problems for the entire used marketplace. How can a library or a used bookstore know, for instance, if some work printed in Europe was sold in the US with the publisher's authorization or not? And imagine the effect on sites like eBay (which not surprisingly filed its own motion in this case), where most of the items are used. Without knowing where something was made and whether its sale was authorized, sellers remain open to big penalties.

"Auction houses would have to track the location of manufacture and sale history of every item they auction off," warned the groups. "Classified pages and online exchanges like eBay, craigslist, and Amazon Marketplace would have to decide between their new liability exposure and the cost of investigating the hundreds of millions of items sold via their sites."

But the Court split 4-4 on the Costco/Omega dispute (newest justice Elena Kagan recused herself), so the appeals court ruling is automatically upheld, although only in the Ninth Circuit. The split means that courts outside the Ninth Circuit are not bound by the ruling, so it's possible the Court could find the issue on the docket once again.

The court's decision is a victory for any company that wants to set different prices in different parts of the world, then prevent those in wealthier countries from taking advantage of prices meant for less-wealthy countries.