Associated Press | The Supreme Court is stepping into a legal
fight over Omega’s effort to stop Costco from offering the Swiss
maker’s watches for up to a third less than they cost elsewhere.

The case has important implications for discount sellers like Costco
and Target as well as eBay, Amazon and other companies that form an
estimated $58 billion annual market for goods that are purchased
abroad, then imported and resold without the permission of the
manufacturer.

The justices said Monday they will hear Costco’s appeal of a lower court ruling that sided with Omega in its attempt to invoke U.S. copyright law to halt the discount sales. Omega owns a U.S. copyright on the Omega Globe Design symbol that is engraved on its watches at the time they are made.

The high court has previously ruled that copyright protections do not apply to goods made in the United States, sold abroad and then imported back into the country for resale. At issue in this case are items that are manufactured overseas, sold by their maker abroad and then brought back here for resale.

This means of purchase, importation and resale is sometimes called the secondary-goods or gray-goods market, and it is a big part of Costco’s business.

Roy Englert, Costco’s lawyer, said in court papers that there is no basis in law for “the distinction between goods made at home and those made abroad.”

In response, Omega said that the ruling by the 9th U.S. Circuit Court of Appeals in San Francisco was faithful to copyright law, which is designed to “prevent the importation, without the authority of the U.S. copyright holder, of genuine copies made and sold overseas.”

The Obama administration said it was troubled by aspects of the appeals court ruling, but urged the justices to stay out of the case.

The case will be argued in the fall.

The case is Costco Wholesale Corp. v. Omega, S.A., 08-1423.