Summary of U.S. Supreme Court case law leading up to Kirtsaeng v. Wiley and the first sale doctrine.

1. “LAWFULLY MADE UNDER THIS TITLE”
Lawfully made in the U.S. v. Manufactured with the permission of the rights holder
CHICAGO BAR ASSOCIATION | Trade & Professional Associations Law
By: Alexis Hart McDowell, Esq.
CURRENT STATE OF THE LAW
Legally manufactured overseas; Sold overseas; Imported back into U.S. - LEGAL
On March 19, 2013 the U.S. Supreme Court decided Kirtsaeng v. John Wiley & Sons, Inc.,
(No. 11–697), holding that the First Sale doctrine (17 U. S. C. §109(a)) applies to copies of
copyrighted works lawfully made outside the United States and then imported into the U.S.
Case Facts: Respondent, John Wiley & Sons, Inc., an academic textbook publisher, often assigns
to its wholly owned foreign subsidiary (WileyAsia) rights to publish, print, and sell foreign
editions of Wiley’s English language textbooks abroad. Wiley Asia’s books state that they are not
to be taken (without permission) into the United States. When petitioner Kirtsaeng moved from
Thailand to the United States to study mathematics, he asked friends and family to buy foreign
edition English-language textbooks in Thai book shops, where they sold at low prices, and to mail
them to him in the United States. He then sold the books, reimbursed his family and friends, and
kept the profit.
EVOLUTION OF THE LAW
Legally manufactured in U.S.; Sold overseas; Imported back into U.S. - LEGAL
In 1998, the U.S. Supreme Court decided Quality King Distributors, Inc. v. L’anza Research Int’l,
Inc., 523 U. S. 135 (1998), holding that a copyrighted item manufactured in the U.S. and initially
sold outside the U.S. could be legally imported back into the U.S. pursuant to copyright’s First Sale
doctrine (17 U.S.C. §109) and without violating the copyright owner’s importation right (17 U.S.C.
§602).
Case Facts: Respondent L’anza, a California manufacturer, sells its hair care products in the
United States exclusively to distributors who have agreed to resell within limited geographic areas
and only to authorized retailers. L’anza’s foreign prices are substantially lower than its domestic
prices. It appears that after L’anza’s United Kingdom distributor arranged for the sale of several
tons of L’anza products, affixed with copyrighted labels, to a distributor in Malta, that distributor
sold the goods to petitioner, which imported them back into the United States without L’anza’s
permission and then resold them at discounted prices to unauthorized retailers.
1 9 April 2013

2. Legally manufactured overseas; Sold overseas; Imported back into U.S. - ILLEGAL
In 2010, an equally divided U.S. Supreme Court affirmed the Ninth Circuit’s holding in Omega
S.A. v. Costco Wholesale Corp., 541 F.3d 982, (9th Cir. 2008) that the first sale doctrine applies
only to copyrighted items that are made and distributed in the United States. The court
deadlocked at 4-4 (Judge Kagan recused).
Ninth Circuit Ruling: The First Sale doctrine provides no defense to an infringement
action under §§ 106(3) (distribution) and 602(a) (importation) that involves (1) foreign-
made, nonpiratical copies of a U.S. copyrighted work, (2) unless those same copies have
already been sold in the United States with the copyright owner’s authority.
Case Facts: Omega manufactures watches in Switzerland that bear the engraving of the U.S.-
copyrighted “Omega Globe Design” on the underside of the watches. Omega first sold the watches
to authorized distributors overseas. Unidentified third parties eventually purchased the watches
and sold them to ENE Limited, a New York company, which in turn sold them to Costco. Costco
then sold the watches to consumers in California. Although Omega authorized the initial foreign
sale of the watches, it did not authorize their importation into the United States or the sales made
by Costco. Omega sued under the Copyright Act, claiming the sale of the watches was an
infringement of their United States copyright. Costco defended on the grounds of the first sale
doctrine, which currently provides a defense for reselling goods manufactured in the United States
that are resold by retailers or distributors. Costco claims that the doctrine applies to foreign-
manufactured goods as well. The district court granted Costco’s motion for summary judgment,
but the Ninth Circuit reversed the ruling.
RELEVANT PROVISIONS FROM THE U.S. COPYRIGHT ACT
17 U.S.C. §106(3) - [T]o distribute copies or phonorecords of the copyrighted work to the public by
sale or other transfer of ownership, or by rental, lease, or lending.
17 U.S.C. §109(a) - Notwithstanding the provisions of section 106 (3), the owner of a particular copy
or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled,
without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy
or phonorecord.
17 U.S.C. §602(a)(1) - Importation into the United States, without the authority of the owner of
copyright under this title, of copies or phonorecords of a work that have been acquired outside the
United States is an infringement of the exclusive right to distribute copies or phonorecords under
section 106, actionable under section 501.
2 9 April 2013

3. (Slip Opinion) OCTOBER TERM, 2012 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
KIRTSAENG, DBA BLUECHRISTINE99 v. JOHN WILEY
& SONS, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT
No. 11–697. Argued October 29, 2012—Decided March 19, 2013
The “exclusive rights” that a copyright owner has “to distribute copies
. . . of [a] copyrighted work,” 17 U. S. C. §106(3), are qualified by the
application of several limitations set out in §§107 through 122, in-
cluding the “first sale” doctrine, which provides that “the owner of a
particular copy or phonorecord lawfully made under this title . . . is
entitled, without the authority of the copyright owner, to sell or oth-
erwise dispose of the possession of that copy or phonorecord,” §109(a).
Importing a copy made abroad without the copyright owner’s permis-
sion is an infringement of §106(3). See §602(a)(1). In Quality King
Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U. S. 135, 145,
this Court held that §602(a)(1)’s reference to §106(3) incorporates the
§§107 through 122 limitations, including §109’s “first sale” doctrine.
However, the copy in Quality King was initially manufactured in the
United States and then sent abroad and sold.
Respondent, John Wiley & Sons, Inc., an academic textbook pub-
lisher, often assigns to its wholly owned foreign subsidiary (Wiley
Asia) rights to publish, print, and sell foreign editions of Wiley’s Eng-
lish language textbooks abroad. Wiley Asia’s books state that they
are not to be taken (without permission) into the United States.
When petitioner Kirtsaeng moved from Thailand to the United States
to study mathematics, he asked friends and family to buy foreign edi-
tion English-language textbooks in Thai book shops, where they sold
at low prices, and to mail them to him in the United States. He then
sold the books, reimbursed his family and friends, and kept the
profit.
Wiley filed suit, claiming that Kirtsaeng’s unauthorized importa-
tion and resale of its books was an infringement of Wiley’s §106(3)
3

4. 2 KIRTSAENG v. JOHN WILEY & SONS, INC.
Syllabus
exclusive right to distribute and §602’s import prohibition. Kirtsaeng
replied that because his books were “lawfully made” and acquired le-
gitimately, §109(a)’s “first sale” doctrine permitted importation and
resale without Wiley’s further permission. The District Court held
that Kirtsaeng could not assert this defense because the doctrine
does not apply to goods manufactured abroad. The jury then found
that Kirtsaeng had willfully infringed Wiley’s American copyrights
and assessed damages. The Second Circuit affirmed, concluding that
§109(a)’s “lawfully made under this title” language indicated that the
“first sale” doctrine does not apply to copies of American copyrighted
works manufactured abroad.
Held: The “first sale” doctrine applies to copies of a copyrighted work
lawfully made abroad. Pp. 7–33.
(a) Wiley reads “lawfully made under this title” to impose a geo-
graphical limitation that prevents §109(a)’s doctrine from applying to
Wiley Asia’s books. Kirtsaeng, however, reads the phrase as impos-
ing the non-geographical limitation made “in accordance with” or “in
compliance with” the Copyright Act, which would permit the doctrine
to apply to copies manufactured abroad with the copyright owner’s
permission. Pp. 7–8.
(b) Section 109(a)’s language, its context, and the “first sale” doc-
trine’s common-law history favor Kirtsaeng’s reading. Pp. 8–24.
(1) Section 109(a) says nothing about geography. “Under” can
logically mean “in accordance with.” And a nongeographical inter-
pretation provides each word in the phrase “lawfully made under this
title” with a distinct purpose: “lawfully made” suggests an effort to
distinguish copies that were made lawfully from those that were not,
and “under this title” sets forth the standard of “lawful[ness]” (i.e.,
the U. S. Copyright Act). This simple reading promotes the tradi-
tional copyright objective of combatting piracy and makes word-by-
word linguistic sense.
In contrast, the geographical interpretation bristles with linguistic
difficulties. Wiley first reads “under” to mean “in conformance with
the Copyright Act where the Copyright Act is applicable.” Wiley then
argues that the Act “is applicable” only in the United States. Howev-
er, neither “under” nor any other word in “lawfully made under this
title” means “where.” Nor can a geographical limitation be read into
the word “applicable.” The fact that the Act does not instantly pro-
tect an American copyright holder from unauthorized piracy taking
place abroad does not mean the Act is inapplicable to copies made
abroad. Indeed, §602(a)(2) makes foreign-printed pirated copies sub-
ject to the Copyright Act. And §104 says that works “subject to pro-
tection” include unpublished works “without regard to the [author’s]
nationality or domicile,” and works “first published” in any of the
4

5. Cite as: 568 U. S. ____ (2013) 3
Syllabus
nearly 180 nations that have signed a copyright treaty with the
United States. Pp. 8–12.
(2) Both historical and contemporary statutory context indicate
that Congress did not have geography in mind when writing the pre-
sent version of §109(a). A comparison of the language in §109(a)’s
predecessor and the present provision supports this conclusion. The
former version referred to those who are not owners of a copy, but
mere possessors who “lawfully obtained” a copy, while the present
version covers only owners of a “lawfully made” copy. This new lan-
guage, including the five words at issue, makes clear that a lessee of
a copy will not receive “first sale” protection but one who owns a copy
will be protected, provided that the copy was “lawfully made.” A
nongeographical interpretation is also supported by other provisions
of the present statute. For example, the “manufacturing clause,”
which limited importation of many copies printed outside the United
States, was phased out in an effort to equalize treatment of copies
made in America and copies made abroad. But that “equal treat-
ment” principle is difficult to square with a geographical interpreta-
tion that would grant an American copyright holder permanent con-
trol over the American distribution chain in respect to copies printed
abroad but not those printed in America. Finally, the Court normally
presumes that the words “lawfully made under this title” carry the
same meaning when they appear in different but related sections,
and it is unlikely that Congress would have intended the conse-
quences produced by a geographical interpretation. Pp. 12–16.
(3) A nongeographical reading is also supported by the canon of
statutory interpretation that “when a statute covers an issue previ-
ously governed by the common law,” it is presumed that “Congress
intended to retain the substance of the common law.” Samantar v.
Yousuf, 560 U. S. ___, ___. The common-law “first sale” doctrine,
which has an impeccable historic pedigree, makes no geographical
distinctions. Nor can such distinctions be found in Bobbs-Merrill Co.
v. Straus, 210 U. S. 339, where this Court first applied the “first sale”
doctrine, or in §109(a)’s predecessor provision, which Congress enact-
ed a year later. Pp. 17–19.
(4) Library associations, used-book dealers, technology compa-
nies, consumer-goods retailers, and museums point to various ways
in which a geographical interpretation would fail to further basic
constitutional copyright objectives, in particular “promot[ing] the
Progress of Science and useful Arts,” Art. I, §8, cl. 8. For example, a
geographical interpretation of the first-sale doctrine would likely re-
quire libraries to obtain permission before circulating the many books
in their collections that were printed overseas. Wiley counters that
such problems have not occurred in the 30 years since a federal court
5

6. 4 KIRTSAENG v. JOHN WILEY & SONS, INC.
Syllabus
first adopted a geographical interpretation. But the law has not been
settled for so long in Wiley’s favor. The Second Circuit in this case
was the first Court of Appeals to adopt a purely geographical inter-
pretation. Reliance on the “first sale” doctrine is also deeply embed-
ded in the practices of booksellers, libraries, museums, and retailers,
who have long relied on its protection. And the fact that harm has
proved limited so far may simply reflect the reluctance of copyright
holders to assert geographically based resale rights. Thus, the prac-
tical problems described by petitioner and his amici are too serious,
extensive, and likely to come about to be dismissed as insignificant—
particularly in light of the ever-growing importance of foreign trade
to America. Pp. 19–24.
(c) Several additional arguments that Wiley and the dissent make
in support of a geographical interpretation are unpersuasive. Pp. 24–
33.
654 F. 3d 210, reversed and remanded.
BREYER, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and THOMAS, ALITO, SOTOMAYOR, and KAGAN, JJ., joined. KAGAN,
J., filed a concurring opinion, in which ALITO, J., joined. GINSBURG, J.,
filed a dissenting opinion, in which KENNEDY, J., joined, and in which
SCALIA, J., joined except as to Parts III and V–B–1.
6

7. (Bench Opinion) OCTOBER TERM, 1997 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
QUALITY KING DISTRIBUTORS, INC. v. L’
ANZA
RESEARCH INTERNATIONAL, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 96–1470. Argued December 8, 1997— Decided March 9, 1998
Respondent L’ anza, a California manufacturer, sells its hair care prod-
ucts in this country exclusively to distributors who have agreed to re-
sell within limited geographic areas and only to authorized retailers.
L’anza promotes its domestic sales with extensive advertising and
special retailer training. In foreign markets, however, it does not en-
gage in comparable advertising or promotion; its foreign prices are
substantially lower than its domestic prices. It appears that after
L’anza’ United Kingdom distributor arranged for the sale of several
s
tons of L’ anza products, affixed with copyrighted labels, to a distribu-
tor in Malta, that distributor sold the goods to petitioner, which im-
ported them back into this country without L’ anza’ permission and
s
then resold them at discounted prices to unauthorized retailers.
L’anza filed suit, alleging that petitioner’ actions violated L’
s anza’s
exclusive rights under the Copyright Act of 1976 (Act), 17 U. S. C.
§§106, 501, and 602, to reproduce and distribute the copyrighted ma-
terial in the United States. The District Court rejected petitioner’ s
“first sale” defense under §109(a) and entered summary judgment for
L’anza. Concluding that §602(a), which gives copyright owners the
right to prohibit the unauthorized importation of copies, would be
“meaningless” if §109(a) provided a defense, the Ninth Circuit af-
firmed.
Held: The first sale doctrine endorsed in §109(a) is applicable to im-
ported copies. Pp. 3–18.
(a) In Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 349–350, this
Court held that the exclusive right to “ vend” under the copyright
statute then in force applied only to the first sale of a copyrighted
work. Congress subsequently codified Bobbs-Merrill’ first sale doc-
s
7

8. 2 QUALITY KING DISTRIBUTORS, INC. v. L’
ANZA
RESEARCH INT’ INC.
L,
Syllabus
trine in the Act. Section 106(3) gives the copyright holder the exclu-
sive right “ distribute copies . . . by sale or other transfer of owner-
to
ship,” but §109(a) provides: “ Notwithstanding . . . [§]106(3), the
owner of a particular copy . . . lawfully made under this title, . . . is
entitled, without the authority of the copyright owner, to sell or oth-
erwise dispose of the possession of that copy . . . .” Although the first
sale doctrine prevents L’ anza from treating unauthorized resales by
its domestic distributors as an infringement of the exclusive right to
distribute, L’ anza claims that §602(a), properly construed, prohibits
its foreign distributors from reselling its products to American ven-
dors unable to buy from its domestic distributors. Pp. 3–7.
(b) The statutory language clearly demonstrates that the right
granted by §602(a) is subject to §109(a). Significantly, §602(a) does
not categorically prohibit the unauthorized importation of copy-
righted materials, but provides that, with three exceptions, such
“[i]mportation . . . is an infringement of the exclusive right to distrib-
ute . . . under [§]106 . . . .” Section 106 in turn expressly states that
all of the exclusive rights therein granted— including the distribution
right granted by subsection (3)— are limited by §§107 through 120.
One of those limitations is provided by §109(a), which expressly per-
mits the owner of a lawfully made copy to sell that copy
“[n]otwithstanding the provisions of [§]106(3).” After the first sale of
a copyrighted item “ lawfully made under this title,” any subsequent
purchaser, whether from a domestic or a foreign reseller, is obviously
an “ owner” of that item. Read literally, §109(a) unambiguously
states that such an owner “ entitled, without the authority of the
is
copyright owner, to sell” that item. Moreover, since §602(a) merely
provides that unauthorized importation is an infringement of an ex-
clusive right “ under [§]106,” and since that limited right does not en-
compass resales by lawful owners, §602(a)’ literal text is simply in-
s
applicable to both domestic and foreign owners of L’ anza’ products
s
who decide to import and resell them here. Pp. 7–9.
(c) The Court rejects L’ anza’ argument that §602(a), and particu-
s
larly its exceptions, are superfluous if limited by the first sale doc-
trine. The short answer is that this argument does not adequately
explain why the words “ under [§]106” appear in §602(a). Moreover,
there are several flaws in L’ anza’ reasoning that, because §602(b) al-
s
ready prohibits the importation of unauthorized or “ piratical” copies,
§602(a) must cover nonpiratical (“ lawfully made” copies sold by the
)
copyright owner. First, even if §602(a) applied only to piratical cop-
ies, it at least would provide a private remedy against the importer,
whereas §602(b)’ enforcement is vested in the Customs Service.
s
Second, because §109(a)’ protection is available only to the “
s owner”
of a lawfully made copy, the first sale doctrine would not provide a
8

9. Cite as: ____ U. S. ____ (1998) 3
Syllabus
defense to a §602(a) action against a non-owner such as a bailee.
Third, §602(a) applies to a category of copies that are neither pirati-
cal nor “ lawfully made under this title” those that are “
: lawfully
made” under another country’ law. Pp. 9–12.
s
(d) Also rejected is L’anza’ argument that because §501(a) defines
s
an “ infringer” as one “who violates . . . [§]106 . . . , or who imports . . .
in violation of [§]602,” a violation of the latter type is distinct from
one of the former, and thus not subject to §109(a). This argument’ s
force is outweighed by other statutory considerations, including the
fact that §602(a) unambiguously states that the prohibited importa-
tion is an infringement “ under [§]106,” thereby identifying §602 vio-
lations as a species of §106 violations. More important is the fact
that the §106 rights are subject to all of the provisions of “ [§§]107
through 120.” If §602(a) functioned independently, none of those sec-
tions would limit its coverage. Pp. 12–15.
(e) The Court finds unpersuasive the Solicitor General’ argument
s
that “ importation” describes an act that is not protected by §109(a)’ s
authorization to a subsequent owner “ sell or otherwise dispose of
to
the possession of” a copy. An ordinary interpretation of that lan-
guage includes the right to ship the copy to another person in another
country. More important, the Solicitor General’ cramped reading is
s
at odds with §109(a)’ necessarily broad reach. The whole point of
s
the first sale doctrine is that once the copyright owner places a copy-
righted item in the stream of commerce by selling it, he has ex-
hausted his exclusive statutory right to control its distribution.
There is no reason to assume that Congress intended §109(a) to limit
the doctrine’ scope. Pp. 15–16.
s
(f) The wisdom of protecting domestic copyright owners from the
unauthorized importation of validly copyrighted copies of their works,
and the fact that the Executive Branch has recently entered into at
least five international trade agreements apparently intended to do
just that, are irrelevant to a proper interpretation of the Act. Pp.
16–17.
98 F. 3d 1109, reversed.
STEVENS, J., delivered the opinion for a unanimous Court. GINSBURG,
J., filed a concurring opinion.
9

10. (Slip Opinion) Cite as: 562 U. S. ____ (2010) 1
Per Curiam
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 08–1423
_________________
COSTCO WHOLESALE CORPORATION, PETITIONER
v. OMEGA, S. A.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[December 13, 2010]
PER CURIAM.
The judgment is affirmed by an equally divided Court.
JUSTICE KAGAN took no part in the consideration or
decision of this case.
10

11. FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
OMEGA S.A.,  Nos. 07-55368
Plaintiff-Appellant, 07-56206
v.  D.C. No.
COSTCO WHOLESALE CORPORATION, CV-04-05443-TJH
Defendant-Appellee.
 OPINION
Appeal from the United States District Court
for the Central District of California
Terry J. Hatter, District Judge, Presiding
Argued and Submitted
July 15, 2008—Pasadena, California
Filed September 3, 2008
Before: Barry G. Silverman, Johnnie B. Rawlinson, and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
12107
11

12. 12110 OMEGA v. COSTCO
COUNSEL
David S. Richman and Kenneth E. Johnson, Theodora
Oringher Miller & Richman, P.C., Los Angeles, California;
12

13. OMEGA v. COSTCO 12111
Barry R. Levy, Horvitz & Levy LLP, Encino, California, for
the plaintiff-appellant.
Aaron J. Moss and Norman H. Levine, Greenberg Glusker
Fields Claman & Machtinger LLP, Los Angeles, California,
for the defendant-appellee.
W. Stephen Cannon and Seth D. Greenstein, Constantine
Cannon LLP, Washington, D.C., for the amici curiae.
OPINION
MILAN D. SMITH, JR., Circuit Judge:
In this opinion, we address whether the Supreme Court’s
decision in Quality King Distributors, Inc. v. L’anza Research
International, Inc., 523 U.S. 135 (1998), requires us to over-
rule our precedents that allow a defendant in a copyright
infringement action to claim the “first sale doctrine” of 17
U.S.C. § 109(a) as a defense only where the disputed copies
of a copyrighted work were either made or previously sold in
the United States with the authority of the copyright owner.
Plaintiff-Appellant Omega, S.A. (Omega) filed claims for
infringing distribution and importation under 17 U.S.C.
§§ 106(3) and 602(a) in response to Defendant-Appellee
Costco Wholesale Corporation’s (Costco) unauthorized sale
of authentic, imported Omega watches bearing a design regis-
tered at the U.S. Copyright Office. The district court granted
summary judgment to Costco on the basis of the first sale
doctrine, and awarded attorney’s fees. We have jurisdiction
pursuant to 28 U.S.C. § 1291, and we reverse.
This circuit has construed 17 U.S.C. § 109(a) to provide no
defense to an infringement action under §§ 106(3) and 602(a)
that involves (1) foreign-made, nonpiratical copies of a U.S.-
copyrighted work, (2) unless those same copies have already
13

14. 12112 OMEGA v. COSTCO
been sold in the United States with the copyright owner’s
authority. We hold that the first portion of this construction is
not “clearly irreconcilable” with Quality King, and that it
remains the law of this circuit. See Miller v. Gammie, 335
F.3d 889, 900 (9th Cir. 2003) (en banc). Because there is no
genuine dispute that Omega made the copies of the Omega
Globe Design in Switzerland, and that Costco sold them in the
United States without Omega’s authority, the first sale doc-
trine is unavailable as a defense to Omega’s claims.
I. FACTUAL AND PROCEDURAL BACKGROUND
The facts are not disputed. Omega manufactures watches in
Switzerland and sells them globally through a network of
authorized distributors and retailers. Engraved on the under-
side of the watches is a U.S.-copyrighted “Omega Globe
Design.”
Costco obtained watches bearing the copyrighted design
from the “gray market”1 in the following manner: Omega first
sold the watches to authorized distributors overseas. Unidenti-
fied third parties eventually purchased the watches and sold
them to ENE Limited, a New York company, which in turn
sold them to Costco. Costco then sold the watches to consum-
ers in California. Although Omega authorized the initial for-
eign sale of the watches, it did not authorize their importation
into the United States or the sales made by Costco.
Omega filed a lawsuit alleging that Costco’s acquisition
and sale of the watches constitute copyright infringement
1
“ ‘Gray-market’ goods, or ‘parallel imports,’ are genuine products pos-
sessing a brand name protected by a trademark or copyright. They are typ-
ically manufactured abroad, and purchased and imported into the United
States by third parties, thereby bypassing the authorized U.S. distribution
channels.” Parfums Givenchy, Inc. v. Drug Emporium, Inc., 38 F.3d 477,
481 n.6 (9th Cir. 1994). Retailers are able to sell these products at a dis-
count because the gray market arbitrages international discrepancies in
manufacturers’ pricing systems.
14

15. OMEGA v. COSTCO 12113
under 17 U.S.C. §§ 106(3) and 602(a), and subsequently
moved for summary judgment. Costco filed a cross-motion on
the basis of 17 U.S.C. § 109(a), arguing that, under the first
sale doctrine, Omega’s initial foreign sale of the watches pre-
cludes claims of infringing distribution and importation in
connection with the subsequent, unauthorized sales. The dis-
trict court ruled without explanation in favor of Costco on
both motions. The court also awarded $373,003.80 in attor-
ney’s fees to Costco under 17 U.S.C. § 505. This appeal fol-
lowed.
II. STANDARD OF REVIEW
We review de novo a district court’s grant of summary
judgment under Federal Rule of Civil Procedure 56. Buono v.
Norton, 371 F.3d 543, 545 (9th Cir. 2004). Rule 56(c) pro-
vides that summary judgment is warranted when the “plead-
ings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any mate-
rial fact and that the movant is entitled to judgment as a mat-
ter of law.” We review a district court’s award of attorney’s
fees under 17 U.S.C. § 505 for an abuse of discretion. Colum-
bia Pictures Television, Inc. v. Krypton Broad. of Birming-
ham, Inc., 259 F.3d 1186, 1197 (9th Cir. 2001).
III. DISCUSSION
[1] The viability of Omega’s infringement claims hinges on
the relationship among three sections of the Copyright Act of
1976: 17 U.S.C. §§ 106(3), 109(a), and 602(a). In relevant
part, § 602(a) reads:
Importation into the United States, without the
authority of the owner of copyright under this title,
of copies . . . of a work that have been acquired out-
side the United States is an infringement of the
15

16. 12114 OMEGA v. COSTCO
exclusive right to distribute copies . . . under section
106, actionable under section 501.2
Section 106(3) states:
Subject to sections 107 through 122, the owner of
copyright under this title has the exclusive rights . . .
to distribute copies . . . of the copyrighted work to
the public by sale or other transfer of ownership, or
by rental, lease, or lending.
Finally, § 109(a) provides:
Notwithstanding the provisions of section 106(3),
the owner of a particular copy . . . lawfully made
under this title, or any person authorized by such
owner, is entitled, without the authority of the copy-
right owner, to sell or otherwise dispose of the pos-
session of that copy . . . .
This last section codifies the so-called “first sale doctrine,”
which holds that “[o]nce [a] copyright owner consents to the
sale of particular copies of his work, he may not thereafter
exercise the distribution right with respect to those copies.” 2-
8 Melville B. Nimmer & David Nimmer, Nimmer on Copy-
right § 8.12(B)(1), at 8-156 (1978 ed.).
[2] The text of the Copyright Act establishes by syllogism
that the first sale doctrine of § 109(a) limits § 602(a): First,
given that § 106(3) is “subject to sections 107 through 122”
and § 109 falls within the designated portion of the Code,
§ 109(a) limits the exclusive distribution right in § 106(3).
Second, infringing importation under § 602(a) is merely a
2
Section 501(a) provides: “Anyone who violates any of the exclusive
rights of the copyright owner as provided by sections 106 through 122, . . .
or who imports copies . . . into the United States in violation of section
602, is an infringer of the copyright . . . .”
16

17. OMEGA v. COSTCO 12115
subcategory of “infringement of the exclusive right to distrib-
ute copies . . . under section 106,” so conduct that does not
violate § 106(3) cannot constitute infringement under
§ 602(a). Finally, because conduct covered by § 109(a) does
not violate § 106(3), and because absent a violation of
§ 106(3) there cannot be infringement under § 602(a), conduct
covered by § 109(a) does not violate § 602(a). In short,
infringement does not occur under § 106(3) or § 602(a) where
“the owner of a particular copy . . . lawfully made under this
title” imports and sells that copy without the authority of the
copyright owner. 17 U.S.C. § 109(a);3 see Quality King Dis-
tribs., Inc. v. L’anza Res. Int’l, Inc., 523 U.S. 135, 144-45
(1998) (adopting this interpretation).
[3] Omega concedes that § 109(a) generally limits
§§ 106(3) and 602(a), but contends that § 109(a) does not
apply in this case. Specifically, Omega argues that § 109(a)
provides no defense to the infringement claims because,
although the Omega Globe Design was copyrighted in the
United States, the watches bearing the design were manufac-
tured and first sold overseas. Omega claims that the copies of
the design were not “lawfully made under [Title 17]” in these
circumstances. 17 U.S.C. § 109(a). Costco responds that
although Omega’s position is correct under BMG Music v.
Perez, 952 F.2d 318 (9th Cir. 1991), Parfums Givenchy, Inc.
v. Drug Emporium, Inc., 38 F.3d 477 (9th Cir. 1994), and
Denbicare U.S.A. Inc. v. Toys “R” Us, Inc., 84 F.3d 1143 (9th
Cir. 1996), the Supreme Court effectively overruled those
cases in Quality King, 523 U.S. 135. For the reasons set forth
below, we hold that Quality King did not invalidate our gen-
eral rule that § 109(a) can provide a defense against §§ 106(3)
and 602(a) claims only insofar as the claims involve domesti-
cally made copies of U.S.-copyrighted works. Because we
3
Other parts of § 109 qualify the first sale doctrine of § 109(a), see gen-
erally 17 U.S.C. § 109, but the parties do not argue that any of those limit-
ing provisions apply.
17

18. 12116 OMEGA v. COSTCO
also conclude that the exception to that rule does not apply,
§ 109(a) provides no defense in this case.
A. Current Rule in the Circuit
[4] Omega’s position was clearly correct under pre-Quality
King Ninth Circuit precedent. This court has twice held on
indistinguishable facts that § 109(a) provides no defense
against a claim under § 602(a). In BMG Music, the defendant
purchased copies of the plaintiffs’ U.S.-copyrighted, foreign-
manufactured sound recordings, imported them into the
United States without the plaintiffs’ authorization, and then
sold them to the public. 952 F.2d at 319. Following CBS v.
Scorpio Music Distributors, 569 F. Supp. 47, 49 (E.D. Pa.
1983), aff’d without opinion, 738 F.2d 424 (3d Cir. 1984), we
held that § 109(a) provided no defense against a claim under
§ 602(a) in the circumstances because the phrase “lawfully
made under this title” in § 109(a) “grants first sale protection
only to copies legally made and sold in the United States,”
and the copies at issue were made and first sold abroad. 952
F.2d at 319. The rationale for this interpretation was twofold:
First, a contrary interpretation would impermissibly extend
the Copyright Act extraterritorially. Id. (citing Scorpio, 569 F.
Supp. at 49). Second, the application of § 109(a) after foreign
sales would “ ‘render § 602 virtually meaningless’ ” as a tool
against the unauthorized importation of nonpiratical copies
because importation is almost always preceded by at least one
lawful foreign sale that will have exhausted the distribution
right on which § 602(a) is premised. Id. at 319-20 (quoting
Scorpio, 569 F. Supp. at 49).
[5] Drug Emporium, 38 F.3d 477, followed BMG Music by
holding on similar material facts that § 109(a) provided no
defense. However, we criticized the prior interpretation of
§ 109(a)’s key phrase—“lawfully made under this title.” By
permitting the first sale defense only against claims involving
copies that are “legally made and sold in the United States,”
BMG Music appeared to give greater copyright protection to
18

19. OMEGA v. COSTCO 12117
foreign-made copies than to their domestically made counter-
parts. See 38 F.3d at 482 n.8. We found that “such a result
would be untenable, and that nothing in the legislative history
or text of § 602 supports such an interpretation.” Id.; see also
2 Paul Goldstein, Goldstein on Copyright § 7.6.1, at 142 (3d
ed. 2007) (criticizing the approach in BMG Music and Scor-
pio). We therefore created an exception to BMG Music, con-
cluding that § 109(a) can apply to copies not made in the
United States so long as an authorized first sale occurs here.
Drug Emporium, 38 F.3d at 481.
Denbicare, which involved copies made in Hong Kong and
voluntarily sold by the U.S. copyright owner within the
United States, applied the exception created by Drug Empo-
rium. Denbicare, 84 F.3d at 1145-46. The copyright owner
sued under §§ 106(3) and 602(a) after the defendant pur-
chased the copies and resold them without permission, but we
rejected the claims: The defendant was not liable for infring-
ing importation under § 602(a) because the disputed copies
were imported by third parties prior to the defendant’s pur-
chase and resale. Id. at 1149. The defendant also was not lia-
ble under § 106(3) because, in light of § 109(a) and Drug
Emporium, the copyright owner’s voluntary sale of the copies
within the United States exhausted the exclusive right of dis-
tribution. Id. at 1149-50.
[6] Under these cases, Costco would not be entitled to sum-
mary judgment on the basis of § 109(a). The statute would not
apply because Omega made copies of the Omega Globe
Design in Switzerland and Costco sold the copies without
Omega’s authority in the United States. The district court’s
unexplained grant of summary judgment on the basis of
§ 109(a) was at odds with BMG Music, Drug Emporium, and
Denbicare.4
4
Denbicare’s rejection of a § 602(a) claim due to the defendant’s lack
of involvement in importation suggests that Omega’s claim under § 602(a)
is similarly unmeritorious because, like the defendant in Denbicare,
19

20. 12118 OMEGA v. COSTCO
B. The Impact of Quality King
We next address the degree to which the Supreme Court’s
decision in Quality King invalidates this circuit’s construction
of § 109(a). This panel may overrule BMG Music, Drug
Emporium, and Denbicare if Quality King “undercut[s] the
theory or reasoning underlying the prior circuit precedent in
such a way that the cases are clearly irreconcilable.” Miller,
335 F.3d at 900.
1.
[7] It is clear that Quality King did not directly overrule
BMG Music, Drug Emporium, and Denbicare. Quality King
involved “round trip” importation: a product with a U.S.-
copyrighted label was manufactured inside the United States,
exported to an authorized foreign distributor, sold to unidenti-
fied third parties overseas, shipped back into the United States
without the copyright owner’s permission, and then sold in
California by unauthorized retailers. 523 U.S. at 138-39. The
Court held that § 109(a) can provide a defense to an action
under § 602(a) in this context. Id. at 144-52. However,
because the facts involved only domestically manufactured
copies, the Court did not address the effect of § 109(a) on
claims involving unauthorized importation of copies made
abroad. See id. at 154 (Ginsburg, J., concurring) (“[W]e do
not today resolve cases in which the allegedly infringing
imports were manufactured abroad.”). Moreover, the Court
never discussed the scope of § 109(a) or defined what “law-
fully made under this title” means.
Costco did not import the disputed copies. See 84 F.3d at 1149. However,
Costco waived this argument by not raising it in its opening brief. See
Greenwood v. FAA, 28 F.3d 971, 977 (9th Cir. 1994) (“We review only
issues which are argued specifically and distinctly in a party’s opening
brief.”). In any event, we must still decide whether § 109(a) provides a
defense against Omega’s claim under § 106(3).
20

21. OMEGA v. COSTCO 12119
2.
[8] We next consider whether the reasoning5 of Quality
King is clearly irreconcilable with our general rule that
§ 109(a) is limited to copies “legally made . . . in the United
States.” BMG Music, 952 F.2d at 319; see also Denbicare, 84
F.3d at 1150. The basis for that rule was our concern that
applying § 109(a) to foreign-made copies would violate the
presumption against the extraterritorial application of U.S.
law. BMG Music, 952 F.2d at 319 (citing Scorpio, 569 F.
Supp. at 49); cf. Subafilms, Ltd. v. MGM-Pathe Commc’ns
Co., 24 F.3d 1088, 1093-98 (9th Cir. 1994) (en banc)
(describing the “undisputed axiom” that United States copy-
right law has no extraterritorial application). Quality King dis-
missed a similar concern that the triggering of § 109(a) by
foreign sales would require an invalid extraterritorial applica-
tion of the Copyright Act, explaining that merely recognizing
the occurrence of such sales “does not require the extraterrito-
rial application of the Act any more than § 602(a)’s ‘acquired
abroad’ language does.” 523 U.S. at 145 n.14. Costco con-
tends that this explanation is irreconcilable with our interpre-
tation of § 109(a) in BMG Music.
[9] We reject Costco’s contention and hold that the
Supreme Court’s brief discussion on extraterritoriality is not
“clearly irreconcilable” with our general limitation of § 109(a)
to copies that are lawfully made in the United States. Miller,
335 F.3d at 900. The common understanding of the presump-
tion against extraterritoriality is that a U.S. statute “appl[ies]
only to conduct occurring within, or having effect within, the
territory of the United States, unless the contrary is clearly
indicated by the statute.” Restatement (Second) of Foreign
Relations Law of the United States § 38 (1965); see also
5
“[L]ower courts [are] bound not only by the holdings of higher courts’
decisions but also by their ‘mode of analysis.’ ” Miller, 335 F.3d at 900
(quoting Antonin Scalia, The Rule of Law as a Law of Rules, 56 U. Chi.
L. Rev. 1175, 1177 (1989)).
21

22. 12120 OMEGA v. COSTCO
EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991).
Recognizing the importance of avoiding international con-
flicts of law in the area of intellectual property, however, we
have applied a more robust version of this presumption to the
Copyright Act, holding that the Act presumptively does not
apply to conduct that occurs abroad even when that conduct
produces harmful effects within the United States. See Suba-
films, Ltd., 24 F.3d at 1096-98; see also William S. Dodge,
Understanding the Presumption Against Extraterritoriality,
16 Berkeley J. Int’l L. 85, 101 (1998) (characterizing this cir-
cuit’s approach under the Copyright Act as consistent with
American Banana Co. v. United Fruit Co., 213 U.S. 347, 356
(1909), overruled on other grounds, Continental Ore Co. v.
Union Carbide & Carbon Corp., 370 U.S. 690, 704-05
(1962), which described the presumption as a “general and
almost universal rule . . . that the character of an act as lawful
or unlawful must be determined wholly by the law of the
country where the act is done”).
[10] Given this understanding of the presumption, the
application of § 109(a) to foreign-made copies would imper-
missibly apply the Copyright Act extraterritorially in a way
that the application of the statute after foreign sales does not.
Under the latter application, the statute merely acknowledges
the occurrence of a foreign event as a relevant fact. The for-
mer application would go much further. To characterize the
making of copies overseas as “lawful[ ] . . . under [Title 17]”
would be to ascribe legality under the Copyright Act to con-
duct that occurs entirely outside the United States, notwith-
standing the absence of a clear expression of congressional
intent in favor of extraterritoriality. See 17 U.S.C. § 109(a);
see also Subafilms, Ltd., 24 F.3d at 1096 (“There is no clear
expression of congressional intent in either the 1976 Act or
other relevant enactments to alter the preexisting extraterrito-
riality doctrine.”). Specifically, it would mean that a copyright
owner’s foreign manufacturing constitutes lawful reproduc-
tion under 17 U.S.C. § 106(1) even though that statute does
not clearly provide for extraterritorial application. This is pre-
22

23. OMEGA v. COSTCO 12121
cisely what we proscribed in Subafilms, see 24 F.3d at 1098,
and Quality King provides no basis for rejecting our approach.
[11] Other significant parts of Quality King’s analysis are
also consistent with BMG Music’s limitation of § 109(a) to
domestically made copies. The Court found that copies of a
work copyrighted under Title 17 are not necessarily “lawfully
made under [Title 17]” even when made by the owner of the
copyright: The category of copies covered by § 602(a), it was
explained, encompasses “copies that were ‘lawfully made’ not
under the United States Copyright Act, but instead, under the
law of some other country.” 523 U.S. at 147. Because
§ 602(a) extends to such copies, but on its terms permits an
infringement action only by the “owner of copyright under
[Title 17],” copies of a work can be lawfully made “under the
law of some other country,” rather than “under [Title 17],”
even when the copies are protected by a U.S. copyright. In
short, copies covered by the phrase “lawfully made under
[Title 17]” in § 109(a) are not simply those which are lawfully
made by the owner of a U.S. copyright. Something more is
required. To us, that “something” is the making of the copies
within the United States, where the Copyright Act applies. See
2-8 Nimmer on Copyright § 8.12(B)(6)(c), at 8-178.4(6)-(7).
We also read one of the Court’s illustrations to be consis-
tent with this understanding. The Court stated that given
a publisher of [a] U.S. edition [of a work] and a pub-
lisher of [a] British edition of the same work, each
such publisher could make lawful copies. If the
author of the work gave the exclusive United States
distribution rights—enforceable under the Act—to
the publisher of the United States edition and the
exclusive British distribution rights to the publisher
of the British edition, however, presumably only
those made by the publisher of the United States edi-
tion would be ‘lawfully made under this title’ within
the meaning of § 109(a). The first sale doctrine
23

24. 12122 OMEGA v. COSTCO
would not provide the publisher of the British edition
who decided to sell in the American market with a
defense to an action under § 602(a).
523 U.S. at 148 (emphasis added and footnote omitted).
Assuming the British edition was made outside the United
States,6 this illustration suggests that “lawfully made under
this title” refers exclusively to copies of U.S.-copyrighted
works that are made domestically. Were it otherwise, the cop-
ies made by the British publisher would also fall within the
scope of § 109(a). See 2-8 Nimmer on Copyright
§ 8.12(B)(6)(c), at 8-178.4(7).
Finally, in the decision’s only direct language on the issue,
Justice Ginsburg’s concurrence cited a copyright treatise for
the proposition that “lawfully made under this title” means
“lawfully made in the United States.” 523 U.S. at 154 (citing
W. Patry, Copyright Law and Practice 166-70 (1997 Supp.)).
The majority opinion did not dispute this interpretation, which
aligns closely with the one adopted by our circuit. See BMG
Music, 952 F.2d at 319.
[12] Costco contends that BMG Music’s limitation of
§ 109(a) to domestically made copies is inconsistent with the
plain language of the statute and its legislative history. This
criticism has been made before, including by this court. See,
e.g., Parfums Givenchy, Inc. v. C & C Beauty Sales, Inc., 832
F. Supp. 1378, 1386-87 (C.D. Cal. 1993), aff’d sub nom. Drug
Emporium, 38 F.3d at 482 n.8. Perhaps most compelling is the
objection that BMG Music would provide substantially greater
copyright protection to foreign-made copies of U.S.-
copyrighted works. A U.S. copyright owner, for example,
6
The illustration offers no specific justification for making this assump-
tion over any other regarding the site of manufacture, but Quality King
cannot be “clearly irreconcilable” with our precedent even if the decision
merely permits assumptions that are consistent with that precedent. Miller,
335 F.3d at 900.
24

25. OMEGA v. COSTCO 12123
would be unable to exercise distribution rights after one law-
ful, domestic sale of a watch lawfully made in South Dakota,
but, without the limits imposed by § 109(a), the same owner
could seemingly exercise distribution rights after even the
tenth sale in the United States of a watch lawfully made in
Switzerland. The difference would likely encourage U.S.
copyright owners to outsource the manufacturing of copies of
their work overseas. Drug Emporium and Denbicare, how-
ever, resolved this problem by clarifying that parties can raise
§ 109(a) as a defense in cases involving foreign-made copies
so long as a lawful domestic sale has occurred. See Drug
Emporium, 38 F.3d at 481; Denbicare, 84 F.3d at 1150. Inso-
far as Costco contends that § 109(a) should apply to foreign-
made copies even in the absence of a lawful domestic sale, the
surviving rule from BMG Music requires otherwise. See 952
F.2d at 319.
In summary, our general rule that § 109(a) refers “only to
copies legally made . . . in the United States,” id., is not
clearly irreconcilable with Quality King, and, therefore,
remains binding precedent. Under this rule, the first sale doc-
trine is unavailable as a defense to the claims under §§ 106(3)
and 602(a) because there is no genuine dispute that Omega
manufactured the watches bearing the Omega Globe Design
in Switzerland. Id.; Fed. R. Civ. P. 56(c); see also Swatch S.A.
v. New City, Inc., 454 F. Supp. 2d 1245, 1253-54 (S.D. Fla.
2006) (concluding that Quality King is consistent with the
interpretation that “lawfully made under this title” means “le-
gally made . . . in the United States”); 2 Goldstein on Copy-
right § 7.6.1, at 143-44 (concluding that Quality King
“indicates an intention not to disturb lower court holdings that
the first sale defense is unavailable to importers who acquire
ownership of gray market goods made abroad”).
3.
We need not decide whether Drug Emporium’s and Denbi-
care’s exception to the rule in BMG Music also survives
25

26. 12124 OMEGA v. COSTCO
Quality King. There is no genuine dispute that the copies of
the Omega Globe Design were sold in the United States with-
out Omega’s authority. The exception, therefore, does not
apply in this case. See Denbicare, 84 F.3d at 1145-46
(“[Section] 109 applies to copies made abroad only if the cop-
ies have been sold in the United States by the copyright owner
or with its authority.”). Because the exception does not apply,
the question of its continuing viability cannot affect our con-
clusion that § 109(a) provides no defense to Omega’s claims.
C. Attorney’s fees under 17 U.S.C. § 505
[13] The final issue is whether the district court abused its
discretion in awarding attorney’s fees to Costco. The Copy-
right Act provides for an “award [of] a reasonable attorney’s
fee to the prevailing party as part of the costs.” 17 U.S.C.
§ 505. In deciding whether to award fees under this statute, a
district court should consider “the degree of success obtained;
frivolousness; motivation; objective unreasonableness (both
in the factual and legal arguments in the case); and the need
in particular circumstances to advance considerations of com-
pensation and deterrence.” Columbia Pictures Television,
Inc., 259 F.3d at 1197.
[14] The district court’s award of $373,003.80 in attorney’s
fees to Costco was an abuse of discretion because neither
party has prevailed in this litigation to this point.
REVERSED AND REMANDED.
26