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Omega v. Costco case – Update

A previous thread (https://www.watchuseek.com/showthread.php?t=346753) discussed a lawsuit that Omega brought against Costco, alleging that Costco’s sale of grey market Omega watches infringed Omega’s copyright on the logo that it places on the back of its watch cases. The Ninth Circuit Court of Appeals sided with Omega, holding that Costco did, in fact, violate Omega’s copyright by selling the watches.

Costco then asked the U.S. Supreme Court to hear the case. Before deciding whether to take the appeal, the Supreme Court asked the Solicitor General for the government’s view on the case. The Solicitor General’s brief, which was filed earlier this month, argues that the Supreme Court should not take the case because the Ninth Circuit got it right. More details about the case and a link to the government’s brief itself can be found here: http://www.exclusiverights.net/2010/03/solicitor-general-reccomends-denial-of-cert-in-costco-v-omega/.

I am no expert in Supreme Court procedure, but I am making an educated guess that it is now unlikely that the Supreme Court will take the appeal, which means that the Ninth Circuit’s ruling will be settled law. In short, it probably will be a lot harder to find grey market Omegas in the U.S., and I suspect that other watch companies may follow Omega’s lead.
 

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Re: Omega v. Costco case – Update

A previous thread (https://www.watchuseek.com/showthread.php?t=346753) discussed a lawsuit that Omega brought against Costco, alleging that Costco’s sale of grey market Omega watches infringed Omega’s copyright on the logo that it places on the back of its watch cases. The Ninth Circuit Court of Appeals sided with Omega, holding that Costco did, in fact, violate Omega’s copyright by selling the watches.

Costco then asked the U.S. Supreme Court to hear the case. Before deciding whether to take the appeal, the Supreme Court asked the Solicitor General for the government’s view on the case. The Solicitor General’s brief, which was filed earlier this month, argues that the Supreme Court should not take the case because the Ninth Circuit got it right. More details about the case and a link to the government’s brief itself can be found here: http://www.exclusiverights.net/2010/03/solicitor-general-reccomends-denial-of-cert-in-costco-v-omega/.

I am no expert in Supreme Court procedure, but I am making an educated guess that it is now unlikely that the Supreme Court will take the appeal, which means that the Ninth Circuit’s ruling will be settled law. In short, it probably will be a lot harder to find grey market Omegas in the U.S., and I suspect that other watch companies may follow Omega’s lead.
swatch is making its way into my stock portfolio.:-d bloody briliant strategy by swatch. they are positioning omega to be the true rival to rolex and it's gonna work|>
 

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Re: Omega v. Costco case – Update

Interesting bit of news there ... but I still think they'll be fighting an uphill battle since most of their sales growth will be from Asia (and, in about 15 to 20 years, in absolute numbers as well) and it will be almost impossible to enforce a strategy like that over there.
 

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Re: Omega v. Costco case – Update

swatch is making its way into my stock portfolio.:-d bloody briliant strategy by swatch. they are positioning omega to be the true rival to rolex and it's gonna work|>
Works for me! Vintage values rise somewhat in accordance with modern prices. I think I'll grab one or two more that I've been thinking about soon.
 

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Re: Omega v. Costco case – Update

impressive victory..but I generally dont agree with their business strategy, and I dont see anyway they are going to be a true rival to rolex when they seem to be so fixated on market share. Companies that strive for rapid increases in market share do not create products that appreciate in value. They produce high value product by flooding the market, which is going to come back to bite them. Rolex doesnt seek market share, they are first and foremost interested in producing only enough watches to sell at a premium.
 

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Re: Omega v. Costco case – Update

Omega and other Swatch brands (e.g. ETA) have become a complete turn-off for me, not just because of this but the entire Swatch strategy.

I'm planning on thinning out my collection and dumping the ETA movement watches, that's how strongly I feel about it. I get much more satisfaction out of owning a nice Russian or Seiko or Sea-Gull with their own movements and part of that satisfaction comes from being able to thumb my nose at Swatch.

I'm sure I'm in the minority with this but that's how I feel about it anyway... So from this one consumer's point of view, the Swatch strategy to gain market share has completely backfired.
 

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Re: Omega v. Costco case – Update

impressive victory..but I generally dont agree with their business strategy, and I dont see anyway they are going to be a true rival to rolex when they seem to be so fixated on market share. Companies that strive for rapid increases in market share do not create products that appreciate in value. They produce high value product by flooding the market, which is going to come back to bite them. Rolex doesnt seek market share, they are first and foremost interested in producing only enough watches to sell at a premium.
They're focused in contracting market share... they're closing down ADs left and right and opening their own boutiques.
 

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Re: Omega v. Costco case – Update

I think Costco was targeted because it is a grey market brick and mortar store. Visible to the public's naked eye, unlike online dealers.
 

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Re: Omega v. Costco case – Update

I think Costco was targeted because it is a grey market brick and mortar store. Visible to the public's naked eye, unlike online dealers.
I think Costco was chosen because they ARE very public and probably quite large enough that once it is known that Costco lost, MOST of the online grey dealers won't even try to fight. However, also they probably thought that Costco may not put up much of fight probably since the Omega watch sale is VERY VERY small part of their sale that they won't really care if they lost the case.

I think in both front they were right and they will be leaping benefit initially. Swatch group can potentially send the letter to let's say Jomashop siting the court ruling to get the Joma to stop selling the Omegas online quite quickly and IMHO Jomashop will most likely comply. This could also go to all Ebay grey market dealers as well. (Effectively making it impossible for any ebay dealers to advertise Omega watches as "New")

Now, for long term? I do not know whether their strategy will be successful.
 

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Re: Omega v. Costco case – Update

I think Costco was targeted because it is a grey market brick and mortar store. Visible to the public's naked eye, unlike online dealers.
Yeah that's as far as it will go, if that far.
They'd definitely need to cut production by a good bit if they cut off the gray sites.
 

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Re: Omega v. Costco case – Update

I think it is stupid. The good thing about an Omega was the fact that you could get something ALMOST AS GOOD as a Rolex. Now if it's gonna be hard and expensive most people WOULD THEN BUY A ROLEX.
It's simple to me at least.
I'd do it in a heartbeat.

WM
 

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Re: Omega v. Costco case – Update

Funny, two weeks or so ago I was at Costco and saw my Breitling COlt II on sale there for a very good price of $2K. It was the blue dial. I had to make some phone calls when I got my Colt II (white/silver dial) and I got it shipped and insured from an AD for about a 100 less (or close to that). So its not that far off, especially if you got no one who will give you a deal. Just was funny as my wife was joking about the fact that Costco was selling Breitltings. She still thinks costco only carries super sized items. I told her about the COlt II (since she bought it for me) and she said, who the hell is gonna buy Breitlings in bulk??? LOL
 

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Re: Omega v. Costco case – Update

I think it is stupid. The good thing about an Omega was the fact that you could get something ALMOST AS GOOD as a Rolex. Now if it's gonna be hard and expensive most people WOULD THEN BUY A ROLEX.
It's simple to me at least.
I'd do it in a heartbeat.

WM
Yes, but Rolex is only "better" because Rolex controlled and marketed their product brilliantly years back. Once Omega changes the public's perception, it changes the whole playing field.
 

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Re: Omega v. Costco case – Update

i think for Omega to compete with Rolex they will need to slow down the grey market that carry there watches, also slow down production of new Omega's and come out with some new in house movement's. Then they can raise there msrp.
 

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Re: Omega v. Costco case – Update

Yes, but Rolex is only "better" because Rolex controlled and marketed their product brilliantly years back. Once Omega changes the public's perception, it changes the whole playing field.
Unless they audit their AD's who help feed the gray market, the perception will not change. Other well known brands do this well and the resale value tends to be much stronger than many brands found on the gray market. Why? Because one person pays AD price and gets hammered on resale once they leave the store. This is because most savvy internet shoppers know they can get it for much less than an AD price. With brands that monitor their AD's a customer knows that they are not paying exorbitantly more than the next guy, again as a general rule of thumb. Yes, Omega makes a very nice watch, but I would buy online or through the forum Omega "dealer". Do you really think they are going to take the huge sales hit by tightening up the gray market?

Perception is reality. Perception is king.

.
 

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Re: Omega v. Costco case – Update

After following the links provided by the OP, I don't believe this will be the end of grey markets. The particular facts of this case depend upon the following chain of events:

1. Foreign produced item made in country A,
2. Is sold by manufacturer to importer in Country B who distributes within B,
3. Retail seller in B exports item to US,
4. To be sold in US by grey dealer.

It appears that if (a) the item was originally produced in the US (not likely with Swiss watches), or (b) if it was originally imported by the official distributor, sold to an AD and then sold to a grey dealer, the act probably does not restrict sale and the AD and grey dealer are protected by the first sale doctrine. There is admittedly some dispute about (b).

Just my read. I don't do IP or copyright work. I am not your attorney.
 

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Re: Omega v. Costco case – Update

I am not a lawyer, but I think it is first move by Omega to curve the Grey market dealers from acquiring watches.

Apparently, the Omegas supplied to Costco was acquired from outside US (Egypt and Paraguay) and this ruling pretty much shuts down US based gray market dealers from distributing foreign acquired Omegas.

At this point, Omega just have to control the flow of watches to US dealers who may be feeding the gray market dealers which may be MUCH easier.

Of course, they can at this point demand the grey market dealers to disclose their sources in guise of "lawful enforcement" so that the watches sold by them are US sourced watches.

Just my interpretation and I am not a lawyer so my comments are worthless in court. Ha!
 

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Discussion Starter #19
Re: Omega v. Costco case – Update

After following the links provided by the OP, I don't believe this will be the end of grey markets.
You are correct. This case only applies to watches that are first sold outside of the US. A grey dealer would not be liable for copyright infringement under the "first sale doctrine" if the particular watch it is selling was first sold by Omega to an authorized dealer or distributor in the US.

I took care in my original post not to say that this would put an end to grey market sales of Omegas in the US. Rather, I said it would make it "harder to find" grey Omegas in the US, which probably is true, given that the ruling has basically cut-off a major supply route (foreign distributors) for Omegas into the US grey market.

In the previous thread on this topic, I raised the possibility (complete conjecture on my part) that perhaps Omega's goal was not to kill the grey market in the US, but rather to give US distributors/dealers control over it. In other words, after this ruling, US distributors/dealers will be the sole legal suppliers of watches to the US grey market.
 

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Re: Omega v. Costco case – Update

Good! What Swiss watchmaker in their right mind would want their products on the shelves of freakin' Costco?
 
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