UPDATE 1-US high court won’t decide Costco-Swatch case

* Deadlocked court affirms ruling for Swiss watchmaker

* Costco backed by business groups, companies like eBay

* Dispute involved imported Swiss-made watches
(Adds details of case, Justice Kagan recusing herself)

By James Vicini

WASHINGTON, Dec 13 (BestGrowthStock) – The U.S. Supreme Court said
on Monday that it deadlocked by a 4-4 vote and will not decide
a copyright infringement case involving Costco Wholesale Corp
(COST.O: ) over reselling luxury imported Swiss-made watches
produced by a Swatch Group (UHR.VX: ) unit.

In a case between the top U.S. warehouse club and the
world’s largest watchmaker, the deadlock means that the
justices automatically affirmed a U.S. appeals court ruling
that Swatch’s Omega unit retained the rights to watches it made
and sold abroad that later were imported into this country.

The Supreme Court’s action was not a ruling on the merits
of the dispute and it does not set a national precedent, but it
does have the result of resolving the case in Omega’s favor.

It had been one of the court’s more important business
cases, with implications for the multibillion-dollar so-called
“gray market,” in which brand name goods protected by trademark
or copyright are imported via third parties into the United
States.

Retailers from Costco to Amazon.com Inc (AMZN.O: ) have faced
legal problems over the resale of goods that brand holders say
infringes their copyright.

A number of business groups, retailers and companies, such
as online auctioneer eBay Inc (EBAY.O: ), had supported Costco
before the Supreme Court. The Obama administration backed
Omega.

Costco obtained Omega’s Seamaster watches through a series
of transactions. It sold each of them to consumers in
California for $1,299, a third less than the suggested retail
price.

Omega first sold the watches to authorized distributors
overseas. Unidentified third parties bought them and sold them
to a New York company, which in turn sold them to Costco.

Although Omega approved the initial foreign sale, it did
not authorize the importation of the watches into the United
States or the sales by Costco.

After Costco’s sale of 43 watches in 2004, Omega sued and
claimed Costco’s actions amounted to copyright infringement.

A federal judge ruled for Costco, but the appeals court
sided with Omega.

The Supreme Court deadlocked because Justice Elena Kagan
did not participate in the case, presumably because she had
been involved with it previously as solicitor general. She has
recused herself from a number of cases, but this was the first
one so far that ended up with a tie vote.
(Editing by Gerald E. McCormick, Dave Zimmerman)

UPDATE 1-US high court won’t decide Costco-Swatch case