Swatch Group AG, the world’s biggest Swiss watchmaker, has sued U.S. discount retailer Costco Wholesale Corp. for selling the company’s Omega Seamaster watches at a price lower than Swatch’s mandate.
Costco, popular for selling bulk-buying options, managed to find a third-party distributor in New York, which purchased the watches from an authorized Omega distributor in Europe at a more competitive pricing than Omega charged for its U.S. retailers. Therefore, Costco was able to sell the watch for $1,299 rather than the recommended retail price of $1,995. The issue at stake concerns the ability of Costco as well as other discount operators to sell discounted products from foreign manufacturers legitimately without breaking U.S. copyright regulations.
A ruling favoring Omega “would push even more manufacturing overseas,” said Scott Schwartz, a Philadelphia-based intellectual property attorney with Cozen O’Connor, according to a Bloomberg report. “Manufacturers will no doubt revisit their manufacturing strategies to avail themselves of the benefits of such a ruling.”
The impact of this case could affect outlets such as Target, eBay, and Amazon.com, which generate annual earnings of $58 billion based on goods purchased and imported from overseas and resold without authorization of the manufacturer. This type of selling is referred to as “gray market” sales, or parallel sales.
According to Charles Sims, a New York lawyer who filed a brief supporting Omega on behalf of the Washington-based Association of American Publishers, “What the case is about is the relentless determination of Costco and entities like it to keep lowering prices notwithstanding any other consideration. … The fact is that Congress in the copyright law imposed some other considerations.”
Costco, popular for selling bulk-buying options, managed to find a third-party distributor in New York, which purchased the watches from an authorized Omega distributor in Europe at a more competitive pricing than Omega charged for its U.S. retailers. Therefore, Costco was able to sell the watch for $1,299 rather than the recommended retail price of $1,995. The issue at stake concerns the ability of Costco as well as other discount operators to sell discounted products from foreign manufacturers legitimately without breaking U.S. copyright regulations.
A ruling favoring Omega “would push even more manufacturing overseas,” said Scott Schwartz, a Philadelphia-based intellectual property attorney with Cozen O’Connor, according to a Bloomberg report. “Manufacturers will no doubt revisit their manufacturing strategies to avail themselves of the benefits of such a ruling.”
The impact of this case could affect outlets such as Target, eBay, and Amazon.com, which generate annual earnings of $58 billion based on goods purchased and imported from overseas and resold without authorization of the manufacturer. This type of selling is referred to as “gray market” sales, or parallel sales.
According to Charles Sims, a New York lawyer who filed a brief supporting Omega on behalf of the Washington-based Association of American Publishers, “What the case is about is the relentless determination of Costco and entities like it to keep lowering prices notwithstanding any other consideration. … The fact is that Congress in the copyright law imposed some other considerations.”
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