Omega taking a stand... how about Rolex?!?

[cdweller]

I saw this link in the Omega forum and thought it was interesting because Costco also sells some Rolex's. It makes me wonder if they are sourcing their Rolex's from gray dealers also...? Either way, an interesting read...

http://www.cnbc.com/id/36647984

[kwood]

It seems that Omega is mostly ticked that Costco is selling at such a low price compared to other dealers.

[springbar]

Originally Posted by cdweller

I saw this link in the Omega forum and thought it was interesting because Costco also sells some Rolex's. It makes me wonder if they are sourcing their Rolex's from gray dealers also...? Either way, an interesting read...

http://www.cnbc.com/id/36647984

I sincerely hope Omega loses. This is (yet another) example of the willful misapplication of copyright that's been going on for the past few decades.

Their same argument could be used to criminalize the re-sale of imported books. Or imported anything, for that matter.

[kingel]

Originally Posted by springbar

I sincerely hope Omega loses. This is (yet another) example of the willful misapplication of copyright that's been going on for the past few decades.

Their same argument could be used to criminalize the re-sale of imported books. Or imported anything, for that matter.

Not really- I could see where it seems that way from that article, but the lawsuit goes much deeper than the importing throught a third pary. If a website, company, or grey marketer is using copyrighted images to create monterary gain for themselves, then the watch company has every right to sue and win. Omega/Rolex spends incredible amounts of money to brand themselves, and shouldn't have someone using that branding for themselves without approval. basic copyright law.
I talked about the Omega lawsuits and some Rolex lawsuits in a thread about Rolex in costco's on here a couple of weeks ago. Costco's has admitted in the lawsuit from Omega that their watches are sourced from stores going out of business, bankruptcies, overseas and US grey market, etc. That includes the couple of Rolex's that pop up here and there. Costco's could care less about a selection of many watches, their goal is to use it as a draw. That's why you see 1 Breitling, an Omega, a couple of Tags. Just like on the earlier thread on here, someone saw 1 Rolex at a Costco's and suddenly guys are posting that Costco's is selling watches they get from Rolex. In real life, a guy sees one Breitling, Omega - tells his buddy "hey, Costco's is selling Breitling" The buddy rushes over, sees the one watch, shrugs, then goes and buys $100 in bulk groceries he doesn't need. That's Costco's aim or goal.

In the Omega lawsuit, Omega set costco's up in California where copyright laws are strict by incorporating their copyrighted world logo on the back of certain watches. As soon as costco's sold one of those watches, they were in violation. Omega has a great case actually. They have already won it at two appeals levels, now it's going to Surpreme Ct.. It's very much established case law- mostly established by various Rolex actions in the court system over the years. It very much well established in rolex's case that the only legal entity that can bring in more than 1 Rolex through Customs is Rolex. anyone that imports several rolex's in are taking a big chance.

Omega is going after a bunch of grey marketers for copyright infringement. They just won a judgment against a site that was using a similar name as Omega.com and they have a lawsuit filed against Jomashop.com. Grey marketers using Omega copyright images.

Speaking of rolex, the only major action I see out there is Rolex has sued a grey marketer Capetown Jewelers.. Crazy thing is they had an actual parts account with Rolex that was still valid afer the lawsuit was filed, Rolex must have noticed and shut it down, and Capetown coutnersued for loss of commerce.. That's crazy. Rolex will squash them.

the problem for the watch companies as evidenced with the Costco/Omega lawsuit is it takes years for these things to work through the system. Not so much with Costco's, but these websites they sue- just disband and start back up under a different name. Rolex has had this happen- they end up suing a nonentity, but they go through it anyway to create caselaw.

[faingator]

Great article.. Thanks for sharing..

[springbar]

Originally Posted by kingel

Not really- I could see where it seems that way from that article, but the lawsuit goes much deeper than the importing throught a third pary. If a website, company, or grey marketer is using copyrighted images to create monterary gain for themselves, then the watch company has every right to sue and win.

The copyrighted image, in this case, is part of the watch itself.

It is a perversion of copyright to claim that resale - not duplication - of a copyrighted work constitutes infringement, and Omega wouldn't have a case at all if it weren't for our bizarre import regulations. If this is a copyright issue, why should it be any less illegal for you or me to re-sell our own Omegas procured from an AD?

Copyright was intended by the Framers to establish short-term monopolies for authors in order to promote publication, which is in the public interest. In this case, the "work of authorship" is a wristwatch - which is ridiculous - and it isn't even being copied.

Congress and their benefactors have been abusing copyright for a few decades now. It's gotten so bad that the system is now used for the opposite purpose that it was originally intended. I'd much rather see grey market Sea-Dwellers at Costco than see copyright law abused even more than it already is.

[SeamasterGMT]

Surely to win a copyright case you have to prove loss of earnings? Where is the loss of earnings to the swatch group? They sold these watches originally.

[Cru Jones]

Originally Posted by SeamasterGMT

Surely to win a copyright case you have to prove loss of earnings? Where is the loss of earnings to the swatch group? They sold these watches originally.

isn't an infringement an infringement? and calculation of damages another question?

[delldeaton]

It's often hard to discern the real "concern" from legal actions taken. I'm not saying that to be judgmental; it's simply that the path a litigant takes to perfect its position is often one of opportunity as opposed to substance.

While I can empathize with the parallel drawn in one of the responses here to our selling watches we've previously legitimately bought, there is well-settled law that distinguishes our "casual" efforts from "retail channels."

More than that, read in the case summary how many times these watches "turned" to end up on the RADAR of Omega. It would seem to me that the OEM action is really against the retailer: In other words, if Omega allows departurers from MSRP that are so great that these watches could be originally sold, et cetera, et cetera, et cetera, and end up at Costco offered for a price that was still more favorable than its locally competing Authorized Dealers were offering, whose responsibility is it to police that?

[kingel]

Originally Posted by SeamasterGMT

Surely to win a copyright case you have to prove loss of earnings? Where is the loss of earnings to the swatch group? They sold these watches originally.

There's no requirement to prove loss of earnings. Breaking a law is breaking a law. If you trespass on my land, you don't have to devalue my land to still be guilty of trespass.

Either way, Omega can and does have a claim of loss. These companies spend great amounts of money to brand themselves with a certain image. It's a valid claim that a bulk wharehouse business like Costco can devalue that brand by selling the watches- especially when those watches have come through channels that are skirting the law. If it's all above board, doesn't it seem strange that Costco's and the grey marketers are creating shell corporations and multiple parties to funnel the watches through to Costco. Obviously they are trying to get around copyright and import laws.

[TempoKing]

..."Frustrating brand owners who want ultimate control over distribution"..

The above 9 words phrase says it all.
In order to manipulate the American consumer in paying more for their product - than other parts of the world
they want to monopolize the distribution in his homeland (?)...yes sir..screw the consumer..in America.

I am so surprised with the secretary of the Department of Commerce
allowing these unfair and monopolistic practices to exist in the land of FREE COMMERCE...

[SEK John]

Uh...if I were Rolex, I'd be a lot more worried about Davidsw, Tempoking, and the other trusted sellers here than Costco.

[looking to buy]

Originally Posted by kingel

Not really- I could see where it seems that way from that article, but the lawsuit goes much deeper than the importing throught a third pary. If a website, company, or grey marketer is using copyrighted images to create monterary gain for themselves, then the watch company has every right to sue and win. Omega/Rolex spends incredible amounts of money to brand themselves, and shouldn't have someone using that branding for themselves without approval. basic copyright law.
I talked about the Omega lawsuits and some Rolex lawsuits in a thread about Rolex in costco's on here a couple of weeks ago. Costco's has admitted in the lawsuit from Omega that their watches are sourced from stores going out of business, bankruptcies, overseas and US grey market, etc. That includes the couple of Rolex's that pop up here and there. Costco's could care less about a selection of many watches, their goal is to use it as a draw. That's why you see 1 Breitling, an Omega, a couple of Tags. Just like on the earlier thread on here, someone saw 1 Rolex at a Costco's and suddenly guys are posting that Costco's is selling watches they get from Rolex. In real life, a guy sees one Breitling, Omega - tells his buddy "hey, Costco's is selling Breitling" The buddy rushes over, sees the one watch, shrugs, then goes and buys $100 in bulk groceries he doesn't need. That's Costco's aim or goal.

In the Omega lawsuit, Omega set costco's up in California where copyright laws are strict by incorporating their copyrighted world logo on the back of certain watches. As soon as costco's sold one of those watches, they were in violation. Omega has a great case actually. They have already won it at two appeals levels, now it's going to Surpreme Ct.. It's very much established case law- mostly established by various Rolex actions in the court system over the years. It very much well established in rolex's case that the only legal entity that can bring in more than 1 Rolex through Customs is Rolex. anyone that imports several rolex's in are taking a big chance.

Omega is going after a bunch of grey marketers for copyright infringement. They just won a judgment against a site that was using a similar name as Omega.com and they have a lawsuit filed against Jomashop.com. Grey marketers using Omega copyright images.

Speaking of rolex, the only major action I see out there is Rolex has sued a grey marketer Capetown Jewelers.. Crazy thing is they had an actual parts account with Rolex that was still valid afer the lawsuit was filed, Rolex must have noticed and shut it down, and Capetown coutnersued for loss of commerce.. That's crazy. Rolex will squash them.

the problem for the watch companies as evidenced with the Costco/Omega lawsuit is it takes years for these things to work through the system. Not so much with Costco's, but these websites they sue- just disband and start back up under a different name. Rolex has had this happen- they end up suing a nonentity, but they go through it anyway to create caselaw.

Great analysis. Thank you

[sturgeon123456]

Good for Omega. Costco as a retailer must exercise better discresion.

[gmaines]

do not understand, they first sold it and made their money, now they want more...that is wrong...

[kingel]

Originally Posted by gmaines

do not understand, they first sold it and made their money, now they want more...that is wrong...

It's a copyright issue, how is that wrong? If I create something and I legally copyright it, I have the right to decide who uses that creation. Basic law. Otherwise it would be anarchy- Every counterfeit Rolex, Omega, whatever would be legal...

They aren't looking for more money after the initial sale, they are looking to block an unauthorized company from using their copyrights (in this case its a product with a logo). As someone else posted there is a distinct legal difference between a retail channel and a private individual selling something.

In the age of the internet, Brands are hampered from their old way of having exclusivity, etc. That is better for us as consumers from a pricing standpoint, but at some point- if the investments a company has made to create a image or brand is damaged by a company- they have every right to sue to protect that image, and they are legally correct in doing so. Case in point- in an earlier thread, someone posted that they saw 1 ONE!! Rolex at a Costco's. Many posts followed from well educated watch enthusiasts actually believing that Costco was now authorized to sell Rolex's. It's clear that some people beleive that one Rolex in a Costco's means Costco's is a Rolex dealer. Some were horrified by that fact, some were excited thinking they can get a deal on a Rolex. If many of us actually would fall for that because of one watch at a Costcos' think what the general public would think! This would hurt a brand image such as Rolex and they would have a right to go after Costco.

Personally, I think Costco is a minor violator and doesn't really affect Omega too much, but Omega is trying to create case law that they can then use to go after others-- which they already are.. Rolex has been very successful in doing this by creating established law.

[Apatheticviews]

Originally Posted by kingel

It's a copyright issue, how is that wrong? If I create something and I legally copyright it, I have the right to decide who uses that creation. Basic law. Otherwise it would be anarchy- Every counterfeit Rolex, Omega, whatever would be legal...

They aren't looking for more money after the initial sale, they are looking to block an unauthorized company from using their copyrights (in this case its a product with a logo). As someone else posted there is a distinct legal difference between a retail channel and a private individual selling something.

In the age of the internet, Brands are hampered from their old way of having exclusivity, etc. That is better for us as consumers from a pricing standpoint, but at some point- if the investments a company has made to create a image or brand is damaged by a company- they have every right to sue to protect that image, and they are legally correct in doing so. Case in point- in an earlier thread, someone posted that they saw 1 ONE!! Rolex at a Costco's. Many posts followed from well educated watch enthusiasts actually believing that Costco was now authorized to sell Rolex's. It's clear that some people beleive that one Rolex in a Costco's means Costco's is a Rolex dealer. Some were horrified by that fact, some were excited thinking they can get a deal on a Rolex. If many of us actually would fall for that because of one watch at a Costcos' think what the general public would think! This would hurt a brand image such as Rolex and they would have a right to go after Costco.

Personally, I think Costco is a minor violator and doesn't really affect Omega too much, but Omega is trying to create case law that they can then use to go after others-- which they already are.. Rolex has been very successful in doing this by creating established law.

It's not so much a "Copyright" in a "traditional" sense, but a copyright in a Branding and Marketing sense. They are using the logo on the watch as a branding mechanism, which is what is "wrong."

They are not violating the "copy" portion of the copyright laws, but are instead using the product itself as FREE advertising which they have not paid for. This may not result in "real" harm to Omega/Swatch, but it does result in potential harm to the brand.

The grey market portion is cut & dry. The law of first use comes into play, and Costco is well within their rights to sell the watches. They just can't DISPLAY them, or advertise that they have them. Very similar to how Amazon bypasses the MAPP (Minimum Advertised Pricing Policy). If a potential customer asked them "do you have any Omegas?" a sales man could say "Yes we do! We keep them under the counter." At that point, it's fair game.

Essentially, we have two very different rulings coming into conflict. One is the copyright law, and the other is the rule of first sale. Omega couldn't win the argument on First sale, so they went after copyright (and won twice). The question for the Supreme court will be whether a logo after first sale is protected as branded material. Is it really advertising, if it's just sitting in the case?

[springbar]

Originally Posted by kingel

It's a copyright issue, how is that wrong? If I create something and I legally copyright it, I have the right to decide who uses that creation. Basic law. Otherwise it would be anarchy- Every counterfeit Rolex, Omega, whatever would be legal...

They aren't looking for more money after the initial sale, they are looking to block an unauthorized company from using their copyrights (in this case its a product with a logo). As someone else posted there is a distinct legal difference between a retail channel and a private individual selling something.

You're mixing up copyright and trademark, which are completely different things.

Copyright is for works of authorship, and it gives the copyright owner the exclusive right to duplication of the work, for limited times, and with numerous exceptions (for example, Fair Use). It is not a carte blanche "right to decide who uses [your] creation." The purpose of copyright is to promote publication, and it exists not for the creator's benefit but for the public's.

Counterfeit goods is a whole other subject. If there's a brand name or logo on there, the person making the counterfeit is violating trademark law, and the person selling the item may be committing fraud. The purpose of trademark is to protect the public interest by ensuring that goods are legitimate.

This case is simply about Omega wanting to control its supply chain for its own reasons, not a real copyright violation. This is a quarrel that should remain between them and their distributors.

[Perdu]

Originally Posted by springbar

I sincerely hope Omega loses. This is (yet another) example of the willful misapplication of copyright that's been going on for the past few decades.

Their same argument could be used to criminalize the re-sale of imported books. Or imported anything, for that matter.

I too hope they loose. It's just the Swiss watch industry trying to limit customers options - again. If Omega wins, every Swiss watch brand out there will follow and you'll have less purchasing options. If they can control the supply chain they can do what they want price wise. Gone will be the excellent deals you can get on Omega today. It's not in a WIS's interests for them to win.

[cujo]

I have shopped COSTCO in a number of States... I have on occasion seen the OMEGA watch.....However, I have never seen a ROLEX.
One of the most significant benefits of shopping at COSTCO is their return policy. With the exception of computers and TVs...you can bring it back whenever you like, if you find something wrong with it or the item doesn't live up to expectations. I have seen people bring back items after a year and get a full refund without questions.
Once again....I haven't ever seen a Rolex. I'd be interested to know if anyone has ever seen a Rolex for sale at their local COSTCO?
Thanks,

[Balboa]

Originally Posted by SeamasterGMT

Surely to win a copyright case you have to prove loss of earnings? Where is the loss of earnings to the swatch group? They sold these watches originally.

Originally Posted by gmaines

do not understand, they first sold it and made their money, now they want more...that is wrong...

You guys have almost hit on the basis of this case and what is really in question before the Supreme Court.

The issue is a portion of U.S. copyright law called "first-sale doctrine". Basically this doctrine states that if the first sale is legal and in compliance with applicable laws, than all subsequent sales are outside of the control of the original seller.

For the most part in the past this doctrine was held to apply only to U.S manufactured products. The position of Omega and many others is that the first sale doctrine does not apply to products manufactured outside of the U.S-Switzerland, for example. This they feel allows them to control not only original sales, but secondary and alternative sales channels as well.

The position of Costco and of course any and all gray market dealers and other subsequent resellers is that this doctrine does apply to goods from any country that are sold under legal first sale rules anywhere.

The implications are huge. A decision for Omega could make any secondary marketing of any product criminal. Not just Omega watches.

In fact, many of our excellent and fair resellers right here on this forum would be out of business. Most could not afford to face a criminal complaint from Rolex, regardless of the outcome.

Mark

[Apatheticviews]

Did Costco pay import duties when they brought them into the US? If so.. things become really convoluted.

[Balboa]

Originally Posted by Apatheticviews

Did Costco pay import duties when they brought them into the US? If so.. things become really convoluted.

Costco likely was not the importer. These watches probably came from a U.S. based gray market dealer or AD.

Not to be overlooked are AD's who sell "out the back door" to non AD resellers. They make a profit and do not have to warehouse and display these watches at retail. Since we know that Rolex, Omega and many others sell only to their AD's, lets not forget where virtually all of these gray market products come from in the first place.

The import duty would have been paid by the original importer and is not an issue in this case.

Mark.