WASHINGTON — The Supreme Court divided evenly Monday in a clash over the multibillion-dollar “gray market,” leaving intact a ruling that lets manufacturers use copyright laws to keep some products out of discount stores.
The 4-4 high-court split, which doesn’t set a nationwide precedent, upholds a federal appeals-court decision favoring Swatch Group’s Omega unit in a dispute with Costco Wholesale Corp. over discounted Seamaster watches.
Retailers had sought to overturn the appeals-court ruling because it exposes them to lawsuits if they try to exploit worldwide price differences on foreign-made products by importing them through unauthorized channels. In Costco’s case, the nation’s largest warehouse club acquired the Swiss-made watches at a discount and then sold them at $1,200, or $700 below Omega’s suggested retail price.
Monday’s high-court action means that “if someone is selling goods 30 percent cheaper in some other country, any retailer who wants to pass that cost benefit on to the consumer would likely be denied,” said John Mitchell, a Washington lawyer who filed a brief backing Costco on behalf of trade groups that represent video-game, home-video and music retailers.
Whether that proves to be a permanent result may depend on Justice Elena Kagan, who stands to be the deciding vote should the justices revisit the issue in a later case.
Kagan didn’t take part in Monday’s high-court action because she had participated in the case as President Barack Obama’s solicitor general.
