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Copyrighted Gray Market Goods May Not Be Stopped By Copyright Owner
Description Reimporter of copyrighted product sold for less in foreign than domestic markets undersold producer in domestic market who controlled distribution within the country. Under first sale doctrine, Supreme Court held that there was no infringement and resale could not be prevented.
Topic Intellectual Property
Key Words Copyrights, Gray Markets, First Sale Doctrine
C A S E   S U M M A R Y
Facts L'anza sells hair care products in the U.S. only to distributors who agree to resell within limited geographic areas to authorized retailers. L'anza promotes its products with significant advertising and promotions. In foreign markets its product prices are lower and it does little advertising. L'anza's U.K. distributor sold large quantities of the goods to Quality King, a U.S. company, which reimported them back to the U.S. and resold them at discount prices to unauthorized retailers. L'anza sued, claiming that Quality King's actions infringed L'anza'a exclusive rights under the Copyright Act to reproduce and distribute the copyrighted material (the labels on the products) in the U.S.
Decision Reversing the lower courts, the Supreme Court unanimously held that under the first sale doctrine, which is codefied in the Copyright Act, the owner of copyrighted material is entitled, without permission of the copyright owner, to sell or otherwise dispose of purchased copyrighted materials, imported or not.
Citation Quality King Distributors, Inc. v. L'anza Research International, Inc., 1998 WL 96265 (S.Ct.)
or
118 S.Ct. 1125 (1998)

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