Bad SCOTUS. : (

[airsix]

That's right. You never know what you're going to get from me. Today I'm venting about the Supreme Court ruling (failure to rule? It was a tie) in Costco vs. Omega. Basically it means that manufacturers can continue to enforce price controls on the resale of goods manufactured outside the US by way of copyright authority. The bottom line is that a brand-S compass costs $40 retail in Europe and $100 in the US, but buying it for $40 in Europe and selling them for less than $100 in the US is illegal if brand-S says so. In my lay understanding, this case had the potential to allow US dive retailers to be competitive by pricing according to supply/demand and an efficient free market. Instead they remain forced to charge exactly what they are told to. My economic analysis summary: This sucks. It goes way beyond the dive industry, but I figured that example would hit home.

[CaptnJack]

Price controls suck.
If people want to sell regs as loss leaders but hike the price of air (the reserve of today's approach) they should be able to free from supplier intervention. Afterall once the wholesale price is paid its none of the manufacturer's damn business how much the retail price ends up being.

[Dusty2]

Price controls suck.
If people want to sell regs as loss leaders but hike the price of air (the reserve of today's approach) they should be able to free from supplier intervention. Afterall once the wholesale price is paid its none of the manufacturer's damn business how much the retail price ends up being.

+1 on that!

If I am a retailer and I pay Ajax inc for a unit to sell I should be free to decide how much I am willing to sell it for. Price fixing is supposed to be illegal and yet they refuse to call it what it is and just look the other way.

[CaptnJack]

Price fixing is supposed to be illegal and yet they refuse to call it what it is and just look the other way.

Costco has some clout, but the practice is so insidious and surprisingly widespread that it's predictable that they ruled for the status quo.

[Grateful Diver]

... meanwhile, Air Liquide laughs all the way to the bank ... I gotta wonder who paid whom how much for this favorable ruling ...

... Bob (Grateful Diver)

[jeffgerritsen]

Folks,
Your getting way to close to the libertarian dark side of the force. I'm not surprised the SCOTUS decided this way. After all each retailer enters into a "binding" contract to sell in such and such price range or fixed amount. Go read most distributors contacts for yourself. This is done with the intent to protecting the small / local dive shop. Now obviously the industry cannot police itself, so that's when the courts come into play. Generally the courts do not get involved with contracts, except to enforce what the parties originally agreed to.

I think you folks need to think about the market here. Do you want a race to the bottom, where all the local shops are forced out of business because they can't compete with the large volume distributors. While ending up with a just a few suppliers who in the end, will not survive because they can't respond the changing needs of the market place fast enough?

I have long since abandoned the Libertarian philosophy many years ago - it always ends with something looking like Somalia - a failed state!

[Mattleycrue76]

Folks,
Your getting way to close to the libertarian dark side of the force. I'm not surprised the SCOTUS decided this way. After all each retailer enters into a "binding" contract to sell in such and such price range or fixed amount. Go read most distributors contacts for yourself. This is done with the intent to protecting the small / local dive shop. Now obviously the industry cannot police itself, so that's when the courts come into play. Generally the courts do not get involved with contracts, except to enforce what the parties originally agreed to.

I think you folks need to think about the market here. Do you want a race to the bottom, where all the local shops are forced out of business because they can't compete with the large volume distributors. While ending up with a just a few suppliers who in the end, will not survive because they can't respond the changing needs of the market place fast enough?

I have long since abandoned the Libertarian philosophy many years ago - it always ends with something looking like Somalia!

If only intent made for good policy!
The net effecy of this MAP policy is that the small retailers aren't able to compete with the big online stores because of precisely the contracts that are supposedly meant to protect them. Attempting to influence markets and fix pricing regardless of the reason has a very poor track record. Society is almost always worse off for it. As to your "race to the bottom scenario" I can't think of an example where large players have put small players out of business, and then put themselves out of business, leaving noone to fill the demand of the market. If your point of reference for libertarian philosophy is Somalia you might benefit from giving the whole thing another look.

Cheers

Matt

[airsix]

As a student of economics I believe in efficient markets. There are natural market forces and artificial forces. The more influence artificial forces are allowed to exert the more inefficient the market becomes. Price fixing is an artificial force. It strengthens its beneficiary at the expense of the greater economic health of the market. The upshot is that the market is resourceful and for every price-fixing Apeks there will be a HOG to pop up and fill the price-space they would have occupied under natural conditions. It's not optimal, but it closes the gap some.

[CaptnJack]

Folks,
Your getting way to close to the libertarian dark side of the force. I'm not surprised the SCOTUS decided this way. After all each retailer enters into a "binding" contract to sell in such and such price range or fixed amount. Go read most distributors contacts for yourself. This is done with the intent to protecting the small / local dive shop. Now obviously the industry cannot police itself, so that's when the courts come into play. Generally the courts do not get involved with contracts, except to enforce what the parties originally agreed to.

I think you folks need to think about the market here. Do you want a race to the bottom, where all the local shops are forced out of business because they can't compete with the large volume distributors. While ending up with a just a few suppliers who in the end, will not survive because they can't respond the changing needs of the market place fast enough?

I have long since abandoned the Libertarian philosophy many years ago - it always ends with something looking like Somalia - a failed state!

Actually they screw the LDS in more ways than just artificially setting prices. They then flood the market with purported "grey market" regs via online sources like Leisure pro.

I am anything but a Libertarian. I would be much happier if the Government set prices - at least their might be some societal benefit, public comment period, or something of actual or imagined value. The Apeks and Scubapro's of the world are not price fixing to "protect" the LDS by any stretch of the imagination, they have their own selfish motivations.

[Peter Guy]

Hey everyone -- this has NOTHING to do with MAP -- it was a COPYRIGHT case! The issue really was, does the Copyright Holder loose its interest in its copyright once the item has been sold? Or, more specifically, did Omega loose its interest in its Copyrighted item (the watch, and yes, it was a Copyrighted item) sold in a foreign country to a US entity and then brought to the US for resale in the US as a way for the US entity to AVOID having to comply with the US copyright?

While I'm all for free enterprise and the ability for people to do what they want, I'm also all for copyright protection (I used to have a number of copyrighted items and people sometimes did try to rip me off).

The 9th C opinion, which is what the 4-4 split upheld, can be found at:

Costco

The statute the court interpreted reads:

The viability of Omega's infringement claims hinges on the relationship among three sections of the Copyright Act of 1976:  17 U.S.C. §§ 106(3), 109(a), and 602(a).   In relevant part, § 602(a) reads:

Importation into the United States, without the authority of the owner of copyright under this title, of copies ․ of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies ․ under section 106, actionable under section 501. 2

Section 106(3) states:

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights ․ to distribute copies ․ of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.

Finally, § 109(a) provides:

Notwithstanding the provisions of section 106(3), the owner of a particular copy ․ lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy․

So the court had to reconcile Sec. 602 with Sec. 109.

It is up to Congress to clarify the law -- I'm not at all sure the 9th C was wrong.

[Mattleycrue76]

I am anything but a Libertarian. I would be much happier if the Government set prices - at least their might be some societal benefit, public comment period, or something of actual or imagined value.

I believe Carter tried that with gasoline. Don't seem to remember that working out too well.

[Mattleycrue76]

Hey everyone -- this has NOTHING to do with MAP -- it was a COPYRIGHT case! The issue really was, does the Copyright Holder loose its interest in its copyright once the item has been sold? Or, more specifically, did Omega loose its interest in its Copyrighted item (the watch, and yes, it was a Copyrighted item) sold in a foreign country to a US entity and then brought to the US for resale in the US as a way for the US entity to AVOID having to comply with the US copyright?

While I'm all for free enterprise and the ability for people to do what they want, I'm also all for copyright protection (I used to have a number of copyrighted items and people sometimes did try to rip me off).

The 9th C opinion, which is what the 4-4 split upheld, can be found at:

Costco

The statute the court interpreted reads:

The viability of Omega's infringement claims hinges on the relationship among three sections of the Copyright Act of 1976:  17 U.S.C. §§ 106(3), 109(a), and 602(a).   In relevant part, § 602(a) reads:

Importation into the United States, without the authority of the owner of copyright under this title, of copies ․ of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies ․ under section 106, actionable under section 501. 2

Section 106(3) states:

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights ․ to distribute copies ․ of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.

Finally, § 109(a) provides:

Notwithstanding the provisions of section 106(3), the owner of a particular copy ․ lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy․

So the court had to reconcile Sec. 602 with Sec. 109.

It is up to Congress to clarify the law -- I'm not at all sure the 9th C was wrong.

What are you some kinda Lawyer or sumpthin?


Seriously, thanks for explaining it a little better for us. I think that (mostly) free markets AND the protection of intellectual property/patents/copyrights are two of the biggest reasons for this country's economic success.

[CaptnJack]

I am anything but a Libertarian. I would be much happier if the Government set prices - at least their might be some societal benefit, public comment period, or something of actual or imagined value.

I believe Carter tried that with gasoline. Don't seem to remember that working out too well.

Better or worse than Apek's/Scubapro pricing?? ;;)

[nwbobber]

So if it was an OMEGA watch sold in a foreign country, then bought, and resold in the US, the copyright infringement here has everything to do with Omega wanting to control how the marketing of its products works, right? Seems like that is the price fixing scenario that was spoken of. If however the copy, was a knockoff of an Omega design, well, that is something different. I'm not in favor of that.

[jeffgerritsen]

Okay, I see I've started some good discussion - which I believe is healthy. As far as a big corp eating up the little ones then collapsing themselves - I offer the East India company back in the late 1700's. Today's example companies (although they haven't collapsed yet) would be your big box stores such as Home Despot, Lowes, and Walmart. Although to be honest these big box stores will be done in due to peak oil aka resource depletion. Over the next five years we will begin to see the beginnings of what I would call the "Great Transition" or making other arrangements for life's daily activities.

Lets face it, the age of cheap and abundant oil is over. We peaked on world wide crude oil production in 2005, and it looks like we are peaking in "all liquids" (tar sands, refinery processing gains, and natural gas condensates) about now. Since economies run on increasing "net" energy not money, future economic growth is impossible. BTW I enjoying the travelling to scuba sites as long as I can, because I will miss it when I can't. Although, who knows what will happen in 2 - 5 years.

I believe we are at the beginning of a series of "compressive" economic contracts that will continue until we reach equality with our domestic net energy production. As foreign competition for remaining fossil fuel resources will become quite cantankerous to say the least. One of the biggest issues will be oil producing nations will hold back exports because their own internal demand will increase.

Now that I gotten side tracked on peak oil, in 20 years these SCOTUS decisions may be moot because we'll largely ignore them, if there is still a federal government left!

[airsix]

So if it was an OMEGA watch sold in a foreign country, then bought, and resold in the US, the copyright infringement here has everything to do with Omega wanting to control how the marketing of its products works, right? Seems like that is the price fixing scenario that was spoken of. If however the copy, was a knockoff of an Omega design, well, that is something different. I'm not in favor of that.

Peter, this is what I was getting at. I believe strongly in IP and its legal protection. What I dont' agree with is using copyright as a front for enforcing regional pricing schemes on consumer products. If Omega can claim a watch as a copyrighted work (which is ludicrous - Copyright is for written works, art, music, software, architecture... not wrist watches), and control its distribution and resale, what else couldn't possibly fall under that umbrella? By that logic Honda can claim copyright privilege and declare their cars non-transferable. In my lay persons understanding, copyright was never intended to be applied in this manner.

[nilsdiver]

Well the manual in the box with the watch is definitely a written work that can have copyrights.

[CaptnJack]

The design of the face or some unique attribute of the mechanics could be copywrited. But if you sell the watch you relinquish rights to dictate how its used or resold. Making replicas would be a clear copywrite violation, reselling the same watch - not. Absent a special agreement of sale reserving certain rights. Reserving the right to set future prices is not in the spirit of copywrite laws.

[lamont]

Lets face it, the age of cheap and abundant oil is over. We peaked on world wide crude oil production in 2005, and it looks like we are peaking in "all liquids" (tar sands, refinery processing gains, and natural gas condensates) about now. Since economies run on increasing "net" energy not money, future economic growth is impossible.

if there was only some other ways to produce energy other than burning carbon...

[Grateful Diver]

Lets face it, the age of cheap and abundant oil is over. We peaked on world wide crude oil production in 2005, and it looks like we are peaking in "all liquids" (tar sands, refinery processing gains, and natural gas condensates) about now. Since economies run on increasing "net" energy not money, future economic growth is impossible.

if there was only some other ways to produce energy other than burning carbon...

... my sarcasm alarm just went off ...

... Bob (Grateful Diver)

[Tom Nic]

Lets face it, the age of cheap and abundant oil is over. We peaked on world wide crude oil production in 2005, and it looks like we are peaking in "all liquids" (tar sands, refinery processing gains, and natural gas condensates) about now. Since economies run on increasing "net" energy not money, future economic growth is impossible.

if there was only some other ways to produce energy other than burning carbon...

... my sarcasm alarm just went off ...

... Bob (Grateful Diver)

I want a nuclear powered re-breather and I want it now.

[Dusty2]

Lets face it, the age of cheap and abundant oil is over. We peaked on world wide crude oil production in 2005, and it looks like we are peaking in "all liquids" (tar sands, refinery processing gains, and natural gas condensates) about now. Since economies run on increasing "net" energy not money, future economic growth is impossible.

if there was only some other ways to produce energy other than burning carbon...

... my sarcasm alarm just went off ...

... Bob (Grateful Diver)

I want a nuclear powered re-breather and I want it now.

Yeh, Then you could stay down forever!!!

But tell me how buying product "a" in japan and selling it as product "a" in the US is in any way stealing intellectual property?? The product was legally purchased from the manufacturer at it's agreed upon wholesale price so I cannot see how this could in any way be infringement of copyright??? Talk about abstract thinking. If that product was in some way different than the US version, and I don't mean product manuals, that could work but since the 2 are literally the same product manufactured in the same factory there is no infringement of intellectual property. If these companies are willing to dump product in overseas markets at far less than they will in the US they shouldn't cry when US retailers buy them and bring them here to sell.

[airsix]

Well the manual in the box with the watch is definitely a written work that can have copyrights.

Years ago I bought a Timex bottom-timer. I still have it. And the manual. With this page. Which if authored by myself I would definitely protect with my copyright privilege. Because it's priceless.

Do not eat watch.

[msmith80]

Well the manual in the box with the watch is definitely a written work that can have copyrights.

Years ago I bought a Timex bottom-timer. I still have it. And the manual. With this page. Which if authored by myself I would definitely protect with my copyright privilege. Because it's priceless.

Do not eat watch.

mmmmmmmm....... crunchy

[spatman]

Do not eat watch.

no wonder everyone tells me i Do It Wrong.