Parfums Givenchy, Inc. v. Drug Emporium, Inc., s. 92-56359

• Decision Date: 21 October 1994
• Docket Number: 93-55050,Nos. 92-56359,s. 92-56359
• Citation: 38 F.3d 477
• Parties: , 1994 Copr.L.Dec. P 27,313, 32 U.S.P.Q.2d 1512 PARFUMS GIVENCHY, INC., Plaintiff-Appellee, v. DRUG EMPORIUM, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 477

38 F.3d 477

63 USLW 2264, 1994 Copr.L.Dec. P 27,313,

32 U.S.P.Q.2d 1512

PARFUMS GIVENCHY, INC., Plaintiff-Appellee, v. DRUG EMPORIUM, INC., Defendant-Appellant.

Nos. 92-56359, 93-55050.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 3, 1994.

Decided Oct. 21, 1994.

John Borgo and R. Lawrence Bonner, Greer, Homer & Bonner, Miami, FL, for defendant-appellant.

Curtis A. Bradley, Covington & Burling, Washington, DC, for plaintiff-appellee.

Stephen Kurzman, Nixon, Hargrave, Devans & Doyle, Washington, DC, for American Free Trade Ass'n, as amicus curiae.

Diane Heiman, Bethesda, MD, for Nat. Consumers League, as amicus curiae.

Appeal from the United States District Court for the Central District of California.

Before: TANG, PREGERSON and NOONAN, Circuit Judges.

PREGERSON, Circuit Judge:

I. INTRODUCTION

Drug Emporium, Inc. appeals a permanent injunction granted by the district court on summary judgment in Parfums Givenchy, Inc.'s ("Givenchy USA's") action for copyright infringement under 17 U.S.C. Sec. 602(a). Givenchy USA owns the United States copyright to the box design of Amarige perfume. Givenchy USA brought the instant action after its representatives purchased a bottle of Amarige perfume, in the original copyrighted packaging, from a discount retail store owned by Drug Emporium. The permanent injunction restrains Drug Emporium from continuing to sell or market the copyrighted Amarige box design in the United States. We have jurisdiction over the appeal under 28 U.S.C. Sec. 1291. We affirm.

II. FACTS

The facts are not in dispute. This case concerns the importation and sale of Amarige, a perfume that is produced in France by Parfums Givenchy, S.A. ("Givenchy France"). Amarige is marketed in distinctively decorated individual boxes designed by employees of Givenchy France. Givenchy France began importing Amarige to the United States in early 1992, and shortly thereafter sold its United States copyright interests in the Amarige box design to appellee, Givenchy USA, its wholly owned subsidiary. Givenchy USA then recorded the box design with the United States Copyright office, obtained a valid registration certificate, and began a multi-million dollar national advertising campaign to promote the perfume.

Meanwhile, third parties purchased or otherwise lawfully obtained quantities of Amarige abroad. The Amarige was packaged in the original distinctively designed box. The third parties then imported the Amarige into the United States without the authorization of either Givenchy France or Givenchy USA. Some or all of the Amarige was imported into the United States before Givenchy France assigned its U.S. copyright interests in the Amarige box design to Givenchy USA. Drug Emporium, a nationwide retail chain, purchased the Amarige from the importing third parties in the United States, and began marketing the perfume in the United States in its original copyrighted packaging. Drug Emporium made all of its purchases of Amarige after Givenchy USA became the registered U.S. copyright owner of the box design.

III. DISCUSSION

We review a grant of summary judgment de novo. Smith v. Noonan, 992 F.2d 987, 989 (9th Cir.1993). We must determine whether, viewing the evidence in the light most favorable to the non-moving party, there are any genuine issues of material fact, and whether the district court correctly applied the relevant substantive law. Botefur v. City of Eagle Point, 7 F.3d 152, 154 (9th Cir.1993).

Drug Emporium raises two primary issues on appeal: (1) It challenges the district court's determination that Givenchy USA had standing to sue for the alleged copyright infringements; and (2) It challenges the district court's determination that the "first sale" doctrine does not apply to shield Drug Emporium from liability for copyright infringement.

A. Standing:

Section 501 of the Copyright Revision Act of 1976, Pub.L. 94-553, 17 U.S.C. Secs. 101-914 (the "Copyright Act") provides that "[t]he legal or beneficial owner of an exclusive right under a copyright is entitled ... to institute an action for any infringement ... committed while he or she is the owner of it." 17 U.S.C. Sec. 501(b). The district court found that Givenchy USA had standing to sue under the Copyright Act because it owned the United States copyright to the box design when the infringement occurred. ¹

Drug Emporium contends that there is a genuine issue of fact whether Givenchy USA owned the copyright to the box design at the time of the alleged infringement. Drug Emporium points out that the third party wholesaler from whom it obtained its supply of Amarige purchased a large quantity of the product abroad before Givenchy France sold its U.S. copyright interest in Amarige to Givenchy USA. But Drug Emporium's alleged copyright infringement did not occur when the Amarige was imported. Rather, it occurred when Drug Emporium attempted to distribute the perfume that had been imported without Givenchy USA's (or Givenchy France's) authorization. ²

It is undisputed that Givenchy USA was the United States copyright owner when Drug Emporium marketed and sold the Amarige in its copyrighted package. Therefore, Givenchy USA had standing to sue under the Copyright Act.

B. Does the "first sale" doctrine protect Drug Emporium?

1. Harmonizing first sale doctrine and importation right:

The owner of a registered copyright has the "exclusive rights" to authorize or distribute copies of the copyrighted work to the public. 17 U.S.C. Sec. 106(3). ³ However, under the "first sale" doctrine, embodied in Sec. 109(a) of the Copyright Act, 17 U.S.C. Sec. 109(a), a sale of a "lawfully made" copy terminates the copyright holder's authority to interfere with subsequent sales or distribution of that particular copy. ⁴ Section 109(a) thus provides a defense to liability under Sec. 106(3) for lawful purchasers of copies of copyrighted materials, so long as the copies were "lawfully made under this title." Drug Emporium contends on appeal that this section protects it from Sec. 602 liability for copyright infringement.

Whether Drug Emporium may rely on the first sale doctrine depends on the relationship between this doctrine and the "importation right" codified at 17 U.S.C. Sec. 602(a). Section 602(a) provides that unauthorized importation of foreign purchased copies of U.S. copyrighted materials is an infringement of the distribution rights provided in Sec. 106. ⁵ There are at least two plausible interpretations of the interaction of the importation right and the first sale doctrine as embodied in Secs. 602(a) and 109(a). Drug Emporium contends that Sec. 109(a) supersedes Sec. 602(a). In its view, a lawful sale abroad of U.S. copyrighted foreign goods would terminate the exclusive right of the U.S. copyright holder to import and distribute those goods in the United States, in the same way that a lawful domestic sale terminates the exclusive distribution rights of domestically manufactured materials. Thus, Drug Emporium argues, Givenchy USA may not interfere with the U.S. distribution of Amarige, lawfully obtained abroad, even though it owns the U.S. copyright to the Amarige box design, and even though the perfume was imported into the United States in the original box without Givenchy USA's authorization. ⁶ In contrast, Givenchy USA contends, and we agree, that the importation right survives as to a particular copy unless and until there has been a "first sale" in the United States.

Prior to the 1976 amendments to the Copyright Act, the unauthorized importation of non-pirated copyrighted articles was not prohibited. See Act of Mar. 4, 1909, ch. 320, Sec. 30, 35 Stat. 1075, 1082 (1909). Section 602(a) was enacted in order to provide greater remedies for U.S. copyright owners, and "makes the mere act of importation--regardless of sale--an infringement of Section 106(3)'s distribution right, and prohibits unauthorized importation, not only of pirated copies, but also of copies that were lawfully made." See Parfums Givenchy v. C & C Beauty Sales, 832 F.Supp. 1378, 1390 (C.D.Cal.1993). As the district court in C & C Beauty Sales recognized, Sec. 602(a) in effect gives Sec. 106(3) an extraterritorial scope. Id. This section ensures that a U.S. copyright owner will gain the full value of each copy sold in the United States, by preventing the unauthorized importation of copies sold abroad from being used as a means of circumventing the copyright owner's distribution rights in the United States. Id. at 1390-91.

We examined this precise issue in BMG Music v. Perez, 952 F.2d 318, 319 (9th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2997, 120 L.Ed.2d 873 (1992). In that case the defendant was an entrepreneur who purchased copyrighted sound recordings manufactured abroad, imported them to the United States, and sold them here in retail outlets. The defendant in BMG Music, like Drug Emporium in this case, claimed that the first sale doctrine of Sec. 109(a) protected him from liability even though he purchased the copyrighted recordings abroad and imported them without plaintiff copyright holder's authorization. We disagreed, holding that "[t]he words 'lawfully made under this title' in Sec. 109(a) grant first sale protection only to copies legally made and sold in the United States." Id. at 319 (citing CBS v. Scorpio Music Distributors, 569 F.Supp. 47 (E.D.Pa.1983), aff'd without op., 738 F.2d 424 (3rd Cir.1984)). We explained that such a rule is necessary to avoid rendering Sec. 602 "virtually meaningless." Id. Without the rule, "[c]opyright owners would no longer have an exclusive right to distribute copies or phonorecords of works manufactured abroad, an interest clearly protected by Sec. 602." Id. In essence, in BMG Music there was no first sale because the defendant purchased the copyrighted material abroad. Therefore, we concluded, the defendant importer did indeed infringe on the U.S. copyright when he imported and sold the...