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The Supreme Court on Monday issued what could be the first of a number of 4-4 decisions this term in a case involving copyright infringement and the so-called gray market. The justices were equally divided in Costco Wholesale Corp. v. Omega, S.A. The discount retailer, Costco, had challenged a ruling by the U.S. Court of Appeals for the 9th Circuit which held that the first sale doctrine — a defense to copyright infringement — does not apply to goods manufactured abroad and imported to the United States. The consequence of the divided decision is to affirm the 9th Circuit ruling. The 4-4 decision has no value as a precedent. Eight justices heard arguments in the case on Nov. 8. Justice Elena Kagan did not participate. When she was solicitor general, Kagan had urged the court to deny review. The case had attracted a broad range of amicus parties, including the retail industry, libraries, consumer rights organizations, the entertainment industry, and online retailers, such as eBay. “There are many basic consumer issues at stake, and having the Court uphold the lower ruling on a tie vote leaves many of those issues up in the air,” said Sherwin Siy, deputy legal director for Public Knowledge, in a statement. “Because of this ruling, the critical ‘first sale’ doctrine in U.S. copyright law is severely limited for goods manufactured outside of the U.S. but sold here. He added that “anyone, from a single person, to a giant corporation, which resells goods made abroad, could find themselves sued under copyright law unless they determine where a product was made and purchase the licensing rights.” The justices on Monday also ruled on an appeal seeking to increase the size of the U.S. House of Representatives. In Clemons v. Department of Commerce, the Court summarily vacated — without merits briefing and argument — the judgment of the U.S. District Court for the Northern District of Mississippi with orders that the district court dismiss the complaint for lack of jurisdiction. The nonprofit organization, Apportionment.US, had argued that the size of the House — unchanged at 435 since 1911, with the exception of a brief period after the admission of Alaska and Hawaii as states — violated the Constitution’s requirement of one person, one vote. Last July, a three-judge panel of the district court ruled that Congress has discretion to set the size of the House even if significant disparities between the number of representatives and a state’s population persist. Finally, there were two notable denials of review on the Court’s last orders list of the year. The justices declined to hear the state of New York’s challenge to a 2nd Circuit decision striking down rules that barred lawyers from using nicknames, monikers, and marketing gimmicks that gave exaggerated or irrelevant portrayals of their services. In Cahill v. Alexander, New York Solicitor General Barbara Underwood had argued that the 2nd Circuit decision conflicted with “numerous state courts of last resort” that have upheld similar regulations and she had urged the justices to bring greater uniformity to the regulation of lawyer advertising. And the Court turned away the second of a recent trio of punitive damages-related challenges. In Shell Oil v. Hebble, the oil giant — hit with a $54 million punitive award — asked whether a statutory 12% interest charge may be treated as “compensatory” in calculating the punitive to compensatory ratio. It also asked whether in determining the maximum punitive damages award in a case involving a substantial compensatory award and only economic harm, courts should be guided by the 1-to-1 ratio mentioned in the justices’ 2007 decision in State Farm v. Campbell, or instead presume that anything within the range of 4-to-1 is permissible. In November, the justices denied review in Stroud v. Blount, which asked if a plaintiff’s attorneys’ fees could be counted as compensatory damages in calculating the ratio of punitive damages to compensatory damages. Still pending review is Lawnwood Medical Center v. Sadow. That case asks whether punitive damages for intentional harm are exempt from the “guidepost” analysis set out in BMW v. Gore. It also questions whether in cases where actual damages are nominal or small, may a court consider the defendant’s wealth as an objective indicator of whether the punitive award is constitutional. Marcia Coyle can be contacted at [email protected].

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