Quality King Distributors, Inc. v. L’Anza Research Int’l, Inc.

Respondent Uanza, a California manufacturer, sells its hair care products in this country exclusively to distributors who have agreed to resell within limited geographic areas and only to authorized retailers. Uanza promotes its domestic sales with extensive advertising and special retailer training. In foreign markets, however, it does not engage in comparable advertising or promotion; its foreign prices are substantially lower than its domestic prices. It appears that after Uanza’s United Kingdom distributor arranged for the sale of several tons of Uanza products, affixed with copyrighted labels, to a distributor in Malta, that distributor sold the goods to petitioner, which imported them back into this country without Uanza’s permission and then resold them at discounted prices to unauthorized retailers. Uanza filed suit, alleging that petitioner’s actions violated Uanza’s exclusive rights under the Copyright Act of 1976 (Act), 17 U. S. C. §§ 106, 501, and 602, to reproduce and distribute the copyrighted material in the United States. The District Court rejected petitioner’s “first sale” defense under § 109(a) and entered summary judgment for Uanza. Concluding that § 602(a), which gives copyright owners the right to prohibit the unauthorized importation of copies, would be “meaningless” if § 109(a) provided a defense, the Ninth Circuit affirmed.