## Facts

- Disenos Artisticos E Industriales, S.A. (DAISA) owned copyrights in Lladro figurines and licensed four affiliated Spanish manufacturers to produce the figurines.
- DAISA’s licenses granted the manufacturers broad sales rights, authorizing sales “to all countries of the world, without the existence of any limitations or exclusions of territory.”
- In practice, the manufacturers sold their output to a parent company, Lladro Comercial, which controlled distribution channels and contracted to limit U.S. sales to Lladro USA, Inc.
- Costco sold genuine Lladro figurines in the United States from 1990 to 1994.
- The figurines were authentic and manufactured under DAISA’s licenses, but entered the United States through gray-market channels rather than through Lladro USA.
- DAISA and Lladro USA sued Costco under 17 U.S.C. § 602(a) for unauthorized importation; the district court granted summary judgment to the plaintiffs.

## Issues

1. Whether importation and sale in the United States of genuine, lawfully made copies violates 17 U.S.C. § 602(a) when the copyright owner granted licensees unrestricted worldwide rights to sell the copies.
2. Whether distribution-channel restrictions created by affiliated entities can render an importation “without the authority of the owner of copyright” for purposes of § 602(a).

## Decision

- The Ninth Circuit reversed the summary judgment for DAISA and Lladro USA.
- The court held Costco was entitled to summary judgment because the undisputed facts established implied authority from DAISA for importation into the United States.
- Because the importation was authorized within the meaning of § 602(a), Costco’s sales did not violate the statute.

## Legal Principles

- Section 602(a) turns on whether importation occurred “without the authority of the owner of copyright,” making the copyright owner’s grant of rights the central inquiry.
- A copyright owner’s express authorization of worldwide, non-territorial sales can carry implied authority for later importation into any country, including the United States.
- Private distribution arrangements among affiliates and distributors cannot narrow the scope of authority already granted by the copyright owner’s license for purposes of § 602(a).
- Where genuine copies are manufactured and first sold pursuant to a copyright owner’s unrestricted distribution license, gray-market importation of those copies is not barred by § 602(a) absent territorial limits traceable to the copyright owner’s authorization.

## Conclusion

The Ninth Circuit held that DAISA’s unrestricted worldwide sales licenses impliedly authorized importation of the genuine figurines into the United States, defeating liability under 17 U.S.C. § 602(a) despite the plaintiffs’ separate efforts to control U.S. distribution through affiliated contracts.


Disenos Artisticos E Industriales, S.A. v. Costco Wholesale Corp., 97 F.3d 377 (9th Cir. 1996)