IANAL, but I've read the 9th circuit's opinion, and I think it's a fair argument; once you realize this is not about the watch (which I'll get to). This comes down to Omega never authorizing the importation of these copyrighted materials. 9th states that
Second, the application of 109(a) after foreign sales would "`render 602 virtually meaningless'" as a tool against the unauthorized importation of nonpiratical copies because importation is almost always preceded by at least one lawful foreign sale that will have exhausted the distribution right on which 602(a) is premised. Id. at 319-20 (quoting Scorpio, 569 F.Supp. at 49).
The watches found their way to Costco via "unidentified third parties,"
Costco obtained watches bearing the copyrighted design from the "gray market" in the following manner: Omega first sold the watches to authorized distributors overseas. Unidentified third parties eventually purchased the watches and sold them to ENE Limited, a New York company, which in turn sold them to Costco.
I am inferring from this that Costco could not prove that these were authorized replications of Omega's copyrighted material. By ruling in favor of Costco they set a precident which could allow me to sell pirate CDs I bought from 'an unspecified 3rd party' wholesaler in China and claiming 'First sale doctrine, bro; I'm just a reseller.' I get that, kind of, if were were talking about CDs, books, or movies.
Here is the part that is fucking retarded: Omega isn't talking about the watch, the watch isn't copyrighted. They are claiming infringement on their logo, the "Omega Globe Design," which just happens engraved on the watch, and which they hold a US copyright on. So by my read, Costco is free to file off the logo and sell them however they want.