Costco's Deep Discount Ticks Off a Luxury Watchmaker

Costco attracts a range of loyal fans with discounted goods.

The Swiss luxury watchmaker has been in a legal dispute with Costco for more than a decade, saying the warehouse company infringed on its copyright for a high-end watch.

That allowed Costco to buy those watches at a discount and sell them for about $1,299 in its stores in the U.S., where Omega's preferred selling price is $1,999, the Wall Street Journal reported.

Omega, a subsidiary of Swatch Group, started selling the Seamaster, engraved with Omega's copyrighted "miniscule" globe design, in 2003, court records show. Though Costco was not an authorized Omega retailer, it started selling the watch in 2004, a court document states. Costco bought 117 Seamaster watches on the gray market from a New York-based company that bought watches intended to be sold abroad, court records state.

"Omega's right to control importation and distribution of its copyrighted Omega Globe expired after that authorized first sale [abroad], and Costco's subsequent sale of the watches did not constitute copyright infringement," the court said in its decision.

An attorney for Omega declined to comment.

Costco did not respond to a request for comment.