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Supreme Court hears arguments on copyright, tax exemption for medical residents

The US Supreme Court [official website; JURIST news archive] heard oral arguments [day call, PDF; merit briefs] Monday in Costco v. Omega [oral arguments transcript, PDF; JURIST report] on whether the first-sale doctrine [17 USC § 109(a)], which provides that the owner of any particular copy "lawfully made under this title" may resell that good without the authority of the copyright holder, applies to imported goods manufactured abroad. Swiss watchmaker Omega [corporate website] manufactures watches in Switzerland and then sells them to authorized distributors overseas. Watches were purchased by third parties and eventually sold to Costco [corporate website], which sold them to US consumers without authorization from Omega. The US Court of Appeals for the Ninth Circuit held [opinion, PDF] that the first-sale doctrine does not apply to imported goods. Counsel for Costco argued that the Ninth Circuit misinterpreted congressional intent: "According to the Ninth Circuit in Omega, Congress intended to treat foreign manufactured goods better in this respect than goods made in the United States. It is wildly implausible that Congress had any such intent." Counsel for Omega argued "that 'lawfully made under this title' would include a copy that was manufactured in the United States, but that it is not so limited." Counsel for the US government argued as amicus curiae in support of Omega's position.

In Mayo Foundation for Medical Education and Research v. United States [oral arguments transcript, PDF; JURIST report], the court heard arguments on whether medical students working as full-time residents are eligible for the student exception to Federal Insurance Contributions Act (FICA) [text] taxes imposed on employers and employees. Medical students working for the Mayo Clinic in Rochester, Minnesota, receive stipends from the foundation and the University of Minnesota [academic websites] for the medical and patient care services they provide. The district court ruled that residents qualify for the exemption and ordered the US Treasury Department [official website] to refund FICA taxes paid during the second quarter of 2005 to both Mayo and the university. The US government appealed to the US Court of Appeals for the Eighth Circuit, which reviewed the case de novo. The circuit court reversed [opinion, PDF] the lower court's holding, concluding that the judiciary must "defer to the regulation limiting this exception to students who are not full-time employees because it is a permissible interpretation of the statute." Counsel for the Mayo Clinic argued that the "services are performed for the purpose of receiving an education," which should qualify the students for the student exception to FICA taxes. Counsel for the US argued that "the Treasury Department has reasonably concluded that an employee's paid work does not make him an exempt student, even if he also learns from his job."

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