Unicolors Case Presents the Supreme Court With an Opportunity to Reinforce the Foundations of the Copyright Registration System
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Imagine you’re an author, photographer, or songwriter who creates a website where you begin to post short stories, photos, or songs. You have a general familiarity with copyright law, have registered works in the past, and understand the benefits of doing so. A few months after launching the website, you register the posted works with the Copyright Office. You later discover that someone is copying and selling your copyrighted works without your permission. After the person refuses to cease the infringing activity, you hire a lawyer and file a complaint in what seems like an open and shut case.
Months into the litigation, after you’ve spent a considerable amount on legal fees and a tremendous amount of time preparing for litigation—time you could have spent creating new works and taking care of other business responsibilities—the infringer challenges the validity of your registration based on an error that appears in the registration. The error was an honest mistake on your part as to the legal interpretation of the date of publication. Even though the defendant clearly infringed your work, they found a loophole and they were able to invalidate your registration on a technicality. The scenario may sound far-fetched and unfair, but it’s what the Supreme Court could open the door to if it rules in favor of a similarly opportunistic defendant in Unicolors v. H&M.
The Unicolors v. H&M saga began in 2016 when Unicolors, a company that creates textile and garment designs, sued fashion brand Hennes & Mauritz (H&M) for copyright infringement related to unauthorized use of Unicolors’ copyrighted geometric design on H&M garments. In 2017, a jury in the Central District of California found for Unicolors, concluding that H&M had indeed infringed Unicolors’ copyright by selling garments bearing a copy of its design. In response, H&M filed a motion alleging that Unicolors included known inaccuracies in its copyright registration application for the designs at issue. The challenge to the registration was based on the allegation that several designs covered in the single (group) registration were not made publicly available at the same time as others, meaning they didn’t constitute a “a single unit of publication” as required by Copyright Office’s registration rules in order to register the designs on a group registration form.
After the district court rejected H&M’s argument, H&M appealed the decision to the Ninth Circuit, which found that the district court erred in denying H&M’s motion. The Ninth Circuit found that the plain language of Section 411(b) of the Copyright Act does not require the copyright owner-registrant have an “intent-to-defraud” the Office in order to invalidate a copyright registration, essentially holding that mere generalized or “constructive” knowledge of an error in the registration application is enough to invalidate the registration. Having an intent to defraud is fundamentally the same standard as having actual knowledge because a registrant who has actual knowledge that they’ve included erroneous information in a registration would be considered to have intentionally defrauded the Copyright Office by including a known misstatement. In settling on a lower constructive knowledge standard, the Ninth Circuit cited its decision in Gold Value v. Sanctuary Clothing, which itself shifted away from the actual knowledge of inaccuracy standard supported by years of case law and legislative history.
In early 2021, Unicolors filed a petition for a writ of certiorari asking the Supreme Court to take the case. The Court granted the petition and will hear the case in the upcoming fall term. The question the court will consider is:
Did the Ninth Circuit err in breaking with its own prior precedent and the findings of other circuits and the Copyright Office in holding that 17 U.S.C. § 411 requires referral to the Copyright Office where there is no indicia of fraud or material error as to the work at issue in the subject copyright registration?
The question acknowledges the important point that the Ninth Circuit broke from its own precedent and those of other circuits in its ruling, which should prompt the Supreme Court to carefully analyze the consequences—including those to copyright owners, alleged infringers, and the copyright registration system—of a finding for H&M. In doing so, it’s critical that the Court recognize the foundational goals of the registration system and the severe consequences a ruling for H&M would have for copyright owners and the way copyright cases are litigated.
The Copyright Registration System Contemplates Unknowing Errors
Copyright registration is a voluntary process that Congress intended to be easily accessible to creators without the assistance of a lawyer or extensive knowledge of copyright law. The purpose of the system is not as much about scrutinizing copyright validity as it is about creating a centralized database of works claimed to be copyrighted as well as a collection of deposit copies in the Library of Congress. Copyright law incentivizes creators to register by conferring a number of benefits—including the ability to seek statutory damages or recover attorneys’ fees as a remedy for infringement—on a copyright owner who timely registers their work with Copyright Office. These incentives embolden hundreds of thousands of creators to register their works every year—leading to more deposits for the Library of Congress collections. In most cases, these registrations are completed without having to hire an attorney.
While the registrations system is designed to be streamlined and straightforward, there is potential for good-faith errors on the part of individual copyright owners and small businesses especially when completing registration information that may require analyses of sometimes unsettled legal concepts. For example, the operative date of publication for online works is subject to conflicting interpretations, as evidenced by an ongoing Copyright Office study to establish a clear rule. Other questions that can trip up registrants are whether something is a work made for hire and the nature of the underlying work. Moreover, copyright law and the Copyright Office rules are not always intuitive or sensical, which increases the potential for unknowing errors made by applicants. This is especially true for certain creators, like photographers and musicians, who register a large volume of works per year and run the risk of making a mistake, whether its factual or legal.
Because of these pitfalls, it’s long been recognized that actual knowledge of a material error, which rises to an intent to defraud, is required to invalidate a registration. In 2008, Congress passed the Prioritizing Resources and Organization for Intellectual Property Act, known as the PRO IP Act, which amended Section 411 of the Copyright Act to codify the doctrine of fraud on the Copyright Office in the registration process. In doing so, the Act confirmed the long-held understanding that unknowing errors in copyright registrations are not grounds for invalidation.
Decades of case law before the PRO IP Act established a common law rule that actual knowledge is required for invalidation, and nothing in the language of Section 411(b)(1)(A) displaces the rule. 411(b)(1)(A) provides that a registration satisfies the prerequisites of copyright law even if it contains inaccurate information, unless “the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate.” This means that an applicant must intentionally include an error in the registration in order for that registration to be invalidated. It follows that if an applicant sincerely believes the information in the registration is accurate, she cannot be culpable of knowingly including inaccurate information in a registration. It’s an important distinction and one that must be preserved to protect the thousands of individual creators and small businesses that register works on their own.
Lowering the Knowledge Standard Would Undermine the Rights of Copyright Owners
Allowing defendants in copyright infringement cases to invalidate registrations based on a registrant’s general knowledge of an error would upend both the copyright registration system and overall litigation practice. First of all, if defendants are able to challenge and invalidate a registration on the basis of an alleged error made without actual knowledge, they would be able to substantially delay copyright litigation in a way that may be prohibitively expensive for an individual copyright owner. Second, plaintiffs could be denied vital remedies such as statutory damages and attorneys’ fees. In fact, defendants may be able to recover attorneys’ fees against plaintiffs, which could in turn cause small copyright owners not to pursue infringement claims out of fear of being forced to pay for their opponent’s win on a technicality. Relatedly, creators may choose not to register their works at all if they are discouraged from bringing infringement suits, which would result in a massive cultural loss due to fewer deposit copies. Finally, defendants may even succeed in having the case dismissed, leaving the copyright owner without the ability to refile a timely suit.
Any or all of these results would be possible even in instances of blatant or willful infringement when no meritorious defenses exist. It’s easy to see how lowering the preexisting knowledge standard would result in abuse of the system, as it would incentivize any accused infringer to challenge a registration based on a simple mistake in the application. Indeed, the legislative history of the PRO IP Act specifically expresses concern with defendants pressing for a lowering of the knowledge standard in order to use registration challenges as a tactic for delaying or denying relief to copyright owners. Conversely, denying defendants the ability to invalidate registrations based on an unknowing error would not disadvantage anyone who has legitimate grounds to challenge a copyright’s validity or to raise substantial merits defenses.
In an amicus brief recently filed by the Copyright Alliance in support of Unicolors, we explain that nothing in Section 411(b) suggests that the knowledge inquiry centers on what a registrant should have known, and that nothing in the PRO IP act indicates that Congress meant to lower the mental-state requirement standard. It’s clear that Congress and numerous other circuit courts understand the harm to copyright owners that would result from the Ninth Circuit’s anomalous determination, and the Supreme Court should reverse the judgment to ensure 411(b) does not become a get-out-of-jail-free card for culpable defendants. Doing so would reinforce a streamlined and predictable system that incentivizes copyright owners of all types to voluntarily register their works with the Copyright Office.