On November 8, the Supreme Court heard oral arguments in Unicolors v. H&M, a case centered around when a copyright owner’s mistake on a registration application is enough to result in invalidation of the registration. In considering this question, among others, the Justices appeared sympathetic to petitioner Unicolors’ position—which was supported by the Solicitor General—that honest mistakes of law on a registration application should not result in invalidation, and that H&M’s position would threaten the operation of a streamlined and predictable copyright system that incentivizes creators to register their works. While the Justices took issue with a discrepancy between the question presented in Unicolors petition for certiorari and that in its opening brief, the Court seemed unconvinced that it should apply a constructive knowledge standard to Section 411(b) of the Copyright Act that would allow opportunistic defendants to invalidate a copyright registration based on a good-faith error.
The Unicolors v. H&M saga began in 2016, and for a full recap of the events leading up to oral arguments, see this earlier post. The short story is that after Unicolors won an infringement action against H&M for unauthorized use of its fabric designs, H&M challenged Unicolors’ copyright registration for having known inaccuracies related to when the group of designs were made publicly available. After a district court rejected H&M’s argument that a constructive knowledge standard should render Unicolors’ copyright registration invalid, H&M appealed the decision to the Ninth Circuit, which found that the district court erred and 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. The Ninth Circuit essentially held that mere generalized or “constructive” knowledge of an error in the registration application is enough to invalidate the registration. Then, in early 2021, Unicolors filed a petition for a writ of certiorari asking the Supreme Court to consider whether the Ninth Circuit broke with prior precedent in holding that Section 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.
A Question of State of Mind Takes Center Stage
Appearing on behalf of Unicolors, Josh Rosenkranz opened oral arguments by explaining that the plain text of 411(b) and a presumption based on decades of case law confirm that to invalidate a registration due to an error, there must be a subjective awareness of a material inaccuracy—not simply a misunderstanding of the law or facts. While the Justices seemed to accept Rosenkranz’s framing of the standard, Justices Alito and Thomas expressed concern that the knowledge standard question in Unicolors’ brief was not what its petition for cert. asked the Court to consider, with Thomas going as far to suggest the case may have been improvidently granted. In response, Rosenkranz explained that both questions—whether 411 requires referral to the Copyright Office where there is no indicia of fraud and whether a knowledge element precludes a challenge to a registration—center on the basis of which referral to the Copyright Office was made, which is the state of mind of the registrant. Further, Rosenkranz invoked Rule 24.1, which provides that for briefs on the merits, “[t]he phrasing of the questions presented need not be identical with that in the petition for a writ of certiorari or the jurisdictional statement.”
Rosenkranz then argued that it cannot be presumed that Congress infused a hidden meaning within the word “knowledge” in Section 411 that would overturn a century of common law. This issue, which gets to the heart of the case, is that the copyright system was not designed to strip rights from a copyright owner for an error in an application based on a legal misunderstanding. In its brief, Unicolors cites a long line of cases that have excused the same type of registration errors that H&M insists must result in invalidation of the copyright registration. After all, as Rosenkranz made clear and as the Copyright Alliance’s amicus brief explains, Congress made a sensible decision to not impose harsh consequences on a layperson who does not have a full understanding of the sometimes complex legal questions involved in filling out a registration application.
It’s also worth noting, as Rosenkranz did, that H&M only argued the invalidity issue as a last resort—on the final day of trial when its other defenses had failed. It’s a telling fact that demonstrates the dangerous precedent a ruling for H&M could set. If alleged infringers were able to invalidate copyright registrations based on any good faith or unknowing error, it will be a tactic employed in countless cases where defendants have no legitimate defense.
Justices’ Attempt to “Talk about the Trolls” Falls Flat
Just as Rosenkranz was wrapping up his opening remarks, Justice Sotomayor chimed in to express her “concern about patent trolls,” which, as she sees it, are “sophisticated part[ies] with the capacity to confer with lawyers” but nonetheless “make a mistake that they could have easily checked.” Addressing this idea of willful blindness on the part of registrant, Rosenkranz explained that nothing stopped H&M from presenting evidence of bad faith willful blindness—they simply had none. Furthermore, he said that the more general constructive knowledge standard that H&M is advocating for may help address problems of the bad faith behavior of sophisticated parties, but it cannot be applied across the range of all applicants.
Attempting to understand whether Unicolors behavior was truly bad-faith opportunistic behavior, Justice Alito asked whether and how Unicolors would benefit by attempting to register all of the designs on one application as opposed to using a separate application for each design. Rosenkranz said that besides a meager amount of money saved by not filing an additional application, there was no discernable advantage gained by Unicolors in litigation or otherwise.
In response to later questions from Justice Breyer about whether copyright trolls were especially likely to make mistakes on a registration, Rosenkranz argued that the case has nothing to do with disciplining trolls and that H&M has no evidence that trolls are especially likely to make mistakes on an application. Breyer agreed that trolls are more likely to “stay abreast of everything” on the legal side in attempt to game the system, and so it’s less likely they would make the kind of innocent mistake that 411(b) is meant to excuse. Ultimately, the Justices seemed unconvinced that, regardless of the parade of horribles presented by some of H&M’s amici, a decision for Unicolors would somehow incentivize bad actors to abuse the registration system.
Solicitor General Warns of Unprecedented Ninth Circuit Opinion
Appearing in support of Unicolors on behalf of the government, Assistant to the Solicitor General Melissa Patterson explained that the Ninth Circuit’s holding was unprecedented in that it set forth a rule that would jeopardize many thousands of copyright registrations “under conditions never before thought to give rise to a risk of invalidation.” In the government’s view, Congress set out a default rule under 411(b) that preserves the validity of copyright registrations even if they contain inaccurate information. Patterson discussed three reasons why the standard for invalidation must be actual knowledge, rather than constructive:
- The plain text of 411(b) simply uses the word “knowledge” without any signal of a constructive standard.
- In the text of the rest of Title 17, when a constructive knowledge standard is imposed, Congress did so by carefully using phrases such as “known or should have known” and “had reasonable grounds to know.”
- If Congress had wanted to impose a constructive knowledge standard, it would have used similar language in 411(b).
Patterson went on to explain that never before “could a court invalidate your registration…because they thought you should have known the law…when you were filling out and checking boxes about publication—published or unpublished, derivative work, not derivative work, works for hire, not works for hire.” Discussing the practical importance of rejecting a constructive knowledge standard, Patterson said that our copyright system should not turn copyright owners away from the courthouse because they got a complicated legal concept wrong on their registration. After all she explained, defendants would still have the opportunity to rebut certain errors during litigation.
H&M’s Counsel Faces Tough Questions
Arguing on behalf of H&M, Peter Stris began his remarks by claiming that Section 411(b) does not excuse mistakes of law, because if it did, it would remove the incentive for copyright registrants to “engage diligently” with the Copyright Office. Justice Breyer, raising a hypothetical involving the misidentification of a bird that flies into the courtroom, challenged Stris on whether it really matters whether we categorize something as a mistake of law or not. Breyer posited that if he mistakenly identified the bird, it could be because (1) he either thought he saw a yellow bird when it was in fact red, or (2) he saw a red bird but did not understand the correct way to label it. Applying the bird hypothetical to the registration questions at hand, Breyer said in the former case you would bring in an ornithologist to resolve the issue and in the latter a lawyer or judge. He then asked “why should the fact that we call the latter thing a question of law but not the former thing make any difference whatsoever to the proper solution to this case?”
Arguing that this distinction does in fact matter, Stris cited the Court’s finding in Jerman v. Carlisle, which held that ignorance of the law does not count as a good faith mistake. But after recognizing that ignorance of the law is no defense is a principle that applies in certain areas, Justice Kavanaugh explained that the concept has much less force in regulatory law.
Following an attempt by Stris to distinguish cases cited by Unicolors from the current case, Justice Gorsuch said that he saw cases such as Rehaif v. United States as involving nearly identical knowledge standard questions as Unicolors. In Rehaif, the Court found that even absent an explicit scienter requirement in the criminal statute, that “Congress intend[ed] to require a defendant to possess a culpable mental state regarding each of the statutory elements that criminalize otherwise innocent conduct.” Gorsuch expressed skepticism over the imposition of a heightened clarity requirement for the Copyright Act.
Kavanaugh then challenged Stris on the real-world implications of H&M’s position, chiefly that a copyright owner would lose the ability to sue for infringement and recover damages simply because there was an honest confusion as to legal requirements. Stris again claimed that Congress intended a constructive knowledge standard because it incentivizes “diligence and full candor” and that there are serious harms that flow from material inaccurate registrations. He then made a curious connection between money the Copyright Office would lose as the result of fewer registrations and a chilling effect on creators. While no explanation was offered as to that interrelation, any standard that allows alleged infringers to invalidate copyright registrations (and thereby escape liability) for good faith registrations errors represents the only true chilling effect. Creators would be forced to consult legal experts for every registration, and there would almost certainly be a large contingent of creators who would be discouraged from registering at all. Justice Roberts picked up on this potential harm, explaining that the copyright registration system is designed to be accessible to laypeople and should not require the hiring of a law firm.
Unicolors’ Rebuttal Puts the Case in Perspective
In a brief rebuttal before the hearing ended, Rosenkranz raised a point that H&M tried to sidestep in its briefing and oral arguments: in roughly one hundred years of common law cases, no court has ever done what H&M asks the Court to do here and impose a subjective knowledge standard. He warned of the windfall a ruling for H&M would be for opportunistic infringers who have no other defense but would suddenly be able to get off the hook if there is any error in a registration. Finally, Rosenkranz noted that a ruling for Unicolors would not have any effect on an alleged infringers’ ability to challenge meritless infringement claims brought by so called trolls, as defendants retain every tool they would need to challenge a registration and be awarded attorney’s fees if successful.
As the Copyright Alliance amicus brief explains, copyright registration is intended to be a voluntary, easily accessible system used by hundreds of thousands of creators every year to build a centralized database of works claimed to be copyrighted. Despite being designed to be accessible by non-lawyer creators, there are complexities inherent in the registration process and consequences that flow from invalidating a registration. At oral arguments, the Supreme Court seemed to appreciate that a rule that would allow registrations to be invalidated on a standard of constructive knowledge of an inaccuracy would undermine the interests and rights Congress intended the system to protect. Whatever the Court decides, it’s critical that alleged infringers are not able to transform Section 411(b) into a vehicle to defeat meritorious copyright suits and that creators remain incentivized to register their works.