SCOTUS Rules That Faulty Copyright Registrations Based on Mistakes of Law Do Not Invalidate Registrations or Prevent Enforcement Actions
On Thursday, February 24, 2022, the U.S. Supreme Court weighed in on the long-running copyright infringement dispute between Los Angeles fabric designer, Unicolors Inc., and global fast fashion giant, H&M Hennes & Mauritz L.P. In its 6-3 decision, the U.S. Supreme Court vacated the Ninth Circuit’s ruling and held that inadvertent inaccuracies in a copyright registration do not void such registration, nor do they preclude the copyright holder from bringing a valid infringement claim.
背景介绍
Unicolors’ lawsuit against H&M began in 2016 in the Central District of California. In its complaint, Unicolors alleged that H&M was incorporating one of its copyrighted fabric designs, a geometric pattern, without its authorization in connection with jackets and skirts, which it commercialized for sale. Finding that Unicolors owned a valid copyright in the artwork, the jury determined that H&M’s use violated that copyright.1 H&M was ordered to pay almost $800,000 in damages and attorneys’ fees and costs.2
Following that verdict, H&M appealed to the Ninth Circuit, who overturned the decision.3 The Ninth Circuit held that Unicolors’ copyright registration could possibly be void for failing to meet the “single unit of publication” requirement. The appellate court remanded to the district court, instructing it to refer to the Register of Copyright to determine whether such an inaccuracy would have caused the registration to be refused.4
The “Single Unit of Publication” Requirement
Section 202.3(b)(4) of the Copyright Act allows a collection of published works to be registered as a single copyright (requiring only one registration fee) when the works have been “included in a single unit of publication.”5 The Ninth Circuit determined that a collection of works does not qualify as a “single unit of publication” unless all of the individual works in the collection were first published as a singular, bundled unit.6
Unicolors’ artwork, the subject of this suit, was registered in the U.S. Copyright Office as part of a collection of 31 designs. In filing for the single copyright, Unicolors listed January 15, 2011, as the collection’s first publication date. However, evidence showed that on January 15, 2011, the entire collection of designs was shown only to Unicolors’ salespeople, who were employees of Unicolors, not the public.7 In fact, evidence demonstrated that after the presentation, only 22 of the designs were made available for public viewing in the designer’s showroom. The remainder were “confined,” i.e. kept private, each to individual customers who were granted exclusive access to the confined work for a limited time.
The Ninth Circuit therefore determined that Unicolors’ copyrighted works were not initially published as a singular, bundled collection and could not satisfy the “single unit publication” requirement of § 202.3(b)(4).
The Standard for Invalidating Copyright Registration
Consequent to the determination that the “single unit publication” requirement was not satisfied, the Ninth Circuit held that the registration of the 31 works as a single copyright contained an inaccuracy. Because an inaccuracy in the copyright registration can be invalidating, the Ninth Circuit considered the standard for invalidation, § 411(b)(1) of the PRO-IP Act.
Section 411(b)(1) states that a copyright registration remains effective despite containing inaccurate information unless “(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate</em>; and (B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration.”8
With respect to Section (A), the Ninth Circuit rejected the argument that the statute required an intent to defraud. The court found that Unicolors knew that certain designs included in the registration were confined, i.e. each was published separately to exclusive customers.9 At trial, Unicolors admitted to having such knowledge. That knowledge was enough to hold that Unicolors satisfied the “knowledge that it was inaccurate” requirement.
The Ninth Circuit considered Section (B) and held that it was necessary to refer the matter to the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register to refuse the registration.10 Reversing and remanding the case back to the district court, the Ninth Circuit instructed that such a request be made before any judgment on copyright infringement be decided.
The Supreme Court’s Ruling
On Thursday, February 24, 2022, the Supreme Court vacated the Ninth Circuit’s decision and remanded the case for further proceedings consistent with its ruling.
Essential to the Supreme Court’s focus was to determine the scope of the phrase “with knowledge that it was inaccurate,” as posited under Section 411(b)(1)(A), the safe harbor provision of the statute. Breaking from the Ninth Circuit, the Supreme Court found that Section 411(b) does not distinguish between mistake of law and mistake of fact—in other words, either mistake is justifiable grounds for excusing the inaccuracy of a copyright registration.
Inaccuracies of Law as “Labeling Issues”
Invoking an analogy of a layperson misidentifying a species of bird, Justice Breyer, writing for the majority, explained that Unicolor simply failed to understand the proper criteria of the label “single unit production.” Like the layperson in his hypothetical who erroneously names a red bird a cardinal instead of a scarlet tanager, Unicolors’ mistake was one of labeling, and Justice Breyer opined further that labeling mistakes are issues of law (not fact).
Given that Unicolors had previously attested to the fact that it was unaware at the time of filing that its 31 designs failed to meet the requirement of the statute’s “single unit of production,” the Supreme Court found that Unicolors did not include an inaccurate statement with knowledge of such inaccuracies. This conclusion plainly fits into the framework of Section 411(b)(1)(A) which, the Supreme Court emphasized, does not differentiate mistakes of fact versus law.
To support this stance, the Supreme Court cited extensive statutory references and case law which conform to the notion that forgiveness of copyright applicant’s legal mistakes were as much intended to be included as were factual mistakes. Perhaps most central to the Supreme Court’s position was the fact that, based on hearing records of Congressional reports, the intention of Congress in enacting Section 411(b) in the first place was to benefit the non-lawyer in making copyright registration and enforcement easier, not harder. Thus, voiding a copyright registration due to mistakes of law, especially copyright law that is “often esoteric,” would undermine the intention of Congress.
Addressing Ignorance of the Law Arguments
Of course, the most common argument against excusable treatment of mistakes of law follow the legal maxim that “ignorance of the law is no excuse.” H&M took this position from the start, noting that the effect of permitting leniency towards inaccurate copyright filings would result in the exploitation of the safe harbor. The Supreme Court was not persuaded.
In response, the Court noted that courts do not automatically need to accept a mistake of law claim as a blind rule. Circumstantial evidence on a case by case basis should be evaluated to determine if the safe harbor would appropriately apply.11 In the case of willful blindness for example, the Court reasoned that use of the safe harbor would likely be improper under certain factors such as “the significance of the legal error, the complexity of the relevant rule, the applicant’s experience with copyright law, and other such matters.”
Dissenting Opinion
Justices Thomas, Alito, and Gorsuch (in part) dissented, calling to issue that Unicolors first petitioned for certiorari on the question of whether Section 411(b)(1)(A)’s “knowledge” element requires “indicia of fraud,” but relied on a separate “actual knowledge” standard in its brief to the Supreme Court. Thomas ultimately found the writ of certiorari as improperly granted due to this shift.
Looking Ahead: Impacts and Implications
The questions of this case concern the “knowledge” of a copyright applicant, both with respect to the legal requirements of registration as well as to the factual information underlying its application. Whether knowledge under the Copyright Act’s safe harbor is meant to cover mistakes rooted in ignorance of the law is a novel issue. The Supreme Court’s holding will undoubtedly affect the way copyright validity and enforcement matters are assessed for years to come.
Setting the Tone
The Supreme Court’s decision sends a clear message regarding the intention of the safe harbor under Section 411(b)(1)(A) – namely, that it is meant to provide additional flexibility to creators, as opposed to impediments. The Court acknowledged the reality that copyright applications are commonly submitted by non-lawyers who have little understanding over the procedural nuances of the law. Even good faith mistakes in the application process—such as checking an incorrect box on a form—can render an application invalid. Recognizing that the aim of the safe harbor provision was to “improve intellectual property enforcement in the United States and abroad” and to deny infringers the ability to exploit potential loopholes, the Court emphasized that “it would make no sense if § 411(b) left copyright registrations exposed to invalidation based on applicants’ good faith misunderstandings of the details of copyright law.” Through its decision, the Supreme Court has further shifted the priorities of U.S. copyright law towards the equities of the lay filer attempting to protect their work—a purpose, the Court makes clear, that underlies the function of the Copyright Act, itself.
Who Stands to Benefit?
The practical implications of this decision apply to current and future copyright registrations, alike. For current registrants, clarity has now been established with respect to Section 411(b)(1)(A)’s scope. There is no doubt that it covers application mistakes rooted in law and fact. This expands upon the possible defenses for current fashion companies who may have had to defend the validity of their “single unit of publication” registrations (a common copyright filing for textile and print designers) in the future. The expansion upon the Section 411(b)(1)(A) safe harbor will likely reduce the number of claims levied on such invalidity grounds.
However, the Supreme Court’s decision likely yields the greatest impact on future copyright applicants. One of the most impactful realities on fashion businesses is the relative lack of comprehensive legal representation in comparison to similarly-sized businesses of other industries. This is true of most creative-led businesses. Because fashion entrepreneurs and start-ups often take legal work into their own hands—especially for copyright filings which do not require a legal license to submit—they overwhelmingly fall prey to basic procedural violations. The Court in Unicolors v. H&M was astutely aware of this fact, and as such, its decision was meant to soften the consequences of the common mistake of failing to seek out legal counsel.
Moving forward, invalid copyright registrations based on application inaccuracies made in good faith will not be found invalid on such procedural accidents, alone. This lessens the initial stresses on start-up and growing fashion businesses, granting them a “break” in case they accidentally get it wrong when filing for copyright protection. In a nuanced and roundabout way, small businesses have been given the benefit of the doubt in the interest of protecting intellectual property that is rightly theirs.
1 Unicolors, Inc. v. H&M Hennes & Mauritz L.P., 2018 WL 10307045 (C.D. Cal. Aug. 1, 2018).
2 Unicolors, Inc. v. H&M Hennes & Mauritz L.P., 2018 WL 6016989 (C.D. Cal. Sept. 25, 2018).
3 Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 959 F.3d 1194 (9th Cir. 2020).
4 Because registration is a precondition to bringing a copyright infringement suit, if on remand the district court were to find that the Register of Copyright would have refused the registration, judgment as a matter of law would be granted in H&M’s favor.
5 Although the current version of § 202.3(b)(4) refers to registration “as one work” rather than “as a single work” and as “the same unit” rather than “a single unit” of publication, the Ninth Circuit used the language of the version of 37 C.F.R. § 202.3(b)(4) effective January 24, 2011. That version is the operative version in this case because Unicolors registered their copyright in February 2011.
6 Unicolors, Inc., 959 F.3d at 1198 (“[P]ublication includes when copies of a work are made available to the general public … even if a sale or other such disposition does not in fact occur.”) (internal citations omitted); the Ninth Circuit had never previously addressed what it means to publish multiple works as a “single unit.” Id. at 1199.
7 Even the district court recognized that “the works were presented to Unicolors salespeople on January 15, 2011, rather than to purchasers, which would likely be required to establish publication on that date.” Unicolors, 2018 WL 10307045 at *3 (emphasis added).
8 17 U.S.C. § 411(b)(1)(A)-(B) (emphasis added).
9 Unicolors, Inc., 959 F.3d at 1200 (“And the knowledge inquiry is not whether Unicolors knew that including a mixture of confined and non-confined designs would run afoul of the single-unit registration requirements; the inquiry is merely whether Unicolors knew that certain designs included in the registration were confined and, therefore, were each published separately to exclusive customers.”).
10 See 17 U.S.C. § 411(b)(2) (“In any case in which inaccurate information described under paragraph (1) is alleged, the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration.”).
11 The Supreme Court also underscored that the ignorance of the law maxim is most aptly relevant to criminal proceedings in order to assess a defendant’s mental state with respect to elements of a crime. Under the present circumstances, the Supreme Court found that this rule doesn’t apply, given that the legal requirements of a safe harbor are distinguishable from elements of a crime in a criminal suit.
