What Happens When You Make a Mistake in a Copyright Registration? Supreme Court to Clarify in Unicolors v H&M
The United States Supreme Court has scheduled oral argument in Unicolors v H&M for November 8, 2021. The Court ruling will be important to all copyright owners because it will determine the effect of making a mistake in a copyright registration. If the Supreme Court affirms, a copyright owner who makes an innocent mistake in a registration but was aware of the underlying facts may suffer severe penalties including invalidation of the registration and potential loss of statutory damages and attorneys fees.
Unicolors, Inc. filed suit against H&M Hennes & Mauritz, L.P. (“H&M”) alleging that a design H&M used on a jacket and skirt infringed Unicolors’ copyright in a Unicolors design. A jury reached a verdict in favor of Unicolors, finding substantial similarity between the works and willful infringement, and awarded $817,920 in profit disgorgement damages and $28,800 in lost profits. The district court later reduced the award to $266,209.33 and awarded attorney’s fees and costs.
Following the jury verdict, H&M asked the court to grant judgment as a matter of law arguing, among other things, that Unicolors’ copyright registration was invalid. Unicolors had obtained the registration at issue as a “single-unit registration” of thirty-one separate designs. H&M argued that the Unicolors’ registration contained inaccurate information because at least nine of the works were “confined” works that Unicolors had created for specific customers who had exclusive use of the works for a limited period of time. H&M asserted that the “confined” works were not published on the same day as the others because even though they were all shown to the sales team together, the “confined” works were not placed in Unicolors’ showroom with the non-confined works. The district court rejected H&M’s argument.
The Ninth Circuit Decision
H&M appealed to the Ninth Circuit, which held that the registration violated the single publication rule. The Ninth Circuit also found that Unicolors made a knowing misrepresentation that related to the underlying ability to register the work. Accordingly, the court sent the case back to the district court with instructions to request the Register of Copyrights advise whether the inaccurate information, if known, would have caused the Register to refuse the registration, pursuant to Section 411(b) of the Copyright Act, which was enacted as part of the PRO IP Act. Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 959 F.3d 1194 (9th Cir. 2020).
In its ruling, the Ninth Circuit held that Section 411(b) does not require an “intent-to-defraud” the Copyright Office, merely that Unicolors knew the “confined” works were not placed in the showroom with the others.
Issue Before the Supreme Court
The Supreme Court agreed to consider the following question: “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?” (Case No. 20-915).
Unicolors argued in its brief that the Section 411(b) requirement that an applicant have knowledge that information is inaccurate means a subjective awareness that the facts or legal conclusions are inaccurate. An innocent mistake of fact or law cannot be knowing. Unicolors argued that the PRO IP act amended Section 411(b) to codify the common law doctrine known as “fraud on the Copyright Office,” which uniformly excused good faith errors. Numerous parties filed amicus briefs in support of Unicolors’ position. These briefs emphasized the difficult legal issues underlying copyright applications and the harm that will result if the Supreme Court affirms.
H&M and its supporters will likely argue that the Ninth Circuit ruling is correct, that its holding is squarely based on the unambiguous language of Section 411(b). If Congress wanted to codify an intent-to-defraud standard, it would have included statutory language reflecting such an intention. Instead, Section 411(b) merely considers whether inaccurate information was included on the application “with knowledge that it was inaccurate.”
For more information, the amicus brief is available here.