“The issue to which the Supreme Court has confined its grant of certiorari is whether the plain text of Section 411 mandates intent to defraud for copyright registration invalidation and not just mere knowledge of potential inaccuracies when the submitted information is believed to be accurate.”
On Tuesday, June 1, the U.S. Supreme Court granted a petition for writ of certiorari filed by fabric designer Unicolors seeking to challenge the U.S. Court of Appeals for the Ninth Circuit’s ruling last May that reversed a jury verdict finding Swedish multinational clothing firm Hennes & Mauritz (H&M) liable for copyright infringement. The district court eventually entered a judgment awarding more than $500,000 to Unicolors. The case will ask the nation’s highest court to decide whether the Ninth Circuit properly construed the language of 17 U.S.C. § 411 in determining that the district court was required to refer Unicolors’ copyright registration to the U.S. Copyright Office because it contained inaccurate information with no evidence that the inaccurate information contained any indicia of fraud or material error regarding the work covered by the copyright registration.
Ninth Circuit: Gold Value Eliminated Intent-to-Defraud Requirement from Section 411
In its decision last May reversing the Central District of California, the Ninth Circuit found that defendant H&M had raised an issue regarding the validity of Unicolors’ copyright registration covering 31 separate fabric designs in a single registration. While Central California had dismissed H&M’s post-trial renewed motion for judgment as a matter of law (JMOL), the Ninth Circuit found that the denial of JMOL was flawed because several designs covered in the single registration were confined to designs not made publicly available, so they weren’t “included in a single unit of publication” as required for copyright registration.
Further, while the Central California district court read an intent-to-defraud requirement into copyright registration invalidation under the Ninth Circuit’s precedents, the appellate court cited to its 2019 decision in Gold Value International Textile, Inc. v. Sanctuary Clothing, LLC as clarifying that there is no such requirement; all that mattered under the plain language of Section 411(b)(1) was that the registration contained “inaccurate information [that] was included… with knowledge that it was inaccurate.” Although the Ninth Circuit held that H&M wasn’t entitled to JMOL, the appellate court remanded with instructions to request the Register of Copyrights under Section 411(b) to advise the district court whether the Register would have refused the registration if the inaccurate information was known.
Unicolors’ Petition: PRO IP Act Codified the Fraud on the Copyright Office Defense
In its petition for writ filed in early January, Unicolors asked whether the Ninth Circuit erred in determining that Section 411 required referral to the Copyright Office on any inaccurate registration information even without evidence of fraud or material error in conflict with other circuit courts and the Copyright Office’s own findings on Section 411. A second question regarding whether the Ninth Circuit misapplied the publication standard was not granted certiorari by the Supreme Court.
As Unicolor’s petition notes, the Supreme Court has never reviewed the language of Section 411(b) since it was enacted in 2008 through passage of the Prioritizing Resources and Organization for Intellectual Property (PRO IP) Act. Legislative history cited by Unicolors indicates that Congress’ intent in passing the PRO IP Act centered on creating uniformity in court standards on invalidating copyright registrations for application errors, and the Copyright Office’s own annual report for fiscal year 2008 stated that the PRO IP Act “amend[ed] section 411 of the copyright law to codify the doctrine of fraud on the Copyright Office.” The Nimmer on Copyright legal treatise has also analyzed Section 411 in light of the PRO IP Act and determined that court’s evaluating the propriety of a certificate of registration under the statute are “limited to questions of fraud on the Copyright Office.”
Unicolors also argued that its case was ripe for review because the Ninth Circuit’s decision created a circuit split on federal copyright law. In Roberts v. Gordy (2017), the U.S. Court of Appeals for the Eleventh Circuit held that invalidation of a copyright registration for inaccurate information under Section 411 required a showing of “intentional or purposeful concealment of relevant information.” The Eleventh Circuit in that case agreed that the PRO IP Act codified the doctrine of fraud on the Copyright Office, finding that “the scienter necessary for invalidating a registration is also clear and well settled.”
H&M Says No Circuit Split on Section 411 Exists, Testimony Shows Unicolors Defrauded Copyright Office
In H&M’s response brief filed on April 1, it pointed out that the Supreme Court recognized that the Ninth Circuit’s Gold Value holding eliminating the intent-to-defraud requirement was correctly decided as SCOTUS denied a petition for writ of certiorari in that case. “Attempting to create doubt where none exists, Unicolors cites to a hodge-podge of secondary sources, administrative interpretations, and legislative history in a futile effort to demonstrate that Congress did not mean what it clearly said when it adopted section 411(b)(1),” H&M’s response brief reads. H&M stressed that the clear language of the statute only required knowledge of inaccurate information and not fraud. Further, the Court of Federal Claims rendered a 2019 decision in Bruhn NewTech, Inc. v. United States in which that court followed the reasoning of the Ninth Circuit’s Gold Value decision and expressly rejected the Eleventh Circuit’s Gold Value holding that found an intent-to-defraud requirement in Section 411 after considering many of the same authorities on the PRO IP Act offered by Unicolors. Throughout H&M’s response brief, it refers to the Court of Federal Claims as the “Federal Circuit” despite the fact that the U.S. Court of Appeals for the Federal Circuit did not issue the opinion in that case.
H&M also pushed back against Unicolors contention that a circuit split was developing on the interpretation of Section 411, arguing that no U.S. court had rejected Gold Value in favor of Roberts since Gold Value was decided in 2019 and that no court outside of the Eleventh Circuit had followed Roberts’ reasoning since that case was decided in 2017. Even if the intent-to-defraud requirement was resuscitated, H&M argued that it still wouldn’t save Unicolors’ case as testimony from witnesses for Unicolors established that the designs covered by the company’s single group registration included confined and unconfined designs that were not published together in a group, and that the group registration option was used by Unicolors in an effort to save money on copyright registrations.
In early May, Unicolors then submitted a reply brief in which it argued that H&M conceded that there was a circuit split between the Ninth and Eleventh Circuits, the latter of which Unicolors contended more faithfully adhered to the plain language of Section 411 by recognizing that “knowledge that [registration information] was inaccurate” can be defeated by the registrant’s belief that the information submitted to the Copyright Office was accurate. Further, Unicolors believes that the circuit split is actually in favor of Roberts as Bruhn NewTech was decided by the Court of Federal Claims, not a federal circuit court as H&M’s brief repeatedly states. H&M’s brief also ignored several district court decisions from outside of the Eleventh Circuit where courts have aligned with the Eleventh Circuit’s Roberts holding, including the District of Puerto Rico, the Southern District of New York, the Western District of Missouri and the District of Kansas.
Will SCOTUS Find in Favor of Alleged Copyright Infringers or Non-Lawyer Copyright Applicants Making Good Faith Mistakes?
The sticking point remaining between Unicolors and H&M, and the issue to which the Supreme Court has confined its grant of certiorari, is whether the plain text of Section 411 mandates intent to defraud for copyright registration invalidation and not just mere knowledge of potential inaccuracies when the submitted information is believed to be accurate.
H&M makes much of the fact that the statute ‘does not require a showing of intent-to-defraud…’ But this is just semantics: ‘fraud’ is simply another way of describing the ‘intentional or purposeful concealment of relevant information’ that the statute expressly requires by insisting on ‘knowledge’ of the ‘inaccura[cy].’
By contrast, Unicolors argues that the Ninth Circuit’s holding grafted additional language onto the plain reading of Section 411 and that Unicolors’ group registration followed the published views of the Copyright Office at the time of submission. Without actual or constructive knowledge that the application itself was inaccurate, Unicolors insists that Gold Value’s holding that “ignorance of the law [is] no excuse,” a maxim familiar to those steeped in criminal law, does not undermine its argument and is instead limited to situations where criminal defendants assert that they were unfamiliar with statutes relevant to their crimes. As many copyright registrants are completed by artists, musicians and other creative professionals who do not have a law background, copyright applications are prone to errors that, while made in good faith, can be fatal to copyright registration under the Ninth Circuit’s approach. “This draconian penalty is wholly unwarranted and inconsistent with the goals of the PRO IP Act,” Unicolors’ reply brief reads.
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