The U.S. Supreme Court granted certiorari in Unicolors, Inc v. H&M Hennes & Mauritz, LP on June 1, 2021. From a narrow view, the Court is set to decide whether the Ninth Circuit correctly found that a federal district court assessing the validity of a copyright registration with purported inaccuracies—but no indication that those inaccuracies were asserted for the purpose of fraud—must refer that registration to the Register of Copyrights for reconsideration under 17 U.S.C. § 411(b). More broadly, the Court may decide whether, to invalidate a copyright registration, the Copyright Act requires a finding that an applicant intended to defraud the Copyright Office or whether a mere material misstatement is sufficient.
Unicolors is a textile designer that creates and markets designed fabrics to garment manufacturers. Some Unicolors designs are available to all customers, whereas others are “confined works” available only to a specific customer.
In January 2011, Unicolors presented an assortment of thirty-one designs (nine of which were “confined” designs, twenty-two of which were not) to its internal sales team. In February 2011, Unicolors filed a copyright application for a single-unit registration covering those thirty-one designs. Unicolors claimed in its application that all of the designs in the deposit materials were published as a unit in January 2011. After the application matured into Registration No. VA 1-770-400 (“the ‘400 Registration”), Unicolors sued H&M for copyright infringement of certain designs covered by the ‘400 Registration.
A jury found that H&M willfully infringed one of Unicolors’s designs allegedly covered by the ‘400 Registration. In an attempt to overturn the jury’s verdict, H&M challenged the validity of the ‘400 Registration, claiming the thirty-one designs covered by the ‘400 Registration were not offered as a single unit in January 2011. Specifically, H&M argued that, contrary to Copyright Office regulations requiring that a single-unit registration be published “as a single work” and only cover works that are “included in a single unit of publication” 37 C.F.R. § 202.3(b)(4), only some of the designs covered by the ‘400 Registration were published in January 2011. As a consequence of this inaccuracy, H&M asked the court to refer the registration to the Copyright Office under Section 411(b) to allow the Office to reconsider the validity of the registration.
The district court rejected this request, reasoning that H&M had not shown that Unicolors intended to defraud the Copyright Office, and that although Unicolors may have marketed and sold various works included in the ‘400 Registration separately, those works still could have been published on the same day.
On appeal, the Ninth Circuit found that the district court erred in finding that fraud was required to refer the matter to the Register of Copyrights under Section 411(b). Thus, the Ninth Circuit reversed the judgment and award of attorneys’ fees against H&M and remanded the case to the district court with instructions to submit an inquiry to the Register of Copyrights. The Ninth Circuit acknowledged that the court’s prior decisions “have implied that there is an intent-to-defraud requirement for registration invalidation” but reasoned that the Court had “recently clarified that there is no such intent-to-defraud requirement” in Gold Value Int’l Textile, Inc. v. Sanctuary Clothing, LLC, 925 F.3d at 1147 (9th Cir. 2019).
Regarding the publication issue, the Ninth Circuit recognized that the meaning of publication of works as a “single unit” in § 202.3(b)(4)(i)(A) was an issue of first impression, and that such language “requires that the registrant first published the collection of works in a singular, bundled collection.” And because the confined designs were not placed in the showroom for sale at the same time, that requirement was not met for the works covered by the ‘400 Registration.
The court held that, despite known inaccuracies in the application for the ‘400 Registration, H&M was not entitled to judgment as a matter of law. Rather, the district court was directed to “request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register ... to refuse registration” pursuant to 17 U.S.C. § 411(b)(2).
On June 1, 2021, the Supreme Court granted Unicolors’s petition for certiorari on the following issue:
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(b) 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?
Accordingly, the Court will hear Unicolors’s argument that the Ninth Circuit erred in finding that there was no intent-to-defraud registration invalidation requirement. In its petition, Unicolors pointed to a circuit split on this issue, citing cases in the Eleventh Circuit, Third Circuit, and Seventh Circuit that squarely or implicitly endorse an intent-to-defraud requirement in conflict with the Ninth Circuit decision. Unicolors also argued, in support of an intent-to-defraud requirement, that “many courts, legislative and administrative authorities, and the leading copyright treatise have uniformly interpreted [the PRO-IP Act of 2008] … to allow invalidation under section 411(b) only when the registrant is shown to have acted in bad faith or intended to defraud the Copyright Office.”
The Court declined Unicolors’s petition for certiorari on a second issue, namely, whether multiple designs included in a single copyright application constitute a “single unit of publication” if those designs are published on different dates.
In granting certiorari, the Court may intend to resolve an apparent circuit split on the issue of whether there is an intent-to-defraud requirement before a referral is made to the Copyright Office under Section 411(b). The Court may also intend to clarify the strength of a copyright registration’s presumptive validity and/or the extent to which the Copyright Act requires courts to defer to Copyright Office determinations under section 411(b)(2) as to whether inaccuracies, if known, would have caused the Office to refuse registration.
Ultimately, because intent to defraud is generally difficult to prove, the Court’s decision should have a significant impact on the strength of copyright registrations and their susceptibility to validity attacks based on perceived inaccuracies in registrations. Accordingly, the decision has the potential to impact copyright application practices, which authors may need to reevaluate following the Court’s decision.
The case is Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 20-915.
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