Legal Alert

Supreme Court to Hear Case Clarifying Intersection of Deceptive Intent and Copyright Invalidation

By Aliza Karetnick and Catherine Seibel
June 2, 2021

Summary

The Supreme Court announced that it will hear a copyright case between fabric designer Unicolors, Inc. and fashion retailer H&M, which may clarify the applicable legal standard to invalidate copyright registrations due to underlying application errors.

The Upshot

  • Unicolors, a fabric designer, won an infringement suit against H&M in 2017 based on a geometric print on garments, despite H&M’s arguments that Unicolors’s copyright registration was invalid for false statements in its application that the group of designs were properly published as a single unit.
  • The Ninth Circuit reversed that decision last year, holding the United States Copyright Office should have been consulted as to the registration questions. The Ninth Circuit also held H&M did not have to show Unicolors intended to defraud the Copyright Office; merely the knowing inclusion of inaccurate information in an application was sufficient to warrant invalidation.
  • The Supreme Court has now agreed to consider whether a court is required to refer the invalidation question to the Copyright Office even where there is no indicia of fraud.

The Bottom Line

The Supreme Court’s opinion, expected next year, could clarify when inaccuracies in an underlying application will and will not be fatal to a copyright registration. For alleged infringers, the opinion would shed light on the procedures to follow, and standards to meet, when asserting invalidity of a copyright registration as a defense.

On Tuesday, June 1, 2021, the U.S. Supreme Court granted certiorari in Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., et al., which may finally clarify the applicable legal standard to invalidate copyright registrations due to underlying application errors.

Petitioner Unicolors, Inc., a fabric designer, brought suit in the U.S. District Court for the Central District of California against H&M Hennes & Mauritz, L.P., in April 2016, accusing the retailer of infringing a geometric pattern on garments. In 2017, a jury awarded Unicolors nearly $900,000 in damages for copyright infringement, but the Ninth Circuit Court of Appeals reversed and remanded that decision last year. Following Unicolors’ petition, the Supreme Court agreed to hear the suit to resolve the presented 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?”

In the district court, H&M argued that Unicolors’ copyright registration was invalid (and therefore could not support an infringement claim) because the 31 designs in the group application, including the design at issue, were not published as a single unit, and because Unicolors knowingly included false information in its application. Under 17 U.S.C. § 411(b), a copyright registration is not satisfactory if inaccurate information was included in the application “with knowledge that it was inaccurate,” and the inaccuracy, “if known, would have caused the Register of Copyrights to refuse registration.” The statute further provides a court shall request advisement from the Register of Copyrights whether it would have registered the copyright if the Copyright Office had known of the inaccuracy.

Without consulting the Copyright Office, the district court held that H&M failed to provide sufficient evidence the works violated the single-unit publication rule, or that Unicolors acted with the requisite scienter. Last year, the Ninth Circuit reversed and remanded the case, holding that the district court was required to refer the matter to the Copyright Office in the first instance. The Ninth Circuit further held the lower court erred in requiring H&M to show Unicolors acted with intent to defraud the Copyright Office, and that mere “knowing” inclusion of inaccurate information in an application was sufficient to warrant invalidation. In its petition for certiorari, Unicolors now asks the Supreme Court to find invalidation of a registration appropriate only under the heightened standard of fraud on the Copyright Office.

This case is significant because it could clarify an intra-circuit split regarding whether deceptive intent is necessary to invalidate a copyright registration under 17 U.S.C. § 411(b). For copyright applicants, this case might delineate the boundaries of what constitutes permissible inaccuracies in an application. For alleged infringers, the opinion would shed light on the procedures to follow, and standards to meet, when asserting invalidity of a copyright registration as a defense. 

The justices will hear oral argument in the case later this year, with a decision likely to follow in 2022.

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