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Justices to Weigh Registration Challenges in H&M Copyright Case

Nov. 5, 2021, 9:03 AM

Unicolors Inc. will try to convince the U.S. Supreme Court Monday that the Ninth Circuit wrongly nixed a copyright infringement win against designer H&M Hennes & Mauritz LP over a misapplied technicality.

The fabric company hopes to revive a nearly $800,000 award it won in its lawsuit claiming H&M used its design in jackets and skirts.

The U.S. Court of Appeals for the Ninth Circuit reversed because Unicolors’ application appeared to contain inaccuracies, and because those errors required asking the U.S. Copyright Office to weigh in on the validity of the copyright registration at H&M’s request.

Monday’s oral argument will address Unicolors’ contention that the appeals court ignored a requirement that H&M show that Unicolors knowingly deceived the Copyright Office.

The result could clarify when a court has to ask the Copyright Office for a ruling on whether an error in a registration would have prevented registration. Losing the registration could block—or at least delay—a lawsuit while limiting potential awards.

‘Prolific Copyright Troll’

The court also will likely address H&M’s claim it should be easier to challenge registrations by companies like Unicolors, which H&M called “a prolific copyright troll,” intellectual property law professor Shyamkrishna Balganesh of Columbia University said. The term generally refers to entities that strategically use copyright law and litigation to drive revenue, not just react to infringement of creations.

Balganesh said he expects the court to conclude that knowlege is required to invalidate a copyright registration over inaccuracies, and then turn to what the threshold for that knowledge requirement should be.

Justice Stephen Breyer in particular has been conscious of “trolls” in past cases, and is more inclined to weigh policy concerns when interpreting disputed statutes than other justices, Balganesh said.

“The justices will ask ‘will this decision allow frivolous lawsuits like trolls are bringing?’ The question is then how many judges can Justice Breyer get to go along,” Balganesh said.

Given the current textualist-oriented bent of the high court, however, “I think this case is going to be about statutory interpretation through and through, rather than a serious engagement with copyright policy,” he added.

Knowledge Requirement

H&M asked the district court post-trial to ask the Copyright Office whether Unicolors including 31 designs in one application, when H&M said they weren’t published together, would have led to refusal of registration.

The district court declined because at trial H&M didn’t show intent to defraud the Copyright Office.

The Ninth Circuit said the lower court shouldn’t have imposed an intent-to-defraud standard to block a referral.

The Copyright Act requires registration before the owner can file an infringement lawsuit. A registration doesn’t satisfy that requirement if it included information the applicant knew was inaccurate, and the inaccuracy would have led to refusal of the registration, the law says.

The same section also says when inaccuracies are alleged, “the court shall request the Register of Copyrights to advise” whether it would have refused registration.

Several friend-of-the-court briefs supported Unicolors’ position that there should be a “knowledge requirement” for a referral to the Copyright Office, and that the bar should be high to protect creators from infringers escaping on a technicality.

The Copyright Alliance, for example, said the standard should be actual knowledge of the inaccuracy, and that constructive knowledge—an applicant should have known—is insufficient.

Intent to Defraud

Alan Behr of Phillips Nizer LLP said courts generally have tried to avoid tossing registrations on technicalities where they can. But a high court decision requiring courts to refer disputes to the Copyright Office on demand without showing intent to defraud could force courts to inundate the Copyright Office with requests for non-binding advisory opinions and make enforcing rights harder, he said.

“How petty do we have to be? How much do we have to involve the Copyright Office on an issue that’s not even dispositive of the case?” Behr said.

H&M and several other friend-of-the-court briefs argued for a clean path for challenging registration validity.

Unicolors has registered 4,500 works since 2002 in an effort to protect an abundance of designs that designers can’t help but infringe by coincidence, H&M said.

The California Fashion Association backed the claims about Unicolors and other parties that enforce copyrights they own to make money. It said Unicolors’ approach of essentially requiring proof of fraud would “exacerbate the existing structural features of the Copyright Act” that “incentivize troll-type lawsuits.”

The case is Unicolors Inc. v. H&M Hennes & Maruitz LP, U.S., No. 20-915, Oral Argument 11/8/21.

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com