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Small Claims Board, Unicolors Decision Lead 2022 Copyright Issues

Dec. 27, 2021, 10:04 AM

The opening of the U.S. Copyright Office’s small claims board and a decision ahead from the U.S. Supreme Court on Unicolors Inc.’s bid to revive an $800,000 award are two of the most significant developments set to play out in copyright law in 2022.

The Copyright Office must open the new board by late June after delaying it for 180 days after Dec. 27. Register of Copyrights Shira Perlmutter said the tribunal will begin operations “well before” that time.

The necessary hiring and publication of proposed regulations will be done by the end of 2021, Perlmutter said.

The Copyright Claims Board is being established as an affordable way to enforce copyrights that aren’t valuable enough to take to federal court in long and costly litigation.

The office has rolled out proposed regulations throughout 2021. Among them are rules on how defendants can opt out of the proceedings to go to federal court and how often plaintiffs can bring claims to the tribunal.

The small claims proceedings are designed to be efficient, remote, cheap, and navigable without a lawyer.

The board could attract users because of the lower legal costs, but using it isn’t required. Accused infringers can opt out.

“There is a real need for some kind of small claims mechanism for the resolution and disposition of smaller amounts of controversy because copyright litigation is just tremendously expensive,” said Naomi Jane Gray, an intellectual property attorney of Shades of Gray Law PC.

“The big question in my mind was well if you’re a big, wealthy defendant and you get sued by some small creator, you have the option to dip—as my 15-year-old would say—and say, ‘I’m not going to participate in this. You better sue in federal court.’”

Others wonder how many will actually participate. Critics noted that there could be challenges to the board’s constitutionality once the CCB is running.

Copyright law professor Rebecca Tushnet of Harvard University said she still has concerns about potential copyright trolls filing high volumes of claims.

“There are potentially pretty serious problems of notice and understanding, and I think there’s a limited amount the Copyright Office can do to fix that,” Tushnet said. “I would like to see a greater focus on avoiding abuse since we know that there’s a problem of abuse of copyright claims in precisely this field.”

Unicolors v. H&M

The Supreme Court is set to rule on Unicolors Inc.’s bid to revive its $800,000 copyright infringement award that the Ninth Circuit threw out because of inaccuracies in an application.

The fabric company won a suit against H&M Hennes & Mauritz LP, claiming H&M used its design in jackets and shirts. The U.S. Court of Appeals for the Ninth Circuit said the lower court erred in not granting H&M’s post-trial request to ask the copyright register whether inaccuracies in a copyright application would have caused the office to denied the registration.

Unicolors argued that the law says a copyright registrant must have knowledge that it submitted wrong information—which it claims it didn’t have—to invalidate a copyright on those grounds.

The ruling will have implications for what the bar should be in terms of how much knowledge is required to invalidate a copyright registration over inaccuracies, attorneys said.

The Supreme Court may need to further define what level of knowledge is required to invalidate a registration for lesser material errors, said Jason Bloom, the head of the copyright practice at Haynes Boone LLP.

“If the Ninth Circuit’s decision is upheld,” Bloom said, “that could potentially lead to a lot more focus on the Copyright Office in litigation.”

Other Major Cases

A Federal Circuit case may further clarify copyright law on software following the Supreme Court’s Google v. Oracle decision last year. Two petitions pending at the Supreme Court are also of interest, if the court decides to review the cases.

A decision is pending at the U.S. Court of Appeals for the Federal Circuit over whether World Programming System infringed SAS System’s copyrights. The ruling could potentially fill some gaps on what is and isn’t protected by copyrights in the software field, Gray said.

The Andy Warhol Foundation has asked the Supreme Court to reverse a circuit court ruling involving the boundaries of fair use.

Jim Olive Photography has asked the justices to overturn a Texas Supreme Court decision that denied the photographer’s copyright infringement claims against the University of Houston based on sovereign immunity grounds.

To contact the reporter on this story: Samantha Handler in Washington at shandler@bloombergindustry.com

To contact the editor responsible for this story: Renee Schoof at rschoof@bloombergindustry.com

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