The Supreme Court heard oral arguments Monday from H&M and the design firm Unicolors, Inc. in a case some worry could send ripples through copyright enforcement in fashion.
Those supporting H&M, such as the National Retail Federation and California Fashion Association, argue a decision in Unicolors’ favor would incentivize copyright trolls. Unicolors and its backers—including the U.S. Department of Justice—meanwhile, contend that a finding against the California-based fabric company could impede enforcement of valid copyrights.
Lauren Katzenellenbogen, a partner with the intellectual property law firm Knobbe Martens, said it is difficult to say which way the justices are leaning right now, especially with a divisive error now at the heart of the copyright case.
“Several expressed skepticism of H&M’s argument,” Katzenellenbogen said. “Justice [Stephen] Breyer, in particular, seemed to struggle with why the mistake in the copyright registration mattered. On the other hand, Justice [Sonia] Sotomayor seemed sympathetic to H&M when she raised the issue of copyright trolls, and Justice [Brett] Kavanaugh expressed skepticism that a registrant that knowingly misrepresents could possibly not have an intent to deceive.”
Unicolors originally sued H&M in April 2016 for selling garments it alleged bore a pattern “identical, or substantially similar” to one it had copyrighted in 2011. A California jury decided in Unicolors’ favor in 2017, awarding it damages of nearly $850,000. The U.S. Court of Appeals for the Ninth Circuit, however, reversed the decision last year, ruling that the fabric firm included “known inaccuracies in its application for [copyright] registration.”
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The issue centered around Unicolors’ use of a group copyright to protect designs that H&M argued were not included together “in a single unit of publication,” as required by the Copyright Act. Unicolors disputed this, but the appeals court ultimately agreed with H&M and decided that the firm’s copyright application contained “known inaccuracies.” The appeals court asked the Register of Copyrights to advise whether this inaccurate information would have caused it to refuse registration and remanded the case back to the district.
Unicolors petitioned the Supreme Court to reverse the appeals court’s ruling in January. Five months later, it granted the petition. The question before the court now centers around the meaning of a copyright statute that says a registration’s validity can be challenged if the applicant includes inaccurate information “with knowledge that it was inaccurate.”
A decision in H&M’s favor, Unicolors argued in the brief it filed in August, would “yield perverse incentives that will change copyright litigation forever.”
“It is far easier for an infringer to show that the plaintiff knew the underlying facts than that it understood the application of a collateral legal rule, and therefore the inaccuracy,” Unicolors wrote. “And infringers are free to demand a referral upon merely ‘alleg[ing]’ the inclusion of ‘inaccurate information’ with knowledge that it was inaccurate…. The resulting deluge of referrals could sink an agency already confronting ‘staffing and budgetary shortages’ … and further delay resolution of copyright litigations.”
Katzenellenbogen, however, said it “seems highly unlikely” that the Copyright Office would be overwhelmed with copyright cancellation referrals, as Unicolors suggests.
“It takes a fair amount of investigation and discovery to uncover an error like the one issue in the Unicolors case,” Katzenellenbogen said. “In Unicolors, for example, the error was not uncovered until near the end of trial. It’s a small number of copyrights that would be litigated to the point that such errors will be uncovered.”
H&M, meanwhile, contends that the Copyright Act does not require the applicant to understand that what it is doing is illegal, simply that it knows that the information it is providing is inaccurate. Since Unicolors admitted that the 31 works were not all published on the date given in the application—nine were embargoed—it therefore knew the information was inaccurate, in H&M’s view. Whether Unicolors correctly understood what was meant by “published”—the company contended that it presented all 31 designs to its salespeople at the same time—would be beside the point.
“A person can go to jail for possessing a machinegun [sic] without realizing that the weapon they possess is legally classified as a machinegun, or a controlled substance without understanding that their drug is legally classified as a controlled substance,” H&M wrote in its brief. “Likewise, a person can face civil liability for making a good-faith error about a statute’s coverage—even though that statute purports to excuse ‘bona fide error[s].’”
In an amicus brief filed in late September, the National Retail Federation expressed skepticism that a decision supporting H&M and the appeals court’s ruling would lead to the “dire consequences Unicolors predicts.” The firm’s fears, it said, are unfounded “particularly since the ability to avoid such a scenario is entirely within the power of the copyright owner.”
The California Fashion Association also submitted an amicus brief in support of H&M’s cause. Characterizing the approach urged by Unicolors and its supporters as “effectively neutering Section 411(b),” it asserted that a ruling in the firm’s favor would “further exacerbate” aspects of the Copyright Act “that incentivize troll-type lawsuits in the first place.”
President Joe Biden’s Justice Department filed its own amicus brief in August. Arguing that the Supreme Court should side with Unicolors, the brief asserts that “copyright registrants generally are not experts in either copyright law or procedures” and as such a ruling that does not protect against mistakes of law “could impede enforcement of valid copyrights through civil infringement suits.”
The American Society of Media Photographers and California Society of Entertainment Lawyers also voiced support for Unicolors. A ruling that would penalize creators for “making a good-faith error,” it argued, could produce a result that awards infringers and punishes those who were infringed.
“When copyright owners are denied registration based on circumstances where there is ‘no indicia of fraud or material error as to the work at issue,’ it creates a landscape in which those who would infringe become the beneficiaries of unwarranted windfall,” they wrote in their amicus brief. “This irreparably harms creators.”