The Supreme Court weighed in on the long-running copyright battle between H&M and the design firm Unicolors Thursday, deciding against the Swedish retailer.
The 6-3 decision reversed a 2020 ruling that concluded Unicolors included inaccurate information “with knowledge that it was inaccurate” in its application for the copyright it originally sued H&M under in April 2016. Under that prior judgement, the U.S. Court of Appeals for the Ninth Circuit had itself reversed a 2017 district court decision that was in Unicolors’ favor and which had awarded the firm nearly $850,000.
The decision—authored by Justice Stephen Breyer and joined by five other justices—asserts that copyright law allows for a certificate of registration to include inaccurate information, so long as those inaccuracies arise from a mistake of fact or, as in Unicolors’ case, a mistake of law. The ruling vacates the appeals court’s ruling and remands the case back to the lower courts.
In a statement published Thursday, Nixon Peabody, a law firm on H&M’s legal team, said it was “pleased” the court agreed with its “key claim” that Unicolors’ registration contained inaccurate information. “The existing testimony shows Unicolors was, at best, willfully blind to the requirement that all works in a group application be published together,” it added. The firm said it “remained committed” to challenging Unicolors’ copyright and that it is “looking ahead to the next phase of litigation.”
The issue that originally cost Unicolors’ its copyright infringement award centered around its 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 Supreme Court’s decision accepts that Unicolors’ designs were not published in a single unit, but concludes that this mistake arose from a—protected—misunderstanding of the law.
“The question before us concerns the scope of the phrase ‘with knowledge that it was inaccurate,’” Breyer wrote in his opinion. “The Court of Appeals for the Ninth Circuit believed that a copyright holder cannot benefit from the safe harbor and save its copyright registration from invalidation if its lack of knowledge stems from a failure to understand the law rather than a failure to understand the facts. In our view, however, §411(b) [the relevant statute] does not distinguish between a mistake of law and a mistake of fact.”
To illustrate the distinction, Breyer offered an analogy involving an individual, John, who sees a red bird and concludes it is a cardinal, when, in actuality, it is a scarlet tanager.
“John may have failed to see the bird’s black wings,” Breyer wrote. “In that case, he has made a mistake about the brute facts. Or John may have seen the bird perfectly well, noting all of its relevant features, but, not being much of a birdwatcher, he may not have known that a tanager (unlike a cardinal) has black wings. In that case, John has made a labeling mistake.”
Unicolors’ mistake is one of labeling and is thus protected, according to Breyer. When it registered for its group copyright, it knew it had made some designs available to certain customers before releasing all 31 designs to the general public. But, like Breyer’s fictional John, who did not know the black wings meant the bird was a tanager, Unicolor did not know its actions violated the “single unit of publication” requirement.
“If Unicolors was not aware of the legal requirement that rendered the information in its application inaccurate, it did not include that information in its application ‘with knowledge that it was inaccurate,’” Breyer wrote. “Nothing in the statutory language suggests that this straightforward conclusion should be any different simply because there was a mistake of law as opposed to a mistake of fact.”
In the months before the Supreme Court heard oral arguments in November, more than a dozen parties filed amicus briefs in favor of either H&M or Unicolors. In the former’s case, it garnered the support of the National Retail Federation (NRF) and California Fashion Association, which argued a decision in Unicolors favor would incentivize copyright trolls.
Others, however, argued that a finding against the California-based fabric company could hurt copyright holders. President Joe Biden’s Justice Department, one of those who filed a brief in Unicolors’ favor, wrote that since “copyright registrants generally are not experts in either copyright law or procedures,” a ruling that does not protect against mistakes of law “could impede enforcement of valid copyrights through civil infringement suits.”
The Supreme Court appeared sympathetic to this viewpoint its decision. As copyright registrations require both legal and factual knowledge, Breyer wrote, inaccurate information is therefore “equally (or more likely) to arise from a mistake of law as a mistake of fact.”
“That is especially true because applicants include novelists, poets, painters, designers, and others without legal training,” Breyer continued. “Nothing in the statutory language suggests that Congress wanted to forgive those applicants’ factual but not their (often esoteric) legal mistakes.”
To assuage concerns from H&M and others who fear the court’s interpretation will make it easy for copyright holders to claim a lack of knowledge, Breyer pointed out that courts have historically recognized that “willful knowledge may support a finding of actual knowledge.” The justice said the significance of the legal error, the complexity of the relevant rule, the applicant’s experience with copyright law and “other such matters” could all suggest awareness or willful blindness of legally inaccurate information.