Chicago Business Litigation Lawyer Blog
In a recent decision, the Supreme Court held that a copyright applicant’s inadvertent mistake of law in a copyright registration application does not invalidate the application or corresponding registration. In so holding, the Court erased an earlier victory for fashion retailer H&M in a long running copyright dispute with fabric designer Unicolors, Inc. handed down by an appeals court. Before the Supreme Court’s decision, the Ninth Circuit court of appeals had ruled in favor of H&M nixing a $750,000 win for Unicolors.
To obtain special rights for copyright holders afforded by the Copyright Act of 1976, the creator must apply for a copyright registration by, among other things, submitting a copy of the work and an application for the copyright to the federal Copyright Office’s Register of Copyrights. Under the Copyright Act, the application for registration of a copyright should not contain inaccurate information. However, in the event that an application does contain inaccurate information, the resulting registration is not automatically invalidated. The Copyright Act contains a safe harbor provision that provides that the registration will only be invalidated if the applicant knew that the information in the application was inaccurate and the inaccuracy is such that, if matters were accurately presented, the Register of Copyrights would have denied the application.
In 2016, Unicolors sued H&M for allegedly copying a fabric design in a jacket sold by H&M. Unicolors ultimately obtained a $750,000 jury verdict against H&M after the case went to trial. After trial, H&M sought to overturn the verdict, arguing that Unicolors could not maintain an infringement suit because Unicolors knowingly included inaccurate information on its registration application, rendering its copyright registration invalid. The trial court denied H&M’s motion after determining that Unicolors did not know when it filed its application that its application contained inaccurate information and thus Unicolors’ registration was saved under the safe harbor provision of the Copyright Act.
On appeal, the Ninth Circuit reversed. It determined that Unicolors could not depend on the Copyright Act’s safe harbor provision because that provision only excused good-faith mistakes of fact, not law. The mistake at issue in the case involved a mistake of law and, thus, the Ninth Circuit found the safe harbor provision inapplicable.
The Supreme Court granted certiorari and heard arguments in the case last year. While the Court agreed with the Ninth Circuit that Unicolors’ copyright registration application contained a mistake of law and not of fact, it disagreed with the Ninth Circuit regarding the importance of that distinction. Where the Ninth Circuit found that the Copyright Act only excused mistakes of fact but not of law, the Supreme Court held that the Copyright Act made no such distinction. The Court reasoned that the ordinary meaning of “knowledge” is the “fact or condition of being aware of something,” and that nothing in the text of the safe harbor or nearby provisions indicated that this knowledge requirement applied only to factual errors. The Court further reasoned that since applicants often are not lawyers, mistakes of law are just as likely, if not more likely, to occur than mistakes of fact. Thus, limiting the safe harbor provision to mistakes of law would largely negate the purpose of the safe harbor provision.
As the Court explained, the applicability of the safe harbor provision turns on the applicant’s “actual, subjective awareness of both the facts and the law.” As such, the safe harbor provision applies equally to inaccuracies in registration applications due to mistakes of fact and law. The Court emphasized, however, that a court is not bound to accept an applicant’s denial of subjective knowledge. As the Court explained, willful blindness or circumstantial evidence may still support a finding of actual knowledge of the facts or law sufficient to exclude application of the Copyright Act’s safe harbor provision.
Justice Thomas authored a dissent, in which Justice Alito joined in full and Justice Gorsuch joined in part, in which he argued that the Court should have dismissed the appeal at the outset because Unicolors briefed a different question than the one presented in its petition for certiorari.
The Court’s full opinion is available here.
Super Lawyers named Illinois business trial attorney Peter Lubin and Patrick Austermuehle a Super Lawyer and Rising Star respectively in the categories of Business Litigation, Class Action, and Consumer Rights Litigation. Lubin Austermuehle’s copyright infringement and intellectual property litigation lawyers have over three decades of experience litigating complex copyright, trademark, trade secret, and other intellectual property disputes. Our Chicago and Lisle commercial dispute attorneys handle emergency litigation involving injunctions and TROS in a variety of intellectual property and business dispute cases involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and their owners who are victims of fraud. You can contact us by calling 630-333-0333 or contacting us online here.