SCOTUS to Review Intent Standard for Invalidation of Copyright Registrations

Author: Reid Dammann

Under the current version of the Copyright Act, registration of a copyright claim is not a condition of copyright protection. 17 U.S.C. § 408(a). However, a certificate of copyright registration is a prerequisite to bringing a civil copyright infringement action. See 17 U.S.C. § 411(a). By statute, a certificate of registration satisfies this prerequisite “regardless of whether the certificate contains any inaccurate information,” unless the following two-part test is met: “(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration.” 17 U.S.C. § 411(b)(1).

Section 411(b)(2), in turn, requires that courts seek the advice of the Register of Copyrights before finding that a certificate of registration does not support an infringement action. Palmer/Kane LLC v. Rosen Book Works LLC, 188 F. Supp. 3d 347, 348 (S.D.N.Y. 2016) (“[C]ourts are in agreement that the provision is mandatory in nature[.]”) (citing DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 623 (7th Cir. 2013) (“Instead of relying solely on the court’s own assessment of the Register’s response to an inaccuracy, the statute obligates courts to obtain an opinion from the Register on the matter.”)). In other words, a court must first obtain the Register’s guidance before finding that the provision of knowingly inaccurate information would have caused the Register to refuse registration. Although the statute by its terms requires a referral “in any case in which inaccurate information described under [§ 411(b)(1)] is alleged,” 17 U.S.C. § 411(b)(2), to protect against the potential for abuse inherent in this process, courts generally agree that they may first require the party seeking invalidation to establish as a factual matter that “(1) the registration application included inaccurate information; and (2) the registrant knowingly included the inaccuracy in his submission to the Copyright Office.” Palmer/Kane LLC, 188 F. Supp. 3d at 349.

Thus, before referring the issue to the Register, a court may determine whether the allegedly inaccurate information is, in fact, inaccurate. Where the factual record is insufficient to make such a determination, a court may choose to “await further factual development at the summary-judgment stage or at trial before issuing a referral.” King-Devick Test Inc. v. NYU Langone Hosps., 17-CV-930 (JPO), 2019 WL 3071935, at *9 (S.D.N.Y. July 15, 2019). If a court ultimately determines that a registration contains inaccuracies, the Register will then “advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration.” 17 U.S.C. § 411(b)(2). The Court “must request a response from the Register before coming to a conclusion as to the materiality of a particular misrepresentation.” DeliverMed Holdings, LLC, 733 F.3d at 623-25 (discussing the “new procedure for courts confronted with a registration allegedly obtained by knowing misstatements in an application”).

Recently, the United States Supreme Court granted certiorari in Unicolors, Inc. v. H&M Hennes & Mauritz.1 In this case, Unicolors submitted thirty-one fabric designs to the U.S. Copyright Office, but indicated that all thirty-one designs were published as a bundle, presumably, to save fees. However, the Ninth Circuit has held that a collection of works may be registered under a single-unit registration only when the works were first published in a singular, bundled unit. Here, Unicolors testified at trial that some of the designs included in the single-unit registration were published to different customers at different times, so its submission of all thirty-one images as a “collection” contained known inaccuracies. The District Court did not request the Register of Copyrights’ insight because it held that invalidation required a showing at trial that Unicolors intended to defraud the Copyright Office—which was not shown. The Ninth Circuit remanded the case to the District Court on the grounds that the District Court erred by imposing an intent-to-defraud requirement for registration invalidation and erred in concluding that Unicolors’s application for copyright registration did not contain inaccuracies despite the inclusion of confined designs. The issue presented to the United States Supreme Court, is whether 17 U.S.C. § 411 requires referral to the Copyright Office where there is no indicia of fraud or material error as to the work at issue in the subject copyright registration.

As part of its argument, Unicolors asserts that the Ninth Circuit ruling creates a circuit split with the Eleventh Circuit, which holds that scienter is necessary. See Roberts v. Gordy, 877 F.3d 1024, 1029-30 (11th Cir. 2017) (holding that 411(b)(1) requires a showing of “intentional or purposeful concealment of relevant information” to render a registration invalid). Unicolors argues that the Eleventh Circuit in Gordy noted that the promulgation of the PRO-IP Act, which, according to the Gordy court, “amends section 411 of the Copyright Act to codify the doctrine of fraud on the Copyright Office in the registration process,” ostensibly reaching the opposite conclusion as the H&M panel. Id.

Unicolors argues that several opinions in the Ninth Circuit have implied that there is an intent-to-defraud requirement for registration invalidation. See L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 853-54 (9th Cir. 2012); see also Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 F.3d 1140, 1145 (9th Cir. 2003) (stating that inaccuracies “do not invalidate a copyright… [unless] the claimant intended to defraud the Copyright Office by making the misstatement”) (quoting Urantia Found. v. Maaherra, 114 F.3d 955, 963 (9th Cir. 1997)); Three Boys Music Corp. v. Bolton, 212 F.3d 477, 486-87 (9th Cir. 2000).

Unicolors further argues that the Ninth Circuit’s supposed misinterpretation of 17 U.S.C. 411(b) contravenes legislative and administrative guidance, and that its position is in line with the relevant administrative and legislative bodies as well as the leading copyright treatise. According to Unicolors, these cited authorities correctly interpret that the PRO-IP Act codifies the doctrine of fraud on the Copyright Office. See U.S. Copyright Office, Annual Report of the Register of Copyrights, Fiscal Year Ending September 30, 2008 12–13 (2008) (“passage of the PRO IP Act strengthens the intellectual property laws of the United States” and specifically, “it amends section 411 of the copyright law to codify the doctrine of fraud on the Copyright Office in the registration process.”); see also U.S. Copyright Office, Annual Report of the Register of Copyrights, at 9 (2009) (Copyright Office further clarified that subsection (b) was added to section 411 “to create a new procedure for infringement actions [ . . . ] on issues that may involve fraud on the Copyright Office.”); 2 MELVILLE NIMMER AND DAVID NIMMER, NIMMER ON COPYRIGHT 7.20 (2018) (“[t]he legislative history for the PRO IP Act explains that the amendment aims to close the loophole whereby ‘intellectual property thieves’ argue ‘that a mistake in the registration documents, such as checking the wrong box on the registration form, renders a registration invalid and thus forecloses the availability of statutory damages’”).

Unicolors also contends that not only is there a split in the Eleventh Circuit, but also that there is a split in the Third Circuit because the Third Circuit requires an “intentional omission” of a material fact to invalidate, noting that “mere inadvertence,” is “insufficient.” See Mon Cheri Bridals, Inc. v. Wen Wu, 383 F. App’x 228, 232 (3d Cir. 2010) (citations omitted). Unicolors also posits that there is a further split in the Seventh Circuit, which has indicated, though not explicitly held, that 411(b)(1) requires a showing of fraud as well. In analyzing applicability of 411(b)(1), the Seventh Circuit in DeliverMed Holdings, LLC, 734 F.3d at 616, 625, fn.3, referred to the statutory provision as “the fraud on the Copyright Office inquiry” and weighed facts to determine if there was a knowing misrepresentation sufficient to seek to invalidation.

H&M’s position is that there is no circuit split, Roberts v. Gordy is an outlying case, and that this exact issue in this matter has already been presented to the United States Supreme Court, who previously denied certiorari. See Gold Value v. Sanctuary Clothing, 925 F.3d 1140 (9th Cir. 2019), cert. denied (no such intent-to-defraud requirement). Further, H&M argues that the statutory language is clear and that there is no need to consult legislative history. H&M argues that the plain meaning of the statute controls – stating “[a]s this Court has stated repeatedly, ‘when the meaning of the statute’s terms is plain, our job is at an end. The people are entitled to rely on the law as written, without fearing that courts might disregard its plain terms based on some extra-textual consideration.” Bostock v. Clayton County, Georgia, 140 S. Ct. 1731, 1749 (2020) (citing Carcieri v. Salazar, 555 U.S. 379, 387 (2009)). The express languge of 411(b) states only that the “inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate[,]” and thefore, by the statutory plain terms, a higher degree of scienter—i.e., fraud—is not required. 17 U.S.C. § 411(b)(1)(A).

Intent-to-defraud requires that one willfully deceives, with intent to induce another to alter position to the other’s injury or risk. This could come in the form of an intentional misrepresentation, negligent misrepresentation, concealment, or a false promise. Courts generally provide that fraud requires a misrepresentation, knowledge that the misrepresentation is false, intent to deceive, justifiable reliance by the victim, and resulting damages, so it is plain to see that a decision by the United States Supreme Court in this matter effectively determines whether it will be more difficult to invalidate a copyright registration in future copyright litigation.

About the author: Reid Dammann is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on litigation matters involving copyright, trademarks, trade secrets, and patents, with a particular emphasis on software. Mr. Dammann is a registered patent attorney with an advanced dual degree in Computer Science and Electrical Engineering. Mr. Dammann’s biography can be found here.
________________________________________________________________________

1 959 F.3d 1194 (9th Cir. 2020)