SCOTUS to Review Intent Standard for Invalidation of Copyright Registrations

By on July 16, 2021
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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.
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1 959 F.3d 1194 (9th Cir. 2020)

Filed under Copyright, Copyright Infringement

The Murky Waters of Authorship in a Software World

By on January 4, 2019
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Author: Reid Dammann

It is quite common for parties to enter into agreements to develop software. Often times, one party has a general understanding of how they would like the software to function on either the back or front end, and/or how they would like the graphical user interface to be displayed to a user. More often than not, the second party to this kind of an agreement is a software programmer. The software programmer is generally able to understand the requirements and otherwise code such that the software performs the functions that are required when it is executed.

One of the bigger issues that springs out of these kinds of arrangements is authorship. This area is constantly evolving and is more or less a factual question generally reserved for the jury. Authorship becomes an issue when the agreement is silent on the same and the respective programming knowledge base between the parties overlaps, leading to confusion as to who contributed to the resulting source code.

The Copyright Act does not explicitly define the term “author.” However, to gain the Copyright Act’s protection, a person must create copyrightable work that is “original” and “fixed” in a “tangible medium of expression.” Copyright Act, 17 U.S.C. § 102. A work is considered “fixed” when “its embodiment in a copy…by or under the authority of the author, is sufficiently permanent or stable to permit it to be reproduced (emphasis added).” Id. at§ 101. Therefore, the Copyright Act expressly provides that an author can empower another to “fix” the author’s original idea. Both tangibility and originality are necessary to be an “author.” One who has an original idea that is not expressed in tangible form is not an author. Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222, 1234 (3d Cir.1986), cert. denied, 479 U.S. 1031, 107 S. Ct. 877, 93 L.Ed.2d 831 (1987) Neither is one who embodies in tangible form another person’s idea, without making any original contribution of his own. The Supreme Court has stated that “[a]s a general rule, the author is the party who actually creates the work, that is, the person who translates an idea into a fixed, tangible expression entitled to copyright protection.” Community for Creative Non-Violence v. Reid, 109 S. Ct. 2166, 2171 (1989). The critical phrase in determining authorship is “by or under the authority of the author.”

That statutory language and the Supreme Court’s guidance produce a definition of an author as the party who actually creates the work—that is, the person who translates an idea into an expression that is embodied in a copy by himself or herself, or who authorizes another to embody the expression in a copy. The definition, however, has limits. When one authorizes embodiment, that process must be rote or mechanical transcription that does not require intellectual modification or highly technical enhancement such as what occurred in M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486 (11th Cir. 1990) (architectural drawings), Geshwind v. Garrick, 734 F.Supp. 644 (S.D.N.Y. 1990) (computer animated film), and Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc., 609 F.Supp. 1307 (E.D. Pa. 1985) (computer program), aff’d, 797 F.2d 1222 (3d Cir.1986), cert. denied, 479 U.S. 1031, 107 S.Ct. 877, 93 L.Ed.2d 831 (1987).

There is a “fundamental distinction” between an “original work” of authorship and “the multitude of material objects in which it can be embodied.” H.R.Rep. No. 1476, 94th Cong., 2d Sess. 53, reprinted in 1976 U.S. Code Cong. & Admin. News 5659, 5666. As the House Report for the Copyright Act’s precursor bill explained: “Thus, in the sense of the bill, a ‘book’ is not a work of authorship, but is a particular kind of ‘copy.’ Instead, the author may write a ‘literary work,’ which in turn can be embodied in a wide range of ‘copies’ and ‘phonorecords,’ including books, periodicals, computer punch cards, microfilm, tape recordings, and so forth.” In questioning the House Report, Professor Nimmer remarked that the solitary act of “setting up the recording session” is “ill-based” for claiming authorship on behalf of the record producer. 1 M. Nimmer & D. Nimmer, Nimmer on Copyright § 2.10[A][b] at 2-146 (1990). Indeed, “this is no more an act of ‘authorship’ than is the act of one who makes available to a writer a room, a stenographer, a typewriter, and paper.” Id.

In S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir. 1989), a Payday employee (Goodman) asserted that she was a joint author. In that particular case, the Court stated that Payday has not presented evidence sufficient to raise a genuine issue of material fact regarding joint authorship. Payday alleges only that Goodman told the programmers what tasks the software was to perform and how it was to sort data. She did none of the coding and does not understand any computer language.

A claim of joint authorship on similar facts was rejected in Whelan Assocs. v. Jaslow Dental Laboratory, 609 F. Supp. 1307, 1318-19 (E.D.Pa. 1985), aff’d, 797 F.2d 1222 (3d Cir. 1986), cert. denied, 479 U.S. 1031, 93 L. Ed. 2d 831, 107 S. Ct. 877 (1987). In that case, a dental laboratory owner commissioned software for use in his business, disclosed to the programmers the detailed operation of his business, dictated the functions to be performed by the computer, and even helped design the language and format of some of the screens that would appear on the computer’s visual displays. The court nonetheless found that the programmer was the sole author of the software. The court’s principal focus was on the creation of the source and object code. The owner’s “general assistance and contributions to the fund of knowledge of the author did not make [him] a creator of any original work, nor even the co-author. It is similar to an owner explaining to an architect the type and functions of a building the architect is to design for the owner. The architectural drawings are not co-authored by the owner, no matter how detailed the ideas and limitations expressed by the owner.”

In Payday, the Court stated “[w]e conclude that the Whelan court’s analysis is sound. Goodman, in our view, is not a joint author of the payroll programs. She did nothing more than describe the sort of programs Payday wanted S.O.S. to write. A person who merely describes to an author what the commissioned work should do or look like is not a joint author for purposes of the Copyright Act.” The Court further stated, “[t]he supplier of an idea is no more an ‘author’ of a program than is the supplier of the disk on which the program is stored. Cf. 17 U.S.C. § 102(b) (no copyright protection for ideas); 17 U.S.C. § 202 (copyright distinct from material object in which work is embodied). We therefore decline to affirm the district court’s grant of summary judgment on the alternate basis of joint authorship.”

In sum, on the one hand, the case law supports the programmer as the author in the situation where the programmer fixes the code into a tangible medium of expression with just a general guidance on how the software is to function from the other party, essentially giving the programmer a large amount of discretion on the expression. On the other hand, as the other party to the agreement contributes more specifically to the project, and even the code itself, along with the programmer, joint authorship emerges as the idea becomes fixed in the source code, therefore reducing the amount of originality provided by the programmer and attributing it to the other party. There is no guarantee of joint authorship for the programmer just because that person wrote the program. If that programmer acts as, essentially, a scrivener, then there may be no authorship at all.

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.

Filed under Authorship, Copyright

9th Circuit Reverses Itself: Clear Labeling and Proper Design of a Website May Avoid Initial Interest Confusion

By on December 1, 2015
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On October 21, 2015, on a granted petition for panel rehearing, an opinion was filed in the case of Multi-Time Machine, Inc. v. Amazon.com, Inc., et al., No. 13-55575, D.C. No. 2:11-cv-09076-DDP-MAN. The panel granted a petition for rehearing, withdrew its prior July 6, 2015 opinion and filed a superseding opinion in an appeal from the lower court’s summary judgment in a trademark infringement action under the Lanham Act against the defendant, Amazon.com (“Amazon”).

On Amazon’s motion for summary judgment, the District Court granted summary judgment in favor of Amazon on the grounds that Multi-Time Machine, Inc. (“Multi-Time”) did not put forth sufficient evidence from which a jury could determine that there was a likelihood of confusion. Multi-Time appealed. The Ninth Circuit reversed the District Court’s grant of summary judgment, holding that Multi-Time presented sufficient evidence for a jury to determine that Amazon’s search function causes a likelihood of confusion under the “initial interest confusion” test.

Military-style watch manufacturer Multi-Time owns the trademark “MTM Special Ops” and does not sell watches on Amazon.com. When Amazon consumers searched for “MTM Special Ops” on Amazon.com, the search results included several of Multi-Time’s  competitors’ watches bearing the competitors’ labels and marks but without an explicit warning that Amazon does not sell Multi-Time watches.

The District Court focused on particular factors in Sleekcraft to reach its conclusion and up on appeal, the Ninth Circuit seemed to as well. The Ninth Circuit determined that Multi-Time’s trademark, “MTM Special Ops,” is suggestive and conceptually strong because it does not merely describe its military-style watches, but is potentially suggestive of them. Additionally, the Court determined that the “similarity of the goods” factor weighs in favor of infringement because Amazon sells military-style watches and even displays them in response to a search for Multi-Time’s trademark. The Court held that a jury could infer that the search results page, coupled with Amazon’s failure to warn the customer that it does not carry Multi-Time products, gives rise to an initial interest confusion. Therefore, because there was sufficient evidence to demonstrate likelihood of confusion, the Court reversed the District Court’s grant of summary judgment and remanded the case for a jury trial.

On rehearing, the panel of the Ninth Circuit reversed itself and held that the District Court was correct in ruling that there is no likelihood of confusion, but did so for different reasons. In so holding, the Ninth Circuit seemed to dispense with the Sleekcraft factors or a vast majority of the Sleekcraft factors, stating that it “is not particularly apt,” because it was developed for a different problem, “i.e., for analyzing whether two competing brands’ marks are sufficiently similar to cause consumer confusion.”

Here, Multi-Time argued that the design of Amazon’s search results page created a likelihood of initial interest confusion; that is, the issue focuses on a different type of confusion, not caused by a competitor’s mark, but by the design of a webpage that is displaying the competing marks and offering the competing products for sale. Setting aside the multifactor confusion test, the Ninth Circuit focused on the conduct of Amazon.com, as a non-competitor, clear labeling, and the arrangement and design of its webpage stating “the confusion is not caused by the design of the competitor’s mark, but by the design of the webpage that is displaying the competing mark and offering the competing products for sale.”

The panel went on to indicate that this “case can be resolved simply by an evaluation of the webpage at issue and the relevant consumer,” that is “(1) who is the relevant reasonable consumer?; and (2) what would he reasonably believe based on what he saw on the screen?”

First, the Ninth Circuit found that the goods in this case are expensive and that the relevant consumer is a reasonably prudent consumer accustomed to shopping online. In turning to the second question, the panel focused on labeling, stating that “clear labeling can eliminate the likelihood of initial interest confusion in cases involving Internet search terms,” however, instead of focusing on labeling that Amazon did not sell Multi-Time products in the prior appeal, the panel focused on the products themselves and whether they were clearly labeled.

Here, the panel stated, “the products at issue are clearly labeled by Amazon to avoid any likelihood of initial interest confusion by a reasonably prudent consumer accustomed to online shopping.” The Court further stated that products are labeled in bright, bold letters and includes a photograph of the item. Multi-Time argued that the use of “MTM special ops” three times within the page (produced as a result of the customer’s search term) could confuse customers, but the panel found that it would be unlikely, stating, “none of the watches produced are labeled with “MTM” or the phrase, “Special Ops.” Thus, the Court reasoned, the undisputed facts show that it is highly unlikely that a reasonably prudent consumer accustomed to shopping online would be confused as to the source of the goods offered for sale on Amazon’s web page.

Filed under Trademark Infringement