IP Law Daily Clothing company knowingly included inaccurate information in copyright application
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Wednesday, June 5, 2019

Clothing company knowingly included inaccurate information in copyright application

By Brian Craig, J.D.

A clothing company that knowingly included inaccurate information in its copyright application—which rendered its registration invalid—was ordered to pay $121,423 in costs and attorney fees to retail outlets that successfully defended themselves against infringement claims.

In a copyright infringement action brought by clothing company Gold Value International Textile, Inc,. alleging infringement of its fabric design by various retail outlets, the U.S. Court of Appeals for the Ninth Circuit has affirmed the district court’s conclusion that the copyright registration was invalid for including inaccurate information in the copyright application. The plaintiff clothing company knowingly included previously published designs in its application to register an unpublished collection that would have caused the Copyright Office to deny registration if it had known of the falsehood. The appeals court further held that the defendant retail outlets, which included Amazon, Bloomindales, and Nordstrom, were entitled to attorney fees and costs of $121,423 as prevailing parties even though they prevailed on a technical defense (Gold Value International Textile, Inc. v. Sanctuary Clothing, LLC, June 4, 2019, Steeh, G.).

Gold Value International Textile, Inc., doing business as Fiesta Fabric, brought a copyright infringement action alleging that defendant Sanctuary Clothing, LLC, copied its fabric design to manufacture a blouse sold by other defendant retail outlets. The defendant retail outlets include Amazon.com, Inc., Macy’s, Inc., Nordstrom, Inc., Bloomingdales, Inc., Dillards, Inc., and Zappos IP, Inc. The district court granted summary judgment to the defendants concluding that Fiesta’s copyright registration was invalid under 17 U.S.C. § 411(b) because Fiesta knowingly included inaccurate information in its copyright application. The district court also awarded $121,423 in attorney fees and costs to the defendants. Fiesta appealed.

Inaccurate information in registration. The Ninth Circuit found that the district court did not abuse its discretion concluding that Fiesta’s copyright registration was invalid for including inaccurate information in the application with knowledge. It is undisputed that Fiesta sold 190 yards of fabric bearing the design before registering its copyright. The district court did not err in finding that the design had been published prior to registration. Therefore, Fiesta’s registration application contained an inaccuracy. Fiesta admitted it was aware of the facts regarding its fabric sales. Fiesta’s inclusion of designs that it knew had been sold, and therefore published, in an unpublished collection could not be characterized as an inadvertent or good faith mistake. Thus, Fiesta included inaccurate information regarding the design in its application, knowing the information was inaccurate, and the U.S. Copyright Office would have refused registration of the collection if it had been aware of the inaccuracy. Because a valid registration is a precondition to bringing an action for infringement, the Ninth Circuit affirmed the district court’s grant of summary judgment.

Attorney fees. Finally, the Ninth Circuit held that the defendants were entitled to an award of attorney fees and costs as prevailing parties under the Copyright Act. The district court concluded that the following factors weighed in favor of a fee award: the defendants were the prevailing parties; the degree of success obtained promoting the purposes of the Copyright Act by encouraging defendants to advance meritorious defenses; no chilling effect; the plaintiff advanced some "objectively unreasonable" legal positions; and compensating defendants and deterring plaintiff from pursuing claims based upon invalid registrations. The district court found no direct evidence of bad faith on the part of the plaintiff and considered this factor neutral. The Ninth Circuit held that prevailing on a technical defense, such as the statute of limitations or copyright registration requirements, does not necessarily preclude an award of attorney fees. Because the district court carefully considered and weighed the various relevant factors, the Ninth Circuit affirmed the award of $121,423.01 in attorney fees and costs.

This case is No. 17-55818.

Attorneys: Scott Alan Burroughs (Doniger Burroughs APC) for Gold Value International Textile, Inc. Edmund J. Ferdinand, III (Ferdinand IP, LLC) for Sanctuary Clothing, LLC and Amazon.com, Inc.

Companies: Gold Value International Textile, Inc.; Sanctuary Clothing, LLC; Amazon.com, Inc.; Macy’s, Inc.; Nordstrom, Inc.; Bloomingdales, Inc.; Dillards, Inc.; Zappos IP, Inc.

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