IP Law Daily Infringement verdict reversed amid questions about viability of single-unit copyright registration
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Monday, June 1, 2020

Infringement verdict reversed amid questions about viability of single-unit copyright registration

By Robert B. Barnett Jr., J.D.

Register’s opinion needed to determine validity of textile designer’s "single-unit registration" for 31 separate designs that were not released at the same time.

In a case in which textile designer Unicolors, Inc., obtained a jury verdict against retailer H&M for copyright infringement involving designs printed on garments, the Ninth Circuit has reversed and remanded, ordering the lower court to go to the Register of Copyrights for a determination whether the inaccurate information that Unicolors supplied in its registration application would have changed the decision to issue the registration. The case raised for the first time in the Ninth Circuit what it means to publish multiple works as a "single unit." The Ninth Circuit concluded that it means "that the registrant first published the collection of works in a singular, bundled collection" (Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., May 29, 2020, Bea, C).

Background. Unicolors creates designs for use on textiles and garments. H&M Hennes & Mauritx L.P. is a retailer. Unicolors sued H&M in Pasadena federal district court alleging that H&M sold garments that violated Unicolors’ copyright in a design it created in 2011 and sold in 2015. In 2011, Unicolors obtained copyright registration on two-dimensional artwork that consisted of 31 separate designs, including the design that was the subject of the lawsuit. They were registered together as a single-unit registration to save money on registration costs. At trial, the jury found it favor of Unicolors, and awarded it just under $850,000. Post-trial, the court awarded Unicolors more than half a million dollars in attorney fees. H&M appealed both the entry of judgment and the award of attorney fees.

Registration. In a post-trial motion, H&M contended that the registration was invalid because Unicolors secured the registration by including known inaccuracies, namely, using a single copyright registration for 31 separate works. Unicolors argued that H&M could not use that category unless it offered all 31 designs for sale in some integrated way. The facts had revealed that at least nine of the 31 designs had been sold separately and exclusively to certain customers who had paid for that right, and thus those designs had not been offered for sale on the same day as the other 22 designs. The district court had rejected that argument for two reasons: (1) to invalidate the registration, Unicolors needed to demonstrate an intent to defraud, which did not exist, and (2) the fact that nine of the designs were sold separately did not mean that they were not made available on the same day. The Ninth Circuit concluded that the lower court was wrong on both counts.

Intent to defraud. The Ninth Circuit acknowledged that several opinions that it had written had implied that the intent to defraud was a requirement for registration invalidation. But the court also recently explicitly stated that no such intent-to-defraud requirement exists.

Single unit registration. The copyright rules allow works to be registered as a collection "as a single work," to allow a registrant to pay only one filing fee (37 C.F.R. §202.3(b)(4)). The Ninth Circuit acknowledged that it had never before addressed what was meant by publishing multiple works as a "single unit." The appellate court examined more closely what the words "single" and "unit" meant. It concluded, it said, that "the plain meaning of ‘single unit’…requires that the registrant first publish the collection of works in a singular, bundled collection." As a result, Unicolors erred when it sought to register a collection of works where the works were not initially published as a singular, bundled collection. Furthermore, Unicolors included the inaccurate information knowing that it was inaccurate. The knowledge that Unicolors had was not the knowledge that this approach would run afoul of the single-unit registration requirements. That knowledge was irrelevant. The relevant knowledge that Unicolors had was that some of the collection it registered as a unit would be sold separately to exclusive customers. Unicolors admitted at trial that it had that knowledge.

Possession of this knowledge did not automatically render judgment in favor of H&M. Rather, it required the trial judge to stop the proceedings and to ask the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register to refuse registration (17 U.S.C. §411(b)(2)). Because the district court never took that statutorily required step, the case had to be remanded to allow the court to make the request.

Attorney fees. Because the validity of the registration was a threshold question, all other matters had to be reversed until that question was resolved. Thus, the award of attorney fees had to be reversed and remanded. If the district court, after submission to the Register, determines that Unicolors had a valid copyright registration, the Ninth Circuit retained jurisdiction to decide the remaining questions raised on appeal.

The Ninth Circuit, therefore, reversed and remanded the lower court’s ruling.

This case is No. 18-56253 and 18-56548.

Attorneys: Trevor W. Barrett (Doniger / Burroughs APC) for Unicolors Inc. Aaron Brian (Nixon Peabody LLP) for H&M Hennes & Mauritz LP.

Companies: Unicolors Inc.; H&M Hennes & Mauritz LP

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