Tag: Supreme Court

To Err is Human: Unicolors v. H&M at the Supreme Court

The Supreme Court on Monday heard oral arguments in the copyright case Unicolors v. H&M Hennes & Mauritz, L.P., a lawsuit bogged down in tiresome and tangential details, but which is important for independent creators. And speaking of tangential details, I noticed that Justice Sotomayor inadvertently used the term “patent trolls” during her brief interaction with counsel, and the reason I mention this minor gaffe is to say that if a Justice of the Supreme Court can make an honest mistake while speaking about the law, so can legal laymen. And that point is at the heart of this case.

The administrative and legal factors underlying this case are as follows: 1) timely and valid registration with the Copyright Office is required to fully enforce an infringement claim in federal court; 2) copyrights claimed in Group registrations may not comprise both published and unpublished works in the same Group; and 3) a registration may be invalidated at trial if the registration applicant knowingly provided inaccurate information and the inaccuracy, if known by the Office, would have caused the registration application to be denied. With that, I will restate the summary of the case from an earlier post.

Unicolors makes original designs for use in textiles, and in 2015, a jury found that retailer H&M copied one of its designs and, thus, awarded Unicolors damages and legal fees for copyright infringement. On appeal to the Ninth Circuit, however, H&M argued that the relevant Group copyright registration should be invalidated because the Group comprising 31 designs, included 9 designs that Unicolors had “confined,” meaning that they were temporarily exclusive to certain customers. H&M argues, therefore, that Unicolors registered these 9 works in the Group knowing that they would not be “published” simultaneously with the other 22 designs. The Ninth Circuit agreed with H&M. It reversed the jury decision and remanded with an order that the Register of Copyrights be consulted as to whether Unicolors’s error, if known at the time of application, would have caused the Copyright Office to deny registration for the Group filing.

So, the big to do here is not Unicolors’s fate per se, but the independent creator who is likely to use Group registrations at the Copyright Office and file her own applications without the aid of counsel. As discussed in this post and this podcast with Steven Tepp, the possibility that a photographer, for example, will inadvertently mix published and unpublished works in a Group registration—and not know about it until some defendant in a claim seeks to invalidate the registration—is actually rather high. This exact circumstance is further aggravated by the fact that the legal meaning of “published” is not entirely settled for legal experts, let alone authors of works, and as Tepp points out, is not something the Copyright Office really needs to know at the time of registration.

“Ignorance of the law is no defense is an old principle,” stated Justice Kavanaugh at one point in response to H&M counsel, Peter Stris. “It’s got a lot less force in regulatory areas, number one. But it especially has less force when the statute itself…folds the legal portion in.” [citation omitted]. If I can summarize almost 90 pages of transcript down to a key point, that would be it. The important question in this case is whether the statutory intent of Section 411 of the Copyright Act allows for errors in law but not errors in fact when submitting information to the Copyright Office.

Misstatements of fact (e.g. author’s identity) are grounds for invalidating a copyright, while misstatements of law (e.g. whether a work is published or is a derivative work) do not automatically meet the standard of “knowingly” providing false information. Not just in copyright, but throughout many areas of law, the distinction between innocent error and fraud is an essential matter of justice. To Justice Kavanaugh’s point, none of us can lay claim to a defense that we don’t know that grand theft is illegal, but ignorance about the arcane and administrative practices of government agencies is not only forgivable but would be downright suspicious if it were not common among nearly all of us. Or to quote Justice Gorsuch, “….no human alive can probably understand the whole of this chapter.”

Although there was some discussion as to whether Unicolors itself, having ample resources, ought to have known better at the time it submitted its registration application, it sounded like the Court was not terribly persuaded by this line of argument. Justice Alito did ask Unicolors’s counsel Joshua Rosencranz what benefit his client gains by the Group registration, and the answer underscores the absurdity of the unforgiving standard for which H&M is arguing. “…under the Ninth Circuit’s theory, we saved $65,” Rosencranz replied. And there you have it. What company knowingly files incorrect information and knowingly risks invalidating its copyrights in order to save $65? It’s prima facie silliness.

The Alleged “Troll Problem” in this Story

A group of 12 legal scholars filed an amicus brief in support of H&M on the grounds that if Unicolors were to prevail, the precedent set would exacerbate the “copyright troll problem.” But the brief stumbles over reality right out of gate, when it declares, “The copyright registration process underpins the modern copyright system. Maintaining the integrity of the registration process, particularly in light of the emerging threat posed by copyright trolls, requires adherence to the registration requirements.”

Aside from the fact that there is no clear evidence that we face an “emerging threat posed by copyright trolls,” abusive litigation in any area of law does not necessarily inform the construction or application of the law itself but is properly addressed through rules of civil procedure and/or bar ethics rules. Nevertheless, the professors’ brief argues that the Court should apply H&M’s legal standard for “knowing error” as a precedent that would mitigate against trolling in general.

The brief asserts two reasons for its position:  1) that the stricter standard for accuracy makes more work for putative copyright trolls; and 2) the possibility of invalidating registrations based on application filing error provides respondents with a defense against trolls. On the second point, I will note that the cost of discovery to arrive at that defense is likely higher than any settlement (just or unjust) the alleged troll is seeking. On the first point, even copyright skeptic Justice Breyer stated empathy for the legit author beavering away at his work and committing a filing error in contrast to alleged trolls about whom he said, “If there is one group of people that it’s going to be tough to make out a claim that they didn’t really know the law, it will be the real copyright trolls because they stay abreast of everything.” In other words, trolls don’t amend the scope of copyright law, but those complaining about them appear to be doing just that.

More broadly, let’s not overstate the registration process as the “underpinning of the system.” As it stands, the U.S. registration process is confusing, bureaucratic, and as we see emphasized in this case, bogged down in certain formal requirements that are not strictly necessary to the process. No other democratic nation with rich copyright systems maintains formalities akin to ours, and many of our formalities are relics of history, serve the purposes of the collection at the Library of Congress, and are testaments to our legislative stodginess.

Compliance with registration formalities is a bargain made by the copyright owner in exchange for the ability to fully enforce her rights, but we should not heap too much praise upon what amounts to a clerical process which is at least as bureaucratic as obtaining a driver’s license and, arguably, less necessary to the purpose at hand. As such, to the extent that Unicolors in this case stands in the shoes of all creators of works, the Court must find as a matter of justice that the statutory interpretation advanced by Unicolors maintains the consequences of lying without disturbing the principle that error is still human.

Photo by: colinn

Unicolors v. H&M Raises Some Thorny Issues for Copyright Owners

On June 1, the U.S. Supreme Court agreed to hear a case of a highly clerical nature, but one of particular interest to photographers and other visual artists who typically register multiple works in Group registrations with the Copyright Office. To reduce filing fees and provide some organizational structure to certain applications, the Copyright Office offers various types of Group registrations. In Unicolors’s case, it registered 31 designs in 2011 under a Group registration that allows individually copyrightable, “unpublished” works to be combined in a single application in instances where they will eventually be made publicly available on a specific date (i.e. “published”) as a unit.

An example of this type of “unit” registration presented by the Copyright Office is a board game, which may have pictorial, literary, and sculptural works that could be individually registered but which will be sold to the public as a bundle of works comprising a single unit as a game. But just to keep things lively, there are other Group registration options, some of which have been adopted since 2011, when Unicolors first registered its designs.

For instance, photographs (and only photographs) may be registered in Groups of up to 750 images under a single title (e.g. “Safari 2021”).* All photos in a Group registration must either be “published” or “unpublished,” but there is no requirement that the “unpublished” photographs anticipate a simultaneous publication date, and the “published” photographs are only required to share the same publication year. Confused yet? Stay tuned.

Enter Unicolors, Inc. v. H&M Hennes & Mauritz, L.P.

Unicolors makes original designs for use in textiles, and in 2015, a jury found that retailer H&M copied one of its designs and, thus, awarded Unicolors damages and legal fees for copyright infringement. On appeal to the Ninth Circuit, however, H&M argued that the relevant Group copyright registration should be invalidated because the Group comprising 31 designs, included 9 designs that Unicolors had “confined,” meaning that they were temporarily exclusive to certain customers. H&M argues, therefore, that Unicolors registered these 9 works in the Group knowing that they would not be “published” simultaneously with the other 22 designs.

The Ninth Circuit agreed with H&M. It reversed the jury decision and remanded with an order that the Register of Copyrights be consulted as to whether Unicolors’s error, if known at the time of application, would have caused the Copyright Office to deny registration for the Group filing. As a reminder to readers, under U.S. law, obtaining a timely response to an application from the USCO is a prerequisite for U.S. works in order for the copyright owner to bring an infringement action against a defendant.[1]

The Issues

Naturally, neither the Copyright Office nor the courts seek to invalidate copyright registrations for applicants who make honest mistakes or trivial errors. And in 2008, the ProIP Act reinforced this principle by amending the copyright law such that Section 411 now states that a certificate of registration may be valid, even if it contains inaccuracies, unless:

(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.

On that basis, and with concern for its constituencies, the American Society of Media Photographers (ASMP), joined by five other creators rights groups, filed a brief supporting the petition for a writ of certiorari with the Supreme Court, arguing that even though Unicolors knowingly filed a Group registration for “confined” and “unconfined” designs, this does not meet the standard intended by the statute. Here, the petitioners assert that an applicant must provide inaccurate information with the intent to deceive the Copyright Office in order for a court to invalidate a registration pursuant to a lawsuit.

Petitioners cite a circuit split (between the 9th and 11th Circuits) on this exact question and further argue that if the Court disagrees with the intent to deceive standard, this would disturb case law sounding in trademarks and patents. Thus, the Court granted cert on this one question, and it is a big bouncing ball to watch for copyright owners in this case. Even if the facts could ultimately show that Unicolors provided false information with the intent to deceive, the important issue is whether SCOTUS will agree that such intent must be demonstrated in order for a court to invalidate a copyright registration.

H&M argues that the intent to deceive (i.e. commit fraud) does not exist in a plain reading of Section 411 and, therefore, Unicolors’s conduct meets the standard for invalidating the registration (i.e. that it knowingly provided inaccurate information that would have caused the application to be rejected had the examiner been aware of the inaccuracy). But because that inaccuracy is alleged to be that the 9 “confined” works did not share the publication date with the other 22 works registered in the Group, there is an underlying complication afoot in this case—one that irritates a sore spot in copyright law—which is that we lack a unifying definition of “published” as a matter of law.

Although the 9 “confined” designs were apparently made available to exclusive customers on the same date that the 22 “unconfined” designs were made public, the Court could find that the “confined” designs constitute a “limited publication,” which would be synonymous with a finding that they are “unpublished” based on the relevant case law. That would satisfy H&M’s proposed standard for invalidating the effective date of protection, but it presumably would not meet the bar of intent to deceive, if the Court agrees that such intent must be present.

I will say that it seems farfetched to assume that Unicolors intentionally sought to deceive the Copyright Office in this instance just to save itself the $35 fee for filing a separate registration application for the 9 “confined” designs. More generally, if this type of error can invalidate the registration on all 31 designs, this implies a lot of uncertainty for other rightsholders. For instance, although the Group photograph registrations mentioned above are less restrictive than “unit” registrations with regard to publication dates, the photographer is barred from mixing “published” and “unpublished” works in a Group. And as mentioned, the meaning of “published” is not exactly a settled doctrine.

With independent creators like photographers so often filing Group applications by themselves, and inevitably making mistakes, one can see why the petitioners representing those constituencies want the Court to find that the standard for invalidation must meet the high bar of an intent to deceive. But more specifically, creators would be hard-pressed to find ten practitioners, legal scholars, or courts to agree upon a straightforward definition of “published” as a matter of law. If that’s the case for legal experts, how are authors filing their own registrations supposed to be sure whether a Group registration comprising a few hundred photos might contain a mix of published and unpublished works?

In a follow-up post, I will delve a little further into the specific challenges for photographers in particular, the policy implications of this case, the unsettled meaning of “published,” and some of the proposals being discussed to resolve these matters for rightsholders.

*NOTE: Thanks to attorney Leslie Burns for clarifying via Twitter: “…the old system for unpub photos was virtually unlimited number in a single reg and no titles for individual photos were required; the new GRUPH has the 750 limit but it does require titles for each photo.”

[1] In order to comply with the terms of the Berne Convention, foreign works need not be registered with the USCO in order for the rightsholder to file suit in U.S. courts.

Google v. Oracle: A Troubling Use of Fair Use

Once the die was cast (i.e. after oral arguments) in Google v. Oracle, I don’t think I was alone in feeling that if the Supreme Court held that the computer code at issue in this case was not properly a subject of copyright protection, that would be an acceptably narrow decision, even though many might disagree with it as a statutory reading.1 On the other hand, I and others felt that if the Court held Google’s use of Oracle’s code to be a fair use, that would be potentially harmful to copyright law in general, and perhaps a disservice to many parties with an interest in this case—except of course to Google.

The argument against the copyrightability of the code at issue (a.k.a. declaring code or APIs), was founded on the merger doctrine, which holds that where an expression and its idea or function are inextricably bound together, the expression cannot be protected by copyright. Here, the majority opinion, written by Justice Breyer, declined to address that consideration, instead stating that “for the sake of argument,” the Court would assume the code is protected, and then it still delivered an opinion on the copyrightability question by couching it in a fair use analysis.

Although the Court did state that the decision is unique to software and does not “overturn or modify earlier cases involving fair use,” we must hope that summary can be reconciled with the part of the opinion which states, “The upshot, in our view, is that fair use can play an important role in determining the lawful scope of a computer program copyright, such as the copyright at issue here.” That is a troubling generalization, which forces the fair use doctrine (a case-by-case defense) to do what the Court otherwise could have done instead, which would have been to write an opinion limiting the statutory protection for the code at issue, and also limit its own finding. In that instance, fair use should not even be considered. Instead, the Breyer opinion asks fair use to do something it is not meant to do.

As a result, this outcome not only could disturb case law, but it also falls short of providing the market certainty many in the software business were seeking in the briefs filed on behalf of Google. For instance, the brief signed by 83 computer scientists stated, “Forcing companies that reimplement APIs to rely on fair use will not meaningfully address … anticompetitive effects. Though better than nothing, a fair use standard creates uncertainty because it depends on fact-intensive, case-by-case determinations which can result, as this case demonstrates, in lengthy and expensive litigation.”

So, rather than providing that hoped-for certainty, by either accepting or rejecting the merger argument, it is notable that the opinion instead asserts factor two (nature of the protected work) of the fair use test ahead of factor one (purpose and character of the use) in order to frame its conclusion with a lengthy discussion about what declaring code does and why the Court agrees it is distinguishable as an unprotectable type of code. The opinion states:  “It is inextricably bound to­gether with a general system, the division of computing tasks, that no one claims is a proper subject of copyright. It is inextricably bound up with the idea of organizing task into what we have called cabinets, drawers, and files, an idea that is also not copyrightable.”

That is extremely close to saying the code at issue fails for copyright protection under merger. So, why didn’t the Court just go ahead and make that finding rather than risk sowing added confusion by stuffing a pseudo copyrightability opinion into prong two of a fair use analysis? Because now, it is possible that a greater number of parties will be disserved by this outcome.

Perhaps what happens in the market should not weigh too heavily where the Court restricts its opinions to questions of law, but this opinion makes clear in its fourth factor analysis that it is terribly concerned about broad market effects. And its assumptions about the market, especially the implications beyond software, seem divorced from reason as a fair use consideration. The factor four opinion suggests the majority was unduly persuaded by the argument that Sun was unsuited as a developer to create a product like Android. “…evidence at trial demonstrated that, regardless of Android’s smartphone technology, Sun was poorly positioned to succeed in the mobile market.” That is potentially a market-devastating view, and here’s why:

First, if a party authors a work that some other entity is potentially better at exploiting, that is grounds for licensing the work, not appropriating it. Consequently, the Court’s failure to hold, in a more straightforward ruling, that the code copied was not protected fosters this more insidious interpretation of “market harm” in its fourth factor analysis.

Second, the biggest gorilla in the sandbox just got a bonus prize. After all, won’t a company like Google always have the resources and capabilities to build the next doodad faster and better than another entity? But in Google v. Oracle, to “level the playing field,” the Court just held that a startup which cannot compete with the Googles of the world, may not necessarily license its IP to the giants either, depending on how one interprets this fourth factor reasoning. Because let’s remember, Oracle ain’t exactly a startup.

Third, imagine we are looking beyond software, and this fourth factor opinion can be argued to mean that, for instance, the novelist who is “poorly positioned” to make a film adaptation of her book is subject to a similar finding in relation to a film studio appropriating her work. Granted, that’s a bit extreme, and she would, we hope, be protected by other considerations in the law. But I use the example to underscore how flawed this view of “market harm” is as a matter of principle.

All the ink spilled in this part of the opinion, lauding the value of smartphones, the quality of the Android system, etc. is an argument that only proves market harm to Oracle due to the failure by Google to obtain a license—and one that simply waves a hand at any implication of the derivative works right. “Given the costs and difficulties of producing alternative APIs with similar appeal to programmers,” the opinion states, “allowing enforcement here would make of the Sun Java API’s [sic] declaring code a lock limiting the future creativity of new programs.”

That language, which connotes a hostility to copyright in general, upends the law by failing to acknowledge that licensing works does not lock up works. We have over 200 years of evidence and jurisprudence to back up that general premise. But again, if this Court accepted the market rationale for this outcome, then it should have held the code at issue unprotectable rather than write a fourth factor “market harm” analysis that describes any rightsholder as “poorly positioned” to exploit a particular use of their works.

By transforming a copyrightability opinion into a fair use analysis, the Court seems to have fallen for the temptation to limit copyright’s protections based solely on works already developed, while failing to more expansively imagine works that may or may not be developed in the future. Aside from the potential damage done to other copyright subjects by this fair use holding (despite the Court’s caveat), the opinion does little for the next software venture, except to tell its principals that when a Google-scale behemoth appropriates some amount of their code, they may be about a decade’s worth of litigation away from finding out if there’s a remedy. And the number of new ventures that can afford that is zero.

  1. I wrote against the merger argument here and here.