Moreover, registration of copyright also affects calculation of damages in legal proceedings. On the one hand, copyright registration should be accurate, otherwise the registration certificate may be invalidated; on the other hand, the US Copyright Act provides safe harbor protection with exceptions for inadvertent inaccurate copyright registration. The provision under the Copyright Act is as follows:
17 USC § 411(b)(1):
A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, 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.
The case analysis below is about how to interpret "knowledge" under 17 USC § 411 (b) (1) (A). This case started in a Federal District Court, then appealed to a Circuit Court and finally ended up in the United States Supreme Court. Although the Supreme Court finally came to a 6:3 majority decision, the reasoning of the majority opinion raises questions and the minority opinion is worthy of attention.
Unicolors, Inc. v. H&M Hennes & Mauritz, L.P.
In this ruling, the US Supreme Court reversed a previous appeals court decision and ruled against high street fashion retailer, H&M. Full text of the Supreme Court’s decision can be seen at: https://www.supremecourt.gov/opinions/21pdf/20-915_pol1.pdf
Unicolors, the copyright owner of a number of fabric designs, sued H&M for copyright infringement. As a defense, H&M claimed that the copyright registrations of Unicolors were invalid because they contained incorrect information.
In particular, H&M alleged that Unicolors improperly used a single application to register 31 different works. According to the U.S. Copyright Office, multiple works may be registered in one single application, provided that they are included in the same unit of publication. But, some of the 31 Unicolors designs were offered for sale exclusively to certain customers, while the rest were offered to the general public. Unicolors admitted that these 31 works were not of the same unit of publication, but asserted as a defense that it was not aware of the corresponding legal requirements on inclusion of multiple registrations in one single application.
The District Court held that the “safe harbor rule” protects Unicolors’ erroneous registration in one single application of multiple works that are not of the same unit of publication from being invalidated since it did not know the "same unit of publication" rule.
The Ninth Circuit held that the safe harbor provision protects only good-faith mistakes of fact, and Unicolors’ knowledge that its 31 designs were not published in the same unit meant it could not rely on the safe harbor provision. It was irrelevant whether or not Unicolors knew the relevant legal requirements.
The Supreme Court held that the safe harbor rule did not distinguish between mistakes of fact and mistakes of law. The Supreme Court's view was that the safe harbor exception depended on the registrant’s awareness of both facts and the law, which in practice meant it allowed inaccuracies in registration whether they were based on mistakes of fact or law.
A major basis of the Supreme Court's majority opinion is grounded on the plain language of the safe harbor rule. 17 USC § 411 (b) (1) does not distinguish between mistakes of fact and mistakes of law. In line with that, any type of mistake may be protected by the safe harbor provision, unless a registrant made the registration application with knowledge of mistakes of both facts and law, and such mistakes are a sufficient basis for the Copyright Office to refuse to issue a copyright registration certificate.
In general, whether in criminal law or civil law, it is rare to see a provision requiring knowledge of the law from perpetrators, and perpetrators are generally not exempt from legal liabilities simply because they are not aware that their acts violate the law. One justification is that knowledge of law is not easy to prove in judicial practice; another one is that should knowledge of law be an element of legal responsibility, the perpetrator may easily be excused from responsibilities for his/her acts. Therefore, once a law is issued, it is presumed to be known by everybody. Expressions in the legal context like " know" or "should know" should normally be understood as targeting facts only, even if they do not clearly state whether the object of the knowledge is fact or law.
In defending its decision, the majority opinion mentions that the court may determine whether there is indeed a mistake of law, taking into account, for example, the seriousness of the mistake, the complexity of the legal provision and the litigant’s prior experience of the law, etc. Although these may be helpful to some degree, it would undoubtedly make the adjudication process more difficult and may not completely avoid abuse of the rule.
Another point raised in the majority opinion was to keep the safe harbor protection in line with other provisions of US copyright law. The majority opinion cited a number of provisions in copyright law that expressly provide " know" or "has reasonable grounds to know", trying to support that " know" under the safe harbor exception should be construed as actual knowledge only, without explicit provision for constructive knowledge such as “has reasonable grounds to know". Actual knowledge requires knowledge of both facts and law.
The foundation of the majority opinion is still putting facts and law on an equal footing in legal context. The majority opinion considers that law, like facts, can be known either actually or constructively, but ignores the fact that knowledge of law is usually presumed rather than actually proven in a legal context. The knowledge provisions in other areas of copyright law, whether actual or constructive, also refer to facts rather than law, and are even more likely to be so than the safe harbor provision.
It is difficult to establish clearly the implications of the majority decision. There is a possibility that it could be abused by applicants, for example, by making an incorrect application without worrying about any liability. The decision may also mean that a layman might be more likely to be protected by the safe harbor provision than a legal professional. Consequently, copyright owners may want to go pro se or engage less experienced agents rather than attorneys to represent them in copyright registration.
The minority opinion, on the other hand, presents some impressive arguments. For example, they considered the question actually put before the Supreme Court was not the one raised by Unicolors in its petition for certiorari (i.e. in the request for the Supreme Court to review a lower court's decision). The question petitioned was whether the safe harbor exception requires "indicia of fraud", whereas the one actually heard by the court was whether the safe harbor exception requires "actual knowledge".
The minority opinion considers that the question heard by the court should be the same as the one raised by the litigants, or that the former was a “prior” question to the latter one (prior question theory). However, the majority was not troubled by Unicolors’ change in question, concluding that the question before it was a “subsidiary” question of the question raised by Unicolors (subsidiary question theory).
Irrespective of the debate over the two theories, even taking the "subsidiary question theory", the majority opinion does not necessarily make sufficient logical sense.
As per the majority opinion, fraud usually requires an intentional misrepresentation of a material fact. One element of fraud requires a perpetrator’s actual knowledge of the facts. Thus, a perpetrator of fraud must have "actual knowledge" of facts, but someone with “actual knowledge” of facts might not be a perpetrator of fraud.
Following this analysis, the Supreme Court actually analysed a broader question rather than a subsidiary one, when compared to that raised in Unicolors’ petition for certiorari. The majority opinion might have made an essential logical mistake in approaching this issue. And, as per the minority opinion, assessing the question of actual knowledge by the court is not a prerequisite for resolving the fraud question, so the former was not a “prior question” of the latter, either.
In addition, the minority opinion points out that the question heard by the Supreme Court had not been adjudicated in other courts before and was not a matter of circuit conflict, thus failing to meet the criteria for the Supreme Court to grant certiorari i.e. it was not in a position to accept hearing the case.
The U.S. Supreme Court reviews lower courts’ decisions only for compelling reasons, which makes the cases reviewed by the Supreme Court very limited. For instance, the Supreme Court has possibly only decided this one intellectual property case. A typical situation where the Supreme Court may take up a case is where there are conflicts of decisions between different circuit courts. For example, the minority opinion considers that there is a conflict between the eleventh circuit and the ninth circuit on whether 17 USC §411(b)(1)(A) requires an intention to deceive. The Supreme Court originally took the case to resolve such a conflict, but Unicolors subsequently abandoned this issue.
Although the reasoning of the majority opinion raises many questions, the author is still on board with the decision that a copyright registration covering multiple works should not be invalidated simply because they were mistakenly included in one single application.
The problem of such copyright registration is that the copyright registrant filed one application, paid one application fee, but registered multiple works. The court should ultimately decide whether such a registration was valid or invalid.
It is similar to the “unity of invention” issue in patent regime i.e. that the claims of a patent application must relate to a single invention. Under patent law, “unity of invention” does not normally render a granted patent invalid, whether in the US or China, because it is generally considered that the “unity” requirement is more an administration concern than a patent eligibility concern. The same is true for copyright registrations, which tend to be even more straightforward, and should be more difficult to be invalidated than patents based on the unity of invention violation.
In addition, the legislative purpose of the safe harbor provision is to protect the copyright owner's right to sue, to balance it against the mandatory requirement of copyright registration under U.S. copyright law. If the safe harbor rule is read too strictly, copyright registration certificates would be easily invalidated, which would hamper copyright owners from enforcing their intellectual property rights, and that would deviate from the original legislative intent.
From a different perspective, it would be less common to see such a case in China. In copyright actions in China, a copyright registration certificate is treated only as prima facie evidence of copyright ownership. Whether a copyright is registered or not does not affect the copyright owner’s right to sue, nor calculation of damages.
About the author:
Defeng Song is an admitted patent attorney in China, also qualified in New York of the United States and the USPTO. He regularly advises clients on both inbound and outbound intellectual property matters. His familiarity with multi-jurisdictional laws helps clients to handle their intellectual property concerns better from a global perspective.
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