Copyright infringement lawsuits involving textile designs have become a growing problem for fashion brands and retailers. One such case, “Unicolors Inc. v. H&M Hennes & Mauritz LP,” recently made it all the way to the U.S. Supreme Court.
Unfortunately, the Court’s decision is unlikely to stem the flood of lawsuits. The Court ruled against fast-fashion retailer H&M Hennes & Mauritz (H&M), rejecting its argument that Unicolors, Inc., a wholesale fabric design company, should be barred from pursuing a copyright infringement action because it included inaccurate information in its application. According to the Court, unintended legal errors do not void a copyright registration.
Copyright Infringement Suit Over Textile Designs
Unicolors, which owns copyrights in various fabric designs, filed a copyright infringement action against H&M. After a jury found in favor of Unicolors, H&M sought judgment as a matter of law. The fashion retailer argued that Unicolors could not sue for infringement because Unicolors knowingly included inaccurate information on its registration application, rendering its copyright registration invalid. A valid copyright registration is a prerequisite when seeking to bring a civil action for infringement of a copyrighted work.
The alleged inaccuracy stemmed from Unicolors having filed a single application seeking registration for 31 separate works, despite a copyright office regulation that provides that a single application may cover multiple works only if they were “included in the same unit of publication.” H&M maintained that Unicolors failed to satisfy this requirement because Unicolors had initially made some of the 31 designs available for sale exclusively to certain customers, while offering the rest to the general public.
The District Court determined that because Unicolors did not know when it filed its application that it had failed to satisfy the “single unit of publication” requirement, the company’s copyright registration remained valid by operation of the safe harbor provision provided under 17 U.S.C. § 411(b). It provides that a certificate of registration is valid “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.”
On appeal, the Ninth Circuit Court of Appeals determined that it did not matter whether Unicolors was aware that it had failed to satisfy the single unit of publication requirement, because the safe harbor excuses only good-faith mistakes of fact, not law. Unicolors had known the relevant facts, so its knowledge of the law (or lack thereof) was irrelevant, according to the federal appeals court.
Supreme Court Rules Legal Mistake Does Not Void Copyright Registration
The Supreme Court reversed, holding that §411(b) excuses inaccuracies that were the result of an innocent mistake of fact or law. “In our view, however, §411(b) does not distinguish between a mistake of law and a mistake of fact. Lack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration,” Justice Stephen Breyer wrote on behalf of the 6-3 majority.
According to the Court, nothing in §411(b)(1)(A) suggests that the safe harbor applies differently because an applicant made a mistake of law as opposed to a mistake of fact. In support, it cited nearby statutory provisions that confirm that “knowledge” refers to knowledge of the law as well as the facts.
“Inaccurate information in a registration is therefore equally (or more) likely to arise from a mistake of
law as a mistake of fact. That is especially true because applicants include novelists, poets, painters, designers and others without legal training,” Justice Breyer wrote. “Nothing in the statutory language suggests that Congress wanted to forgive those applicants’ factual but not their (often esoteric) legal mistakes.”
The Court also cited legislative history indicating that Congress enacted §411(b) to make it easier, not more difficult, for non-lawyers to obtain valid copyright registrations. “Given this history, it would make no sense if §411(b) left copyright registrations exposed to invalidation based on applicants’ good-faith misunderstandings of the details of copyright law,” Breyer wrote.
Key Takeaway for Fashion Retailers
While fabric mills are within their rights to protect their designs, the current legal framework makes it challenging for fashion companies to ensure that they won’t later face allegations of copyright infringement. One of the primary challenges is that there is no central database that can track the vast number of fabric designs and the ownership rights attached to them. Suppliers may also provide inaccurate information about whether they created or licensed a particular fabric. Given the potential legal risks, it is essential that fashion companies work with experienced legal counsel who can help navigate the complex legal landscape surrounding textile copyrights.
Howard D. Bader is a NYC attorney who serves as general counsel for clients in a wide range of industries on an international scale. With over three decades’ worth of legal experience, he has represented clients in numerous legal matters, including commercial litigation, intellectual property, bankruptcy and creditor’s rights and mergers and acquisitions, as well as numerous corporate transactions and business law matters.
Howard D. Bader
hbader@sh-law.com
(212) 784-6926 www.sh-law.com
