Unicolors Files A Petition for A Writ of Certiorari: Will The 9th Circuit's "No Intent-to-Defraud" for Invalidation Ruling Be Overturned?

*** The writing does not, and is not intended to, constitute legal advice by any means***

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Last June, I reported on a copyright infringement lawsuit Unicolors, a Californian textile design company, brought against H&M, a global fast fashion titan. The subject of the lawsuit was a design pattern ("EH101 artwork") that Unicolors alleged H&M effectively infringed upon by producing and selling jackets and skirts incorporating the artwork in dispute. Judge Birotte of the United States District Court for the Central District of California found H&M liable because the two works are "substantially similar". Unicolors, Inc. v. H&M Hennes & Mauritz L.P., No. 16-CV-02322-AB (SKX), 2018 WL 10307045, at *4 (C.D. Cal. 2018). On appeal, the Ninth Circuit overturned the decision for the reasons I discussed at length below. Visibly dissatisfied, Unicolors has just filed a petition for a writ of certiorari to the Supreme Court. Before we jump to an analysis, what is a writ of certiorari? It is a legal process by which a party challenging the decision of a lower court (by the way, I hate to use the term "lower courts", but I will use it anyways for the lack of a better word) asks the Supreme Court to revisit and review the ruling. If 4 out of the 9 Justices say yes, the Supreme Court will grant a "cert". Only a small fraction of certs are given the green light each year. (Visit the Supreme Court website for the relevant statistics.)

At the appellate court level, H&M advanced an argument that Unicolors had obtained its federal copyright registration certificate fraudulently by invoking the so-called "single-unit publication rule". Unicolors filed a single application for 31 different designs that it stated were "published" on the same date in the application, but H&M argued there were pieces of evidence that Unicolors had knowingly sold some of them to different customers at different times to the contrary. That alone, H&M emphasized, is sufficient to invalidate the registration certificate. Why is H&M taking a shot at invalidation? Precisely because a valid copyright registration certificate is a precondition for a cause of action for infringement. Unicolors retorted that the inaccuracies, or mistakes, in its registration application were not intentional and that H&M rather bears the burden of proving intent. After the heated representation, the Ninth Circuit overturned the jury verdict that had awarded Unicolors around $840,000 in damages, plus attorneys' fees. 

In reaching the decision, the Ninth Circuit ruled that there is no need for H&M to prove that Unicolors acted with intent to defraud in the first place. The intent-to-defraud requirement, the Ninth Circuit pronounced, is flawed as a matter of law. Judge Bea reasoned that "the plain language of § 411(b) does not require a showing of fraud, but only that the claimant included inaccurate information on the application with knowledge that it was inaccurate." Gold Value Int'l Textile, Inc. v. Sanctuary Clothing, LLC, 925 F.3d 1140, 1147 (9th Cir. 2019). Furthermore, the judge articulated that an accurate reading of the Copyright Statute (17 U.S.C. § 101, to be exact) compels a finding that the meaning of "publication" under the statute is "when copies of a work are made available to the general public... even if a sale does not in fact occur." Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 959 F.3d 1194, 1198 (9th Cir. 2020). Since those 31 textile designs were not displayed in a showroom at the same time, they can't be grouped together to be eligible for a single unit of publication.

In its petition for a writ of certiorari, Unicolors voiced that "the Court's guidance is necessary to conclusively establish if the Act codifies the doctrine of fraud on the Copyright Office". It concluded the petition by urging the Court to put a punctuation mark to the deepening "circuit division concerning requiring a showing of fraud in order to seek invalidation". Unicolors is claiming that its "good-faith" errors in the application should be deemed immaterial at best. I'm saving the analysis of the petition for the next post because it is so well-written that it merits a post of its own, both in terms of argumentation and style. My inclination is pro-IP, and I think a technicality should not get in the way of affording robust protections to creators. You can absolutely disagree with me on whether the issue in dispute is ultimately technical. As I noted earlier, only a small number of cases make their ways up to the Supreme Court, and only one or two IP cases end up doing so each year. When I first shared with you the district court decision of the case, it didn't occur to me that they would resolutely fight it out to the very end, but I was clearly wrong. David does want to seek justice against Goliath.