Unicolors v. H&M: When White Lies Can Leave You Black and Blue

Because copyright applications are not substantively examined, unlike patent and trademark applications, obtaining a copyright registration is typically viewed as relatively easy. Indeed, only a minority of copyright applications are refused each year. Additionally, filling out a Copyright Application form to register a work with the U.S. Copyright Office appears simple enough. The form itself includes nine sections with relatively straightforward questions and easy-to-follow instructions on how to answer the questions. However, the Ninth Circuit’s recent decision in Unicolors, Inc. v. H&M Hennes & Mauritz, L.P. (9th Circ. 2020) serves as a cautionary tale of what can happen to a copyright registration when its underlying application includes known inaccuracies.

What happened in Unicolors?, a.k.a. Unicolors’s white lies leave black and blue marks on its copyright registration

The Ninth Circuit considered the validity of Unicolors’s U.S. copyright registration covering 31 different works of two-dimensional floral and ethnic fabric designs, one of which (ethnic design EH101) was incorporated into allegedly infringing garments made by H&M. According to the registration, all 31 works were published, or made available to the public, on the same date.

But the evidence presented at trial demonstrated that Unicolors knew otherwise, and that it applied to register all 31 works in a single copyright registration to save money. Specifically, the designs designated “EH” were placed in Unicolors’s showroom and available for public viewing and purchase, whereas the works designated CEH were not. Instead, those works were first made available to individual, exclusive customers. Accordingly, the Ninth Circuit determined that not all 31 works covered by Unicolors’s registration could have been first made available to the public (and therefore published) at the same time.

The Ninth Circuit further noted that under the Copyright Act, multiple published works may be registered in a single copyright registration if the multiple works published on the same day as “a single unit of publication.” Addressing for the first time the issue of what is necessary for multiple works to constitute a “single unit of publication” eligible for coverage by a single copyright registration, the Ninth Circuit held that all individual works must be “first published as a singular, bundled unit.” As applied to Unicolors’s 31 works, the Ninth Circuit determined that not all 31 works could have been first published as a singular, bundled unit because some of the works were first made available to individual, exclusive customers, while others were first made available to the public in Unicolors’s showroom.

According to the Ninth Circuit, that H&M failed to demonstrate that Unicolors had intended to defraud the Copyright Office when it knowingly included an inaccurate publication date was insufficient to protect Unicolors’s copyright registration from potentially being invalidated. However, rather than outright holding that Unicolors had no valid copyright registration in the EH101 design at issue, the Ninth Circuit remanded the issue of validity to the district court with instructions that the court ask the Copyright Office whether the known inaccuracies in Unicolors’s copyright application would have caused registration to be refused.

What are some ways to avoid potential copyright application pitfalls?

The Unicolors decision is a clear reminder that there is no intent-to-defraud requirement for copyright invalidation in the Ninth Circuit. Thus, it is important that a copyright application be prepared as accurately as possible. Parties applying for a copyright registration should archive internal documents that clearly corroborate the details entered into a copyright application to improve the chances of successfully defending against potential validity issues later.

Moreover, the Ninth Circuit’s narrowly defined instances of when multiple published works may be eligible for registration in a single copyright registration suggests that parties may want to err on the side of caution and file separate applications for multiple published works unless they undoubtedly “first published as a singular, bundled unit.” Factors to consider include whether the multiple works were first distributed together as a single package and bear a single sales price. For example, an assortment of greeting cards distributed to the public on the same day, but bear different prices and/or can be purchased separately from each other would not constitute a singular bundled unit, whereas the same assortment, if first distributed together in a single package bearing one unit price, should.

By keeping these points in mind, parties can better position their copyright registrations to survive a validity challenge with flying colors.

This article appeared in the June 2020 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.