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H&M Sweater Spat Heads to High Court

A pattern manufacturer vying to restore a nearly $1 million copyright verdict against the fast-fashion giant will get a Supreme Court audience in the fall.

WASHINGTON (CN) — Wading into an argument over whether H&M makes clothes that use copyrighted patterns without permission, the Supreme Court took up a Los Angeles fabric designer's appeal on Tuesday.

Though a California jury had sided with Unicolors, awarding $850,000 in damages, the Sweden-based giant of the fast-fashion world won a Ninth Circuit reversal in May 2020. H&M says Unicolors lacks a valid copyright, having built its case on a registration for a group of 31 patterns. Since Unicolors has sold some of those patterns to individual customers, H&M says the copyright must be individual as well.

On remand, the Ninth Circuit says the District Court must determine whether the “known inaccuracies” contained in Unicolors’ copyright registration application would have caused the Register of Copyrights to refuse registration. 

Unicolors meanwhile petitioned the Supreme Court to intervene, noting that the 11th Circuit requires a showing of “intentional or purposeful concealment of relevant information” to render a registration invalid.

“There was no evidence supporting the panel’s conclusion that the designs were separately published before certain designs were categorized as confined in Unicolors’ registration certificate,” Scott Burroughs of the firm Doniger Burroughs wrote for Unicolors in the 32-page petition. “There was thus insufficient evidence to deduce any sort of error that would require referral to the Copyright Office.”

Fellow counsel for Unicolors emphasized in a statement Tuesday that Congress passed the intellectual property law at the center of the argument to "support IP rights, not to create a novel roadblock that prevents artists from vindicating their rights.”

“Statutory text, history, and plain common sense all weigh strongly against the idea that an honest mistake in a copyright registration form lets an infringer off the hook," said attorneys Scott Burroughs of Doniger Burroughs and Josh Rosenkraz of Orrick Herrington.

Per its custom, the Supreme Court did not issue any statement in taking up Unicolors' case. The order specifies that the justices will consider whether the Ninth Circuit properly found that the matter at hand requires referral to the Copyright Office.

While Unicolors registered its pattern as EH101, H&M sold the allegedly similar garments as the Xue Xu design. It pressed the high court to deny Unicolors a writ of certiorari.

“Although Unicolors represented to the Copyright Office that all thirty-one designs were concurrently first published as a collection on January 15, 2011, Unicolors knew that this was not true,” Staci Riordan of Nixon Peabody wrote for the store in an opposition brief. “In fact, nine of the designs were designated as ‘confined’ (i.e., exclusive to one requesting customer), and were not first published with the other designs on January 15.”

Speaking about the case Wednesday, Riordan said that Unicolors had put multiple designs on a single copyright application in an effort to save money on registration fees.

“The plain language of the Copyright Act requires that when this evidence came to light — as it did during trial — the court should have asked the Copyright Office if it would have issued the copyright registration had it known the truth,” the H&M attorney told Courthouse News. “The Ninth Circuit accurately read and applied the plain language of the Copyright Act when it directed the trial court to ask the Copyright Office this very question.”

In her brief, Riordan framed the 11th Circuit’s precedent as an “outlier,” saying “there is no meaningful split among the circuits regarding the continued viability of the now discredited intent-to-defraud standard.” 

“The [Ninth Circuit's ruling] is manifestly correct, as it adheres to and honors the plain language of the statute,” her brief continues.

The federal complaint that Unicolors filed against H&M in 2015 is one of more than 160 that the company has filed in the Central District of California since 2008. Many of these cases appear to be copyright infringement suits against large fashion chains, including Belk, Rue 21, Nordstorm, Macy’s and Charlotte Russe.

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