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Friday, June 14, 2024 | Back issues
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Justices order another round in copyright dispute over H&M sweater

A Los Angeles fabric designer that says the fast fashion chain ripped off its designs will get another shot at claiming damages. 

WASHINGTON (CN) — Likening the issue to one where a bird watcher gives the wrong name for a flash of red he saw in a tree, the Supreme Court vacated a court win for Sweden-based fashion giant H&M on Thursday morning, ruling 6-3 that a mistake of law or fact can excuse inaccuracies in copyright registrations. 

Los Angeles fabric designer Unicolors made the mistake here in its copyright registration for a group of 31 patterns.

After the company filed a suit that accused the Sweden-based H&M of copying one of the protected designs in a sweater, H&M moved to have the copyright declared invalid. 

Under copyright regulations, a single application can cover multiple works if they were “included in the same unit of publication." H&M says this was not the case for the Unicolors designs, some of which were made exclusive to individual customers. 

Though a California jury sided with Unicolors, ruling that the company’s copyright was still valid under safe harbor provisions, the Ninth Circuit reversed that decision in May 2020.

The Ninth Circuit’s decision was based on Unicolors’ misunderstanding of the law rather than just accidentally providing inaccurate information. The Supreme Court ordered a new hearing Thursday, about eight months after it took up the case, finding it incorrect to distinguish between mistake of law and mistake of fact. 

“The Court of Appeals for the Ninth Circuit believed that a copyright holder cannot benefit from the safe harbor and save its copyright registration from invalidation if its lack of knowledge stems from a failure to understand the law rather than a failure to understand the facts,” Justice Stephen Breyer wrote for the majority. “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. We therefore vacate the Court of Appeals’ contrary holding.” 

Attorneys for Unicolors applauded the outcome, calling it a win for creatives over corporations.  

“The court sided with poets and artists over corporate behemoths playing Gotcha! based on honest mistakes,” Josh Rosenkranz, a partner at Orrick, Herrington & Sutcliffe, said in a statement.

Attorneys for H&M meanwhile found a silver lining in the court's acknowledgement that Unicolors used inaccurate information in its application.

“After today’s ruling, in order to ‘save its copyright’ Unicolors will have to establish that it had a good faith belief that it misunderstood the legal requirements when it filed its original application, which H&M believes it cannot do given Unicolors’ existing trial court testimony demonstrating Unicolors was, at best, willfully blind to the requirement that all works in a group application be published together,” Staci Jennifer Trager, a partner at Nixon Peabody representing H&M, said in a statement. “Moreover, H&M appreciates the dissent’s acknowledgement that Unicolors abandoned its original position and that the question decided today was one of first impression.”

The dissenting justices said that the court should have dismissed the appeal "as improvidently granted because Unicolors has abandoned the question presented and instead proposes novel questions of copyright law that no other court addressed before today."

"I would not reward Unicolors for its legerdemain," Justice Clarence Thomas wrote, joined by Justices Samuel Alito and Neil Gorsuch.

In the majority opinion, Breyer deployed his bird analogy early on, asking what kind of mistake is made when someone misidentifies a scarlet tanager as a cardinal.

“John may have failed to see the bird’s black wings,” Breyer wrote. “In that case, he has made a mistake about the brute facts. Or John may have seen the bird perfectly well, noting all of its relevant features, but, not being much of a birdwatcher, he may not have known that a tanager (unlike a cardinal) has black wings. In that case, John has made a labeling mistake. He saw the bird correctly, but does not know how to label what he saw.” 

The mistake by Unicolors, he continued, was also one of labeling, and the labeling problem is one of law.

“If Unicolors was not aware of the legal requirement that rendered the information in its application inaccurate, it did not include that information in its application ‘with knowledge that it was inaccurate,’” Breyer said (emphasis in original). “Nothing in the statutory language suggests that this straightforward conclusion should be any different simply because there was a mistake of law as opposed to a mistake of fact.” 

Breyer goes on to conclude that the word “knowledge” in the statute applies to law and facts. He was joined in the lead opinion by Chief Justice John Roberts as well as Justices Sonia Sotomayor, Elena Kagan, Brett Kavanaugh and Amy Coney Barrett.

“Nothing in the statutory language suggests that Congress wanted to forgive those applicants’ factual but not their (often esoteric) legal mistakes,” Breyer wrote (parentheses in original). 

Thomas noted that, not only is there no circuit split on the new question Unicolors asks, the high court is the first court in the country to address these issues. 

“It is clear that the Court of Appeals did not meaningfully consider these questions,” Thomas wrote. “It said nothing about actual versus constructive knowledge and it merely implied, in a cursory sentence, that §411(b)(1)(A) requires knowledge of facts and not law. ...Thus, we are the ‘first court in the Nation’ to decide the important questions that Unicolors belatedly presents. I would decline the invitation to take that imprudent step.” 

Claiming the majority took unprecedented action in the case, Thomas said the decision will have a considerable cost. 

“The Court imposes an actual-knowledge-of-law standard that is virtually unprecedented except in criminal tax enforcement,” Thomas wrote. “And while the Court claims the word ‘knowledge’ in §411(b)(1)(A) compels this conclusion that result is far from certain.” 

Scott Burroughs, another attorney for Unicolors, said the ruling sends a message to copyright infringers. 

“The Unicolors decision will benefit artists everywhere, particularly those who have struggled to complete the byzantine copyright registration process,” said Burroughs, who is with the firmDoniger / Burroughs. “It also sends a clear message to copyright infringers that they will have to address their misconduct on the merits as opposed to hiding behind technicalities."

Follow @KelseyReichmann
Categories / Appeals, Business, Law

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