Photo from Unicolors, Inc.’s Brief

Tianchu Gao is an IPilogue Writer and a 1L JD Candidate at Osgoode Hall Law School.

Pankhuri Malik is an IPilogue Writer and an LLM Candidate at Osgoode Hall Law School

On February 24, 2022, the Supreme Court of the United States (“SCOTUS”) decided Unicolors, Inc. v H&M. They held that an inadvertent mistake of law in a copyright registration application does not automatically nullify the application. 

Unicolors, Inc., a fabric and design company in Los Angeles, owns copyrights in various fabric designs. It sued H&M for copyright infringement, claiming that H&M used their copyright-protected designs in its clothes. As a defense, H&M argued that Unicolors’ application did not satisfy the “single unit of publication” requirement, which provides that a single application cannot cover multiple works that were not first made publicly available as a singular, bundled collection. Despite this mistake, the District Court ruled that Unicolors’ copyright registrations remain valid because Unicolor was unaware of the requirement when it submitted its application. Consequently, Unicolors’ copyright registrations are protected by the safe harbour provision § 411(b)(1)(A) of the Registration and Civil Infringement Actions, which states that inaccuracies are permitted so long as they were unknown. On appeal, the Ninth Circuit overturned the decision. It ruled that the safe harbour provision did not apply in this case because it only protects good-faith mistakes of fact, not law.

In a 6-3 decision, the U.S. Supreme Court agreed with the Ninth Circuit’s decision that Unicolor’s mistake in the registration was a mistake of law. However, applying the safe harbour provision depends on the applicant’s “actual, subjective awareness of both the facts and the law [page 6].” It can therefore excuse innocent mistakes of both facts and law.

SCOTUS considered the following factors while rendering its decision:

1. Intent to Defraud: The Ninth Circuit said that the applicant does not require intent to defraud as long as it knowingly made any inaccurate representations. On a textual reading of the provision, this appears to be correct. However, SCOTUS found that “knowledge” historically does not differentiate between law or fact. Nothing in § 411(b)(1)(A) indicates that constructive knowledge would be sufficient to invalidate the registration instead of actual knowledge of wrongdoing.
2. Holistic Reading of the Statute: To corroborate its above conclusions, the Court also relied on other provisions of the Act to state that the statute does not intend to forgive applicants without legal backgrounds for mistakes of fact, while continuing to penalise them for mistakes of law.
3. Legislative Intent: The Court also opined that § 411(b) was enacted to eliminate exploitative loopholes that prevented copyright holders from enforcing their otherwise valid rights merely due to procedural irregularities.

Looking ahead, the Supreme Court’s decision strongly protects copyright applicants and holders. It requires that alleged copyright infringers prove “willful blindness” on the part of the registration owner to nullify a registration based on inaccuracies. Such high standard was meant to protect copyright owners, especially those unrepresented by legal counsels, from the excessively formal and sometimes “esoteric”—in the Court’s words—U.S. copyright registration processes. The Ninth Circuit’s judgement appears to be the exact outcome that § 411(b) seeks to eliminate.

On the other hand, there are concerns about increasing copyright trolls and misuse as a result of the stringent test for nullification. Invalidating all inaccurately registered copyrights can protect the public from entities which hold large numbers of copyright for the purpose of making frivolous infringement lawsuits. A recent report showed that more than 50% of copyright cases filed in the states between 2014 to 2016 were against John Doe defendants. However, in this case, H&M’s arguments regarding the practice appeared to be an attempt to escape liability by using policy concerns.