Gold Value Int'l v. Sanctuary Clothing, LLC

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GOLD VALUE INTERNATIONAL No. 17-55818
TEXTILE, INC., DBA Fiesta Fabric, a
California Corporation, D.C. No.
Plaintiff-Appellant, 2:16-cv-00339-
JAK-FFM
v.
SANCTUARY CLOTHING, LLC, a OPINION
California Limited Liability
Company; AMAZON.COM, INC., a
Washington Corporation; MACY’S,
INC., an Ohio Corporation;
NORDSTROM, INC., a Washington
Corporation; BLOOMINGDALES, INC.,
a New York Corporation; DILLARDS,
INC., an Arkansas Corporation;
ZAPPOS IP, INC., a Nevada
Corporation; DOES, 1–10,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
John A. Kronstadt, District Judge, Presiding
Argued and Submitted December 6, 2018
Pasadena, California
Filed June 4, 2019
2 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
Before: Diarmuid F. O’Scannlain and Sandra S. Ikuta,
Circuit Judges, and George Caram Steeh III, *
District Judge.
Opinion by Judge Steeh
SUMMARY **
Copyright
The panel affirmed the district court’s summary
judgment and award of attorney’s fees in favor of the
defendants in an action under the Copyright Act.
Gold Value International Textile, Inc., doing business as
Fiesta Fabric, alleged that defendant Sanctuary Clothing,
LLC, copied its fabric design, which was used to
manufacture a blouse that was sold by defendant retail
outlets. Sanctuary filed a counterclaim, seeking invalidation
of Fiesta’s copyright. Concluding that Fiesta’s copyright
registration was invalid, the district court granted summary
judgment in favor of defendants.
The panel affirmed the district court’s conclusion that
Fiesta’s copyright registration was invalid under 17 U.S.C.
§ 411(b) because Fiesta knowingly included inaccurate
information in its copyright application that would have
*
The Honorable George Caram Steeh III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 3
caused the Copyright Office to deny registration.
Specifically, Fiesta knowingly included previously
published designs in its application to register an
unpublished collection. In addition, the Register of
Copyrights indicated that it would not publish a single group
of published and unpublished works. Because a valid
registration is a precondition to bringing an action for
infringement, the panel affirmed the district court’s grant of
summary judgment in favor of defendants.
The panel further held that defendants were prevailing
parties, and the district court did not abuse its discretion in
awarding attorney’s fees under 17 U.S.C. § 505 even though
defendants prevailed on a technical defense.
COUNSEL
Scott Alan Burroughs (argued) and Trevor W. Barrett,
Doniger/Burroughs, Venice, California, for Plaintiff-
Appellant.
Jessica Strom Rutherford (argued), Alexander Malbin, and
Edmund J. Ferdinand III, Ferdinand IP LLC, New York,
New York, for Defendants-Appellees.
4 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
OPINION
STEEH, District Judge:
Gold Value International Textile, Inc., doing business as
Fiesta Fabric (“Fiesta”), brought this action for copyright
infringement against Sanctuary Clothing, LLC
(“Sanctuary”), and several clothing retailers. Fiesta alleges
that Sanctuary copied its fabric design, which was used to
manufacture a blouse that was sold by the defendant retail
outlets. Sanctuary filed a counterclaim, seeking invalidation
of Fiesta’s copyright. Concluding that Fiesta’s copyright
registration was invalid, the district court granted summary
judgment in favor of Defendants. The district court
determined invalidity pursuant to 17 U.S.C. § 411(b),
finding that Fiesta knowingly included inaccurate
information in its copyright application that would have
caused the Copyright Office to deny registration.
Recognizing that a valid copyright registration is a
prerequisite to bringing suit, the district court dismissed
Fiesta’s complaint. The court also awarded attorney’s fees
and costs to Defendants. Fiesta appeals the final judgment
as of right. Finding no error in the conclusions of the district
court, we affirm.
BACKGROUND
Fiesta is a California corporation that creates textile
designs and sells fabric to its customers, who use the fabric
to make clothing. Sanctuary is a clothing manufacturer; the
remaining defendants are retailers who purchased garments
from Sanctuary and sold them to customers. Fiesta alleges
that it owns the copyright in a two-dimensional textile design
entitled 1461-43 (“1461 Design”). According to Fiesta,
Sanctuary infringed its copyright by creating and selling
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 5
clothing to retailers featuring a design substantially similar
to the 1461 Design.
Effective October 24, 2013, Fiesta registered the 1461
Design under Copyright Registration No. VAu 1-151-509
(“‘509 Registration”), as part of its “Grp. 029-
Spring/Summer 2014” collection. In addition to the 1461
Design, the ‘509 Registration comprises thirty-three fabric
designs. In the copyright application, Fiesta’s president,
Morris Ajnassian, certified that none of the works in the
collection had been published as of October 23, 2013. The
fabric designs were registered as an unpublished collection.
Prior to the registration, Fiesta sold samples of fabric
bearing the 1461 Design to “a limited group of existing and
potential customers for the limited purpose of securing full
production contracts for hundreds or thousands of yards of
fabric.” Between March 12, 2013, and October 24, 2013,
Fiesta sold about 190 yards of fabric featuring the 1461
Design. Ajnassian testified that he knew that sample fabric
bearing the 1461 Design had been sold prior to approving
the copyright registration application, but that he did not
consider sampling to be publication.
PROCEDURAL HISTORY
In ruling on the parties’ cross-motions for summary
judgment, the district court determined that because the 1461
Design had been sold prior to registration, it had been
published and, therefore, Fiesta’s identification of the 1461
Design as unpublished in the copyright application was
inaccurate. Because Fiesta knew that the fabric had
previously been sold, the court concluded, it included
inaccurate information in its copyright application with
knowledge that it was inaccurate. The court deferred a final
ruling on whether Fiesta’s copyright registration was
6 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
invalid, and submitted an inquiry to the Copyright Office
regarding whether the Register of Copyrights would have
rejected Fiesta’s application if it had known of the
inaccuracy. Specifically, the district court inquired as
follows:
Would the Register of Copyrights have
rejected Plaintiff’s Registration No. VAu 1-
151-509 for 2-dimensional artwork
(“Grp.029-Spring/Summer 2014,” filed
October 24, 2013) with respect to Design
1461? Thus, would it have done so if, at the
time of the application, the Register of
Copyrights had known that, although
Plaintiff had characterized the work as an
unpublished collection that included the 1461
Design, Plaintiff previously had published
the 1461 Design when it sold to its customers
fabric samples that used the 1461 Design,
without limiting further distribution or sale
by those customers?
The Register of Copyrights responded that “had the
Office been aware that the 1461 Design had been previously
published, the Office would have refused registration of that
work using the unpublished collections option because the
work was registered as unpublished when in fact it had been
published.” As the district court explained, “[t]he Register
noted that if it is made aware of an error at the time of
application, the general practice of the Copyright Office is
to correspond with the applicant and give an opportunity to
correct the error” within forty-five days. The Register’s
response was “premised on the fact that the error identified
in the Court’s question was not timely corrected.”
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 7
In light of the Register’s response, the district court
granted Defendants’ motion for summary judgment,
declaring Fiesta’s copyright registration to be invalid as to
the 1461 Design and dismissing Fiesta’s claims with
prejudice. Defendants moved for an award of attorney’s fees
and costs, which the district court granted in the amount of
$121,423.01.
In the meantime, Fiesta submitted a separate copyright
registration application for the 1461 Design, certifying that
it was first published on March 12, 2013, approximately six
months prior to the date of the original ‘509 Registration.
The Copyright Office issued Registration No. VA 2-006-252
(the “‘252 Registration”). Citing Fiesta’s lack of diligence,
the district court denied Fiesta leave to amend its complaint
to add the ‘252 Registration as the basis for its claims. Fiesta
has not appealed this ruling. Rather, Fiesta filed a second
action based upon the ‘252 Registration of the 1461 Design.
Gold Value Int’l Textile, Inc. v. Sanctuary Clothing, LLC,
2:17-cv-03726 (C.D. Cal.). The parties stipulated to a stay
of the second action pending the resolution of this appeal.
STANDARD OF REVIEW
The court reviews the district court’s grant of summary
judgment de novo. L.A. Printex Indus., Inc. v. Aeropostale,
Inc., 676 F.3d 841, 846 (9th Cir. 2012). “Summary
judgment is appropriate if, viewing the evidence in light
most favorable to the nonmoving party, ‘there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P.
56(a)).
The court reviews an award of attorney’s fees under the
Copyright Act for an abuse of discretion. Cadkin v. Loose,
569 F.3d 1142, 1146–47 (9th Cir. 2009). “A district court
8 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
abuses its discretion when its decision is based on an
inaccurate view of the law or a clearly erroneous finding of
fact.” Id. at 1147 (citation omitted).
DISCUSSION
Although copyright registration is “not a condition of
copyright protection,” registration is a precondition to filing
an action for copyright infringement. 17 U.S.C. §§ 408(a),
411(a); Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 157
(2010) (with some exceptions, the Copyright Act “requires
copyright holders to register their works before suing for
copyright infringement”). A copyright registration
certificate “shall constitute prima facie evidence of the
validity of the copyright and of the facts stated in the
certificate.” 17 U.S.C. § 410(c).
The Prioritizing Resources and Organization for
Intellectual Property Act of 2008 (the “PRO IP Act”)
amended the Copyright Act to include a new provision,
17 U.S.C. § 411(b) (2008). Section 411(b) provides that a
“certificate of registration satisfies the [registration
requirement of § 411(a)], regardless of whether the
certificate contains any inaccurate information,” unless
(1) “the inaccurate information was included on the
application for copyright registration with knowledge that it
was inaccurate,” and (2) “the inaccuracy of the information,
if known, would have caused the Register of Copyrights to
refuse registration.” 17 U.S.C. § 411(b)(1).
Prior to the PRO IP Act, “we have held that ‘inadvertent
mistakes on registration certificates do not invalidate a
copyright and thus do not bar infringement actions, unless
the alleged infringer has relied to its detriment on the
mistake, or the claimant intended to defraud the Copyright
Office by making the misstatement.’” L.A. Printex, 676 F.3d
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 9
at 853 (quoting Urantia Found. v. Maaherra, 114 F.3d 955,
963 (9th Cir. 1997)); see also Unicolors, Inc. v. Urban
Outfitters, Inc., 853 F.3d 980, 991 (9th Cir. 2017) (“Good
faith mistakes in copyright applications do not preclude an
infringement action.”).
A copyright owner may file an application for
supplementary registration “to correct an error in a copyright
registration or to amplify the information given in a
registration.” 17 U.S.C. § 408(d). “The information
contained in a supplementary registration augments but does
not supersede that contained in the earlier registration.” Id.The Copyright Act regulations permit a work to be
registered separately, or under certain circumstances, as part
of a group of related works:
For the purpose of registration on a single
application and upon payment of a single
registration fee, the following shall be
considered a single work:
(A) In the case of published works: all
copyrightable elements that are otherwise
recognizable as self-contained works, that are
included in a single unit of publication, and
in which the copyright claimant is the same;
and
(B) In the case of unpublished works: all
copyrightable elements that are otherwise
recognizable as self-contained works, and are
combined in a single unpublished
“collection.”
10 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
37 C.F.R. § 202.3(b)(4)(i) (2007). 1 The Copyright Office
will not accept a group of published and unpublished works
in a single registration, as such a grouping does not satisfy
either (A) or (B) above. Id.; see also L.A. Printex, 676 F.3d
at 853–54. A work is published for purposes of the
Copyright Act when copies are distributed “to the public by
sale or other transfer of ownership, or by rental, lease, or
lending” or offered to be distributed “to a group of persons
for purposes of further distribution, public performance, or
public display.” 17 U.S.C. § 101.
I. Inaccurate Information in Copyright Registration
Fiesta argues that the district court erred in finding that
it included inaccurate information in its application for
copyright registration. The 1461 Design was registered as
part of an unpublished collection. Fiesta suggests that it
made a mistake by failing to include a publication date in its
application, which could be corrected by a supplemental
registration. Fiesta’s error was to include published works
in an unpublished collection, however. Adding a publication
date to the application would not correct this error, because
the Copyright Office would not have registered a published
design as part of an unpublished collection. See L.A. Printex,
676 F.3d at 853–54 (characterizing the inclusion of two
previously published designs in a work registered as an
unpublished collection as an “error”).
Fiesta next argues that the ‘509 Registration is not
inaccurate, because the entire collection of works had never
1
The regulations have been amended, effective March 15, 2019, to
include a new section regarding group registration of unpublished works.
The new regulation provides that “[a]ll the works in the group must be
unpublished.” 37 C.F.R. § 202.4(c)(1) (2019).
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 11
been published together as a collection, and therefore the
collection was properly registered as unpublished. Fiesta
provides no authority for the proposition that published and
unpublished works may be registered as a group, which is
contrary to the regulations, guidance from the Copyright
Office, and caselaw. See, e.g., id.; 37 C.F.R.
§ 202.3(b)(4)(i)(B) (effective July 6, 2007) (permitting
registration of “unpublished works . . . combined in a single
unpublished ‘collection.’”); U.S. Copyright Office,
Compendium of U.S. Copyright Office Practices § 607 (2d
ed. 1984) (“Compendium II”) (“For the purpose of
registration on a single application and payment of a single
fee, a number of unpublished works may be registered as a
single work.”). 2
Fiesta also contends that its ‘509 Registration was
accurate because any publication of the 1461 Design was a
“limited” distribution for promotional purposes and did not
constitute legal publication under the limited publication
doctrine. See Acad. of Motion Picture Arts & Scis. v.
Creative House Promotions, Inc., 944 F.2d 1446, 1452 (9th
Cir. 1991) (“[A] publication is ‘limited’ . . . when tangible
copies of the work are distributed both (1) to a ‘definitely
selected group,’ and (2) for a limited purpose, without the
right of further reproduction, distribution or sale.”). In its
second copyright application, however, Fiesta certified that
2
The third edition of the Compendium was issued in 2014. U.S.
Copyright Office, Compendium of U.S. Copyright Office Practices (3d
ed. 2014) (“Compendium III”). Although the Register would have
applied Compendium II at the time of Fiesta’s ‘509 Registration, the
Register cited Compendium III in her response to the district court’s
inquiry, noting that “the relevant practices have not materially changed.”
See generally Richlin v. Metro-Goldwyn-Mayer Pictures, Inc., 531 F.3d
962, 973 (9th Cir. 2008) (Copyright Register’s interpretation of
copyright law entitled to deference).
12 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
the date of first publication of the 1461 Design was March
12, 2013, when Fiesta began selling sample fabric bearing
the 1461 Design to its customers. Thus, Fiesta admitted that
this allegedly limited distribution constituted legal
publication, and that the publication occurred prior to the
registration of the 1461 Design as part of an unpublished
collection.
Moreover, Fiesta cannot demonstrate that it distributed
the fabric “for a limited purpose, without the right of further
reproduction, distribution or sale.” Id. at 1452. Although
Fiesta’s invoices included a copyright notice that prohibited
copying, reproducing, or altering the fabric designs, the
notice language did not prohibit customers from distributing
or reselling the fabric. 3
It is undisputed that Fiesta sold 190 yards of fabric
bearing the 1461 Design before registering its copyright.
Because the 1461 Design was distributed “to the public by
sale or other transfer of ownership,” it was published within
the meaning of the Copyright Act. 17 U.S.C. § 101; see also
Compendium II § 905.02 (publication includes distribution
to “persons who are under no implied or express restriction
with respect to disclosure of the work’s contents”). The
district court did not err in finding that the 1461 Design had
been published prior to registration and that, therefore,
3
Because we find that Fiesta does not satisfy the requirements of
the limited publication doctrine, we need not decide whether this
doctrine remains viable under the Copyright Act of 1976. The concept
of limited publication was read into the Copyright Act of 1909 “to
mitigate the harsh forfeiture effects of an improper publication” without
a copyright notice. Am. Vitagraph, Inc. v. Levy, 659 F.2d 1023, 1027
(9th Cir. 1981). The 1976 Act, which applies here, does not require
publication with a copyright notice, undermining the basis for the limited
publication doctrine. See 17 U.S.C. § 401(a).
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 13
Fiesta’s ‘509 Registration application contained an
inaccuracy.
II. Knowledge of the Inaccuracy
An inaccuracy in the application does not necessarily
invalidate a copyright registration, however. See 17 U.S.C.
§ 411(b)(1). Rather, the inaccurate information must have
been included in the application for copyright registration
“with knowledge that it was inaccurate” and “the inaccuracy
of the information, if known, would have caused the Register
of Copyrights to refuse registration.” Id.; see also L.A.
Printex, 676 F.3d at 852–53. The district court found that
Fiesta knew the information in the application was
inaccurate because it knew that it had previously sold fabric
bearing the 1461 Design to customers when it applied for the
‘509 Registration. Fiesta argues that it did not know that the
sale of samples to its customers constituted publication as a
matter of law under the Copyright Act, and therefore, it did
not have the requisite knowledge or fraudulent intent. The
district court characterized Fiesta’s position as one of
“ignorance of the law,” which is “no excuse,” and
determined that a showing of fraudulent intent is not
required to invalidate a copyright registration under
§ 411(b).
Both parties rely upon L.A. Printex. In that case, the
plaintiff registered a group of five textile designs as a single
unpublished collection entitled Small Flower Group A.
After bringing its infringement action, L.A. Printex became
aware that its copyright registration for Small Flower Group
A contained an error: two of the five designs—but not the
design at issue—had been published before the date of
registration. L.A. Printex filed an application for
supplementary registration to remove the two previously
published designs and the Copyright Office issued a
14 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
certificate of supplementary registration for Small Flower
Group A. The defendant argued that L.A. Printex’s
registration for the design at issue was invalid. Rejecting
this argument, we stated that “[t]he record, when viewed in
the light most favorable to L.A. Printex, does not
demonstrate that L.A. Printex knowingly included
previously published designs in its application for copyright
registration such that the error was other than an inadvertent
mistake, or that L.A. Printex intended to defraud the
Copyright Office.” Id. at 854.
Unlike the plaintiff in L.A. Printex, Fiesta knowingly
included previously published designs in its application to
register an unpublished collection. Fiesta was aware that it
had sold yards of fabric to customers prior to registering the
1461 Design as part of an unpublished collection. Although
Fiesta asserts that it did not believe that such sales
constituted publication as a matter of law, Fiesta provides no
reasonable basis for this belief. Fiesta’s lack of authority or
plausible explanation for its position distinguishes this case
from others in which a claimant’s good faith or inadvertent
mistake did not constitute a knowing inaccuracy. See
Unicolors, 853 F.3d at 990–91 (holding claimant’s
inadvertent exclusion of source artwork from application did
not invalidate registration because the copyright application
form is a “minefield for applicants attempting to properly
register a derivative work” and it was a “good faith
mistake”); Archie MD, Inc. v. Elsevier, Inc., 261 F.Supp.3d
512, 520 (S.D.N.Y. 2017) (holding claimant had no
knowledge of inaccuracy because whether licensing the
work constituted publication was an “unsettled legal
question”). Moreover, “the term ‘knowingly’ does not
necessarily have any reference to a culpable state of mind or
to knowledge of the law. As Justice Jackson correctly
observed, ‘the knowledge requisite to knowing violation of
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 15
a statute is factual knowledge as distinguished from
knowledge of the law.’” Bryan v. United States, 524 U.S.
184, 192 (1998) (citation omitted).
Fiesta claims that L.A. Printex requires a showing of
fraud on the part of the claimant in order to invalidate a
copyright registration. L.A. Printex did not address this
issue, however. Although we stated that there was no
evidence that the claimant intended to defraud the Copyright
Office, we did not consider the issue of whether a showing
of fraud is required to invalidate a registration pursuant to
§ 411(b). L.A. Printex, 676 F.3d at 853–54. We hold that
Fiesta’s argument is foreclosed by the plain language of
§ 411(b), which does not require a showing of fraud, but
only that the claimant included inaccurate information on the
application “with knowledge that it was inaccurate.”
17 U.S.C. § 411(b)(1)(A); see also Lamie v. United States
Tr., 540 U.S. 526, 534 (2004) (“It is well established that
‘when the statute’s language is plain, the sole function of the
courts—at least where the disposition required by the text is
not absurd—is to enforce it according to its terms.’” (citation
omitted)). 4
Fiesta was admittedly aware of the facts regarding its
fabric sales; its inclusion of designs that it knew had been
sold, and therefore published, in an unpublished collection
cannot be characterized as an inadvertent or good faith
4
The Eleventh Circuit held in Roberts v. Gordy that a showing of
“intentional or purposeful concealment of relevant information” is
required to render a registration invalid. 877 F.3d 1024, 1029 (11th Cir.
2017) (citation omitted). The court relied upon its prior precedent,
however, without attention to the plain language of § 411(b). Section
411(b) does not mention intentional concealment or fraud, but only that
the information was included “with knowledge that it was inaccurate.”
17 U.S.C. § 411(b)(1).
16 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
mistake. Thus, Fiesta included inaccurate information on its
application with knowledge that it was inaccurate.
III. Whether the Register of Copyrights Would Refuse
Registration
Pursuant to § 411(b)(1)(B), we next consider whether the
inaccuracy would have caused the Register of Copyrights to
refuse registration. The Register has indicated that it would
not register a single group of published and unpublished
works. Compendium III § 1106.1. In L.A. Printex, the
(unpublished) design at issue was registered as part of an
unpublished collection. The claimant mistakenly included
two published designs in the unpublished collection. The
claimant corrected the mistake by filing a supplemental
registration removing the published designs from the
unpublished collection. The Copyright Office accepted the
correction and issued a certificate of supplementary
registration. L.A. Printex, 676 F.3d at 845–46. The
Copyright Office’s decision to issue a certificate of
supplementary registration “shows that the error was not one
that ‘if known, would have caused the Register of
Copyrights to refuse registration.’” Id. at 854 (quoting
17 U.S.C. § 411(b)(1)(B)).
The district court noted that this is the inverse of the
situation faced in L.A. Printex. Fiesta did not obtain a
supplementary registration, but registered the 1461 Design
separately. Unlike the copyright owner in L.A. Printex,
Fiesta could not correct its registration by removing the
published designs, including the 1461 Design. Had it done
so, the ‘509 Registration would properly include only
unpublished designs, but it could not serve as a basis for this
action, because it would no longer include the 1461 Design.
The district court determined that because the Copyright
Office would not have registered the 1461 Design as part of
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 17
an unpublished collection, § 411(b)(1)(B) was met and the
registration was invalid as to the 1461 Design.
In light of the Register’s response, we agree that
§ 411(b)(1)(B) is satisfied and that the inaccuracy in the ‘509
registration renders it invalid as to the 1461 Design. Fiesta
included inaccurate information regarding the 1461 Design
in its application, knew the information was inaccurate, and
the Register would have refused registration of the collection
if it had been aware of the inaccuracy. The district court
properly declared the ‘509 registration invalid as to the 1461
Design, pursuant to § 411(b). 5 Because a valid registration
is a precondition to bringing an action for infringement, we
affirm the district court’s grant of summary judgment in
favor of Defendants.
IV. Attorney’s Fees
Fiesta asserts that the district court erred by granting
attorney’s fees in favor of Defendants. Exercising its
discretion pursuant to 17 U.S.C. § 505, the district court
5
Relying upon Syntek Semiconductor Co. v. Microchip Tech. Inc.,
307 F.3d 775 (9th Cir. 2002), Fiesta argues that the district court exceeded
its authority by “cancelling” its registration. Fiesta’s argument is
misplaced. In Syntek, the plaintiff sought a declaration that the
defendant’s copyright was invalid because it did not comply with the
applicable regulations by depositing the original source code. We
determined that, under the doctrine of primary jurisdiction, the issue was
properly considered first by the Register of Copyrights, which has the
authority to cancel a registration if the deposit material does not meet
certain legal requirements. Syntek did not address the issue before us—
whether a plaintiff failed to satisfy the registration requirement of
§ 411(a) because an inaccuracy in the application rendered the
registration invalid under § 411(b). The district court did not “cancel”
Fiesta’s registration, but held it to be invalid pursuant to § 411(b), which
was within the district court’s authority under the statute.
18 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
considered several factors, including whether Defendants
were the prevailing parties, the degree of success obtained,
whether the purposes of the Copyright Act were furthered,
whether an award against an impecunious party would create
a chilling effect, the plaintiff’s motivation in bringing suit
(bad faith), whether the plaintiff’s legal positions were
frivolous or unreasonable, and the need for compensation
and deterrence. See Fogerty v. Fantasy, Inc., 510 U.S. 517,
534 (1994) (non-exclusive factors to consider include
“frivolousness, motivation, objective unreasonableness . . .
and the need in particular circumstances to advance
considerations of compensation and deterrence”); Kirtsaeng
v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1989 (2016) (in
assessing fees, the court should give “substantial weight” to
the objective reasonableness of the opposing party’s
position, “but also taking into account all other relevant
factors”).
“The most important factor in determining
whether to award fees under the Copyright
Act, is whether an award will further the
purposes of the Act.” To reiterate, the Act’s
“primary objective” is to “encourage the
production of original literary, artistic, and
musical expression for the good of the
public.” While no longer a prerequisite to a
fee award, the “objective unreasonableness
(both in the factual and in the legal
components of the case)” of a losing party’s
claim can be a relevant indicator of whether
the Act’s primary objective is being served
by the litigation.
SOFA Entm't, Inc. v. Dodger Prods., Inc., 709 F.3d 1273,
1280 (9th Cir. 2013) (citations omitted). “A successful
GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING 19
defense furthers the purposes of the Copyright Act just as
much as a successful infringement suit does.” Inhale, Inc. v.
Starbuzz Tobacco, Inc., 755 F.3d 1038, 1043 (9th Cir. 2014).
The district court concluded that the following factors
weighed in favor of a fee award: Defendants were the
prevailing parties; the degree of success obtained (“modest
weight”); promoting the purposes of the Copyright Act by
encouraging defendants to advance meritorious defenses; no
chilling effect; Plaintiff advanced some “objectively
unreasonable” legal positions (“weighs slightly in favor of a
fee award”); and compensating Defendants and deterring
Plaintiff from pursuing claims based upon invalid
registrations (“provides some support for a fee award”). The
court found no “direct” evidence of bad faith on the part of
Plaintiff and considered this factor to be “neutral.”
Although Fiesta does not challenge the amount of the
award, Fiesta argues that the district court abused its
discretion in awarding fees. Fiesta contends that Defendants
should not be considered prevailing parties because the legal
relationship between the parties has not been materially
altered and Fiesta may still seek relief for infringement of its
1461 Design, based upon the ‘252 registration. Defendants
contend that they prevailed on the merits because the district
court dismissed Plaintiff’s claims with prejudice, and that
reassertion of those claims is barred by res judicata. “[A]
‘prevailing party’ is one who has been awarded some relief
by the court. . . . The key inquiry is whether some court
action has created a ‘material alteration of the legal
relationship of the parties.’” Cadkin v. Loose, 569 F.3d
1142, 1148 (9th Cir. 2009) (quoting Buckhannon Bd. & Care
Home, Inc. v. W. Va. Dep’t of Health & Human Res.,
532 U.S. 598, 603–604 (2001)). The district court dismissed
Plaintiff’s claim based upon the ‘509 registration with
20 GOLD VALUE INT’L TEXTILE V. SANCTUARY CLOTHING
prejudice and entered a final judgment on the merits;
accordingly, Defendants are the prevailing parties.
Buckhannon, 532 U.S. at 604.
Fiesta also argues that the district court should not have
awarded fees because Defendants prevailed on a technical
defense rather than on the merits. We have affirmed fees in
favor of a defendant who “prevailed on the merits rather than
on a technical defense, such as the statute of limitations,
laches, or the copyright registration requirements.” Fantasy,
Inc. v. Fogerty, 94 F.3d 553, 556 (9th Cir. 1996). We have
not held that prevailing on a technical defense necessarily
precludes an award of fees, however. The district court
acknowledged that Defendants prevailed on a “technical
defense” and found that “this factor provides modest weight
in support” of a fee award. We discern no basis to disturb
this conclusion.
The district court carefully considered and weighed the
various factors relevant to a fee award. Its decision does not
reflect “an inaccurate view of the law” or “clearly
erroneous” findings of fact. Cadkin, 569 F.3d at 1146.
Accordingly, the district court did not abuse its discretion in
awarding attorney’s fees to Defendants.
AFFIRMED.