Unicolors, Inc. v. H&M Hennes & Mauritz, Lp

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNICOLORS, INC., a California Nos. 18-56253
Corporation, 18-56548
Plaintiff-Appellee,
D.C. No.
v. 2:16-cv-02322-
AB-SK
H&M HENNES & MAURITZ, L.P., a
New York limited partnership,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
Andre Birotte, Jr., District Judge, Presiding
Submitted March 30, 2020 *
Pasadena, California
Filed May 29, 2020
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 UNICOLORS V. H&M HENNES & MAURITZ
Before: Carlos T. Bea and Bridget S. Bade, Circuit Judges,
and Jon P. McCalla, ** District Judge.
Opinion by Judge Bea
SUMMARY ***
Copyright
The panel reversed the district court’s judgment after a
jury trial and award of attorneys’ fees in favor of the plaintiff
in a copyright infringement action, and remanded for further
proceedings concerning copyright registration.
The district court denied defendant’s motion for
judgment as a matter of law on the ground that plaintiff’s
copyright registration was invalid because it secured the
registration by including known inaccuracies in its
application for registration.
The panel held that under 17 U.S.C. § 411(b)(1)–(2),
once a defendant alleges that (1) a plaintiff’s certificate of
registration contains inaccurate information; (2) “the
inaccurate information was included on the application for
copyright registration;” and (3) the inaccurate information
was included on the application “with knowledge that it was
inaccurate,” a district court is then required to submit a
**
The Honorable Jon P. McCalla, United States District Judge for
the Western District of Tennessee, 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.
UNICOLORS V. H&M HENNES & MAURITZ 3
request to the Register of Copyrights “to advise the court
whether the inaccurate information, if known, would have
caused [it] to refuse registration.” In other words, courts
may not consider in the first instance whether the Register of
Copyrights would have refused registration due to the
inclusion of known inaccuracies in a registration application.
The panel held that the district court erred in imposing
an intent-to-defraud requirement for registration
invalidation. The district court further erred in concluding
that plaintiff’s application for copyright registration of a
collection of works did not contain inaccuracies. The panel
held that single-unit registration requires that the registrant
first published a collection of works in a singular, bundled
collection. The panel also concluded that the undisputed
evidence adduced at trial showed that plaintiff included the
inaccurate information with knowledge that it was
inaccurate. Accordingly, the district court was required to
request the Register of Copyrights to advise the court
whether the inaccurate information, if known, would have
caused the Register to refuse registration. The panel
reversed and remanded for the district to complete this
statutorily required request.
COUNSEL
Staci Jennifer Riordan, Aaron Brian, and Dale A. Hudson,
Nixon Peabody LLP, Los Angeles, California, for
Defendant-Appellant.
Stephen M. Doniger, Scott Alan Burroughs, and Trevor W.
Barrett, Doniger / Burroughs, Venice, California, for
Plaintiff-Appellee.
4 UNICOLORS V. H&M HENNES & MAURITZ
OPINION
BEA, Circuit Judge:
This is a copyright-infringement action brought by
Unicolors, Inc. (“Unicolors”), a company that creates
designs for use on textiles and garments, against H&M
Hennes & Mauritz L.P. (“H&M”), which owns domestic
retail clothing stores. Unicolors alleges that a design it
created in 2011 is remarkably similar to a design printed on
garments that H&M began selling in 2015. The heart of this
case is the factual issue whether H&M’s garments bear
infringing copies of Unicolors’s 2011 design. Presented
with that question, a jury reached a verdict in favor of
Unicolors, finding the two works at least substantially
similar. On appeal, however, we must decide a threshold
issue whether Unicolors has a valid copyright registration for
its 2011 design, which is a precondition to bringing a
copyright-infringement suit.
I
Unicolors’s business model is to create artwork,
copyright it, print the artwork on fabric, and market the
designed fabrics to garment manufacturers. Sometimes,
though, Unicolors designs “confined” works, which are
works created for a specific customer. This customer is
granted the right of exclusive use of the confined work for at
least a few months, during which time Unicolors does not
offer to sell the work to other customers. At trial,
Unicolors’s President, Nader Pazirandeh, explained that
customers “ask for privacy” for confined designs, in respect
of which Unicolors holds the confined designs for a “few
months” from other customers. Mr. Pazirandeh added that
his staff follows instructions not to offer confined designs
for sale to customers generally, and Unicolors does not even
UNICOLORS V. H&M HENNES & MAURITZ 5
place confined designs in its showroom until the exclusivity
period ends.
In February 2011, Unicolors applied for and received a
copyright registration from the U.S. Copyright Office for a
two-dimensional artwork called EH101, which is the subject
of this suit. Unicolors’s registration—No. VA 1-770-400
(“the ’400 Registration”)—included a January 15, 2011 date
of first publication. The ’400 Registration is a “single-unit
registration” of thirty-one separate designs in a single
registration, one of which designs is EH101. The name for
twenty-two of the works in the ’400 Registration, like
EH101, have the prefix “EH”; the other nine works were
named with the prefix “CEH.” Hannah Lim, a Unicolors
textile designer, testified at trial that the “EH” designation
stands for “January 2011,” meaning these works were
created in that month. Ms. Lim added that a “CEH”
designation means a work was designed in January 2011 but
was a “confined” work.
When asked about the ’400 Registration at trial, Mr.
Pazirandeh testified that Unicolors submits collections of
works in a single copyright registration “for saving money.”
Mr. Pazirandeh added that the first publication date of
January 15, 2011 represented “when [Unicolors] present[ed]
[the designs] to [its] salespeople.” But these salespeople are
Unicolors employees, not the public. And the presentation
took place at a company member-only meeting. Following
the presentation, according to Mr. Pazirandeh, Unicolors
would have placed non-confined designs in Unicolors’s
showroom, making them “available for public viewing” and
purchase. Confined designs, on the other hand, would not
be placed in Unicolors’s showroom for the public at large to
view.
6 UNICOLORS V. H&M HENNES & MAURITZ
H&M owns and operates hundreds of clothing retail
stores in the United States. In fall 2015, H&M stores began
selling a jacket and skirt made of fabric bearing an artwork
design named “Xue Xu.” Upon discovering H&M was
selling garments bearing the Xue Xu artwork, Unicolors
filed this action for copyright infringement, alleging that
H&M’s sales infringed Unicolors’s copyrighted EH101
design. Unicolors alleges that the two works are “row by
row, layer by layer” identical to each other.
The case proceeded to trial, at which a jury returned a
verdict in Unicolors’s favor, finding Unicolors owned a
valid copyright in the EH101 artwork, H&M infringed on
that copyright by selling the contested skirt and jacket, and
H&M’s infringement was willful. The jury awarded
Unicolors $817,920 in profit disgorgement damages and
$28,800 in lost profits.
H&M filed a renewed motion for judgment as a matter
of law, or in the alternative, for a new trial. The district court
denied H&M’s renewed motion for judgment as a matter of
law, but conditionally granted H&M’s motion for a new trial
subject to Unicolors accepting a remittitur of damages to
$266,209.33. Unicolors accepted the district court’s
remittitur and the district court entered judgment against
H&M accordingly. Unicolors subsequently moved for
attorneys’ fees and costs, which the district court awarded in
the amounts of $508,709.20 and $5,856.27, respectively.
This appeal of both the entry of judgment and award of
attorneys’ fees in favor of Unicolors followed.
II
“To establish infringement, two elements must be
proven: (1) ownership of a valid copyright, and (2) copying
of constituent elements of the work that are original.” Feist
UNICOLORS V. H&M HENNES & MAURITZ 7
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361
(1991). As to ownership, a registration certificate issued by
the U.S. Register of Copyrights constitutes prima facie
evidence of the validity of a plaintiff’s copyright. 17 U.S.C.
§ 410(c).
Although proper registration benefits copyright-
infringement plaintiffs by imbuing their copyright with a
presumption of validity, proper registration is also a burden
of sorts, as it is “a precondition to filing an action for
copyright infringement.” Gold Value Int’l Textile, Inc. v.
Sanctuary Clothing, LLC, 925 F.3d 1140, 1144 (9th Cir.
2019); see 17 U.S.C. § 411(a). Proper registration, of
course, is not a precondition to copyright protection.
17 U.S.C. § 408(a). But the Copyright Act expressly
prohibits copyright owners from bringing infringement
actions without first properly registering their work. Id.
§ 411(a). Whether a copyright is properly registered is
rarely disputed, because the mere receipt of a registration
certificate issued by the Register of Copyrights ordinarily
satisfies the Copyright Act’s registration requirement. Id.
§ 411(b)(1). But possession of a registration certificate does
not satisfy the Copyright Act’s registration requirement if
the registrant secured the registration by knowingly
including inaccurate information in the application for
copyright registration that, if known by the Register of
Copyrights, would have caused it to deny registration. Id.
In practice, once a defendant alleges that (1) a plaintiff’s
certificate of registration contains inaccurate information;
(2) “the inaccurate information was included on the
application for copyright registration”; and (3) the inaccurate
information was included on the application “with
knowledge that it was inaccurate,” a district court is then
required to submit a request to the Register of Copyrights “to
8 UNICOLORS V. H&M HENNES & MAURITZ
advise the court whether the inaccurate information, if
known, would have caused [it] to refuse registration.” Id.
§ 411(b)(1)–(2). In other words, courts may not consider in
the first instance whether the Register of Copyrights would
have refused registration due to the inclusion of known
inaccuracies in a registration application.
Here, following the unfavorable verdict, H&M filed a
renewed motion for judgment as a matter of law that
contended, in relevant part, that Unicolors’s ’400
Registration covering the EH101 work was invalid because
Unicolors secured the registration by including known
inaccuracies in its application for registration. In particular,
H&M noted that Unicolors used a single copyright
registration to register thirty-one separate works, one of
which was EH101. But to register a collection of works as a
“single unit” as Unicolors did, H&M maintained that the
works must have been first sold or offered for sale in some
integrated manner. And because the undisputed evidence
adduced at trial showed that Unicolors included in the ’400
Registration at least nine confined works that were sold
separately and exclusively to individual customers, H&M
argued that the collection of works identified in the ’400
Registration were not first sold together and at the same
time. In turn, H&M contended the district court should find
the ’400 Registration invalid and enter judgment in favor of
H&M.
The district court rejected H&M’s argument for
invalidating the ’400 Registration for two reasons. First, the
district court held that invalidation required a showing at
trial that Unicolors intended to defraud the Copyright Office,
and found no evidence introduced at trial showed such an
intent. Second, the district court held that although
Unicolors may have marketed and sold various works
UNICOLORS V. H&M HENNES & MAURITZ 9
included in the ’400 Registration separately, that did not
mean all of the works were not first made available to the
public—i.e., published—on the same day.
Both the district court’s reasons for denying H&M
judgment as a matter of law are flawed. To be sure, several
opinions from this Court have implied that there is an intent-
to-defraud requirement for registration invalidation. See
L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841,
853–54 (9th Cir. 2012); see also Lamps Plus, Inc. v. Seattle
Lighting Fixture Co., 345 F.3d 1140, 1145 (9th Cir. 2003)
(stating that inaccuracies “do not invalidate a copyright . . .
[unless] the claimant intended to defraud the Copyright
Office by making the misstatement”) (quoting Urantia
Found. v. Maaherra, 114 F.3d 955, 963 (9th Cir. 1997));
Three Boys Music Corp. v. Bolton, 212 F.3d 477, 486–87
(9th Cir. 2000) (same), overruled on other grounds by
Skidmore v. Led Zeppelin, 952 F.3d 1051 (9th Cir. 2020) (en
banc); Cooling Sys. & Flexibles, Inc. v. Stuart Radiator, Inc.,
777 F.2d 485, 487 (9th Cir. 1985) (“Absent fraud, a
misstatement or clerical error in the registration application
. . . will not invalidate the copyright . . . .”) (internal
quotation marks omitted), overruling on other grounds
recognized by Apple Computer, Inc. v. Microsoft Corp.,
35 F.3d 1435, 1448 (9th Cir. 1994); 2 M. Nimmer & D.
Nimmer, Nimmer on Copyright § 7.20[B][1] (2019). But we
recently clarified that there is no such intent-to-defraud
requirement. See Gold Value Int’l Textile, Inc., 925 F.3d at
1147 (9th Cir. 2019).
The district court further erred in concluding that
Unicolors’s application for copyright registration did not
contain inaccuracies despite the inclusion of confined
designs because single-unit registration requires merely that
all works identified in the application be published on the
10 UNICOLORS V. H&M HENNES & MAURITZ
same date. Under the Copyright Act, an author may register
a collection of published works “as a single work,” so that
the registrant need pay only one filing fee. 37 C.F.R.
§ 202.3(b)(4) (effective January 24, 2011). 1 To register such
a collection of published works, the works must have been
“included in a single unit of publication.” Id.
§ 202.3(b)(4)(i)(A) “Publication” under the Copyright Act
is defined as the initial “distribution” or “offering to
distribute” the “work to the public by sale or other transfer
of ownership, or by rental, lease, or lending.” 17 U.S.C.
§ 101. As we have explained, publication includes when
copies of a work are “made available to the general public
. . . even if a sale or other such disposition does not in fact
occur.” Am. Vitagraph, Inc. v. Levy, 659 F.2d 1023, 1027
(9th Cir. 1981) (quoting 1 M. Nimmer & D. Nimmer,
Nimmer on Copyright § 4.04 at 4-18 to 4-19 (1978)). The
confined designs, however, were not placed in the showroom
for sale at the same time. And this court has never previously
addressed what it means to publish multiple works as a
“single unit.” 2
We conclude that the plain meaning of “single unit” in
§ 202.3(b)(4)(i)(A) requires that the registrant first
published the collection of works in a singular, bundled
1
The current version of § 202.3(b)(4) refers to registration “as one
work” rather than “as a single work.” We use the language of the
regulation’s version effective January 24, 2011, which is the operative
version in this case.
2
The Third Circuit discussed the single-unit requirement in a
published opinion, but that case provides no help to the matter at hand.
See Kay Berry, Inc. v. Taylor Gifts, Inc., 421 F.3d 199, 204–06 (3d Cir.
2005) (mentioning the single-unit registration option and concluding the
individual works need not be “related,” but not explaining what it means
for works to be part of a “single unit”).
UNICOLORS V. H&M HENNES & MAURITZ 11
collection. The relevant language of the regulation provides,
in full:
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[.]
37 C.F.R. § 202.3(b)(4)(i)(A) (emphasis added). The plain
meaning of the word “single” unsurprisingly commands a
sense of singularity. See Single, Merriam-Webster
Dictionary, https://www.merriam-webster.com/dictionary/s
ingle (defining “single” as “unaccompanied by others”).
The plain meaning of “unit” is no different. See Unit,
Merriam-Webster Dictionary, https://www.merriam-
webster.com/dictionary/unit (defining “unit” as “a single
thing, person, or group that is a constituent of a whole”).
Together, the two words suggest that a “single unit of
publication” refers to some singular, bundled item that
contains all works identified in the registration.
The proverbial toolkit of statutory interpretation
reinforces that a collection of published works that make up
“a single unit of publication” must have been first published
as part of some singular, bundled collection. The principle
of noscitur a sociis—“it is known by its associates” or “birds
of a feather flock together”—instructs that words in statutes
are given more precise content by neighboring words.
12 UNICOLORS V. H&M HENNES & MAURITZ
See Life Techs. Corp. v. Promega Corp., 137 S. Ct. 734, 740
(2017); see also Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts, 195–98
(2012) (describing noscitur a sociis and explaining its
meaning as “birds of a feather flock together”). Here,
§ 202.3(b)(4)(i)(A) refers to “copyrightable elements that
are otherwise recognizable as self-contained works, which
are included in a single unit of publication.” (emphasis
added). By referring to “elements” that are “otherwise . . .
self-contained works,” the regulation unambiguously
contemplates that a “single-unit of publication” does not
cover separate self-contained works, but instead covers the
unification of such works that otherwise could be self-
contained. 3
For these reasons, we hold that a collection of works
does not qualify as a “single unit of publication” unless all
individual works of the collection were first published as a
singular, bundled unit. Therefore, it is an inaccuracy for a
registrant like Unicolors to register a collection of works
(such as the works identified in the ’400 Registration) as a
single-unit publication when the works were not initially
3
Even if the term “single unit” were ambiguous, we would hold the
term has the same meaning. If it were ambiguous, we would look to how
the U.S. Copyright Office has defined the term in its internal manual,
Compendium of Copyright Office Practices (“Compendium”), which is
entitled to Skidmore deference. Inhale, Inc. v. Starbuzz Tobacco, Inc.,
755 F.3d 1038, 1041–42 & n.2 (9th Cir. 2014). The Compendium details
that the “single unit of publication” option applies to a collection of
published works “first distributed to the public in the packaged unit.”
Compendium § 1103. In other words, a single unit of publication refers
to separately copyrightable works “that are physically bundled together
and distributed to the public as a unit, such as a board game containing
instructions, a game board, and sculpted playing pieces.” Id. The
Compendium’s definition for “single unit” thus aligns with what we
ascribe as its unambiguous and plain meaning.
UNICOLORS V. H&M HENNES & MAURITZ 13
published as a singular, bundled collection. At a minimum,
the confined works included in the ’400 Registration were
initially made available only to individual, exclusive
customers.
The undisputed evidence adduced at trial further shows
that H&M included the inaccurate information “with
knowledge that it was inaccurate.” 17 U.S.C.
§ 411(b)(1)(A). And the knowledge inquiry is not whether
Unicolors knew that including a mixture of confined and
non-confined designs would run afoul of the single-unit
registration requirements; the inquiry is merely whether
Unicolors knew that certain designs included in the
registration were confined and, therefore, were each
published separately to exclusive customers. See Gold
Value Int’l Textile, Inc., 925 F.3d at 1147. At trial, Unicolors
admitted to having such knowledge.
Although Unicolors’s application for the ’400
Registration contained known inaccuracies, that does not
mean H&M was entitled to judgment as a matter of law.
Rather, the district court was required to “request the
Register of Copyrights to advise the court whether the
inaccurate information, if known, would have caused the
Register . . . to refuse registration.” 17 U.S.C. § 411(b)(2).
Because the district court did not make the statutorily
required request, we remand the case so that the district court
can complete this requirement before deciding whether
Unicolors’s registration is invalid, which would require
dismissing Unicolors’s claims and entering judgment in
favor of H&M.
III
For the foregoing reasons, we reverse the district court’s
entry of judgment and award of attorneys’ fees in favor of
14 UNICOLORS V. H&M HENNES & MAURITZ
Unicolors and remand to the district court with instructions
to submit an inquiry to the Register of Copyrights asking
whether the known inaccuracies contained in the ’400
Registration application detailed above, if known to the
Register of Copyrights, would have caused it to refuse
registration. Because the validity of Unicolors’s copyright
registration is a threshold issue, we do not consider here the
many other questions presented on appeal. 4 In the event the
district court determines on remand—and after submitting
the necessary inquiry to the Register of Copyrights—that
Unicolors has a valid copyright registration in EH101, this
panel retains jurisdiction over any subsequent appeal to
review that determination and, if necessary, to decide
remaining questions presented in this appeal.
REVERSED AND REMANDED.
4
As the Supreme Court has explained, the Copyright Act’s
registration requirement is not a jurisdictional requirement; rather, it is a
claim-processing rule. Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154,
163–66 (2010). That does not change that Unicolors’s compliance with
the Copyright Act’s registration requirement is a threshold matter. As
the Supreme Court recently clarified, a claim-processing rule can still be
“mandatory,” which means “that a court must enforce the rule if a party
‘properly raise[s]’ it.” Fort Bend Cty. v. Davis, 139 S. Ct. 1843, 1849
(2019) (alteration in original) (quoting Eberhart v. United States,
546 U.S. 12, 19 (2005) (per curiam)). The Fort Bend County Court even
noted that “the Copyright Act’s requirement that parties register their
copyrights” is one such mandatory claim-processing rule. Id. Here, the
parties do not dispute that H&M properly raised its challenge to
Unicolors’s compliance with the Copyright Act’s registration
requirement.