How Much Mischief Can Copyright Registrations Cause?

What Happens if Reasonable Minds Could Disagree Whether Information in a Copyright Registration Is “Inaccurate”?

Last time, I wrote about an outrageous legal result, Unicolors v. H & M. Because the copyright holder made a ministerial (i.e., minor) mistake on its copyright registration application form, it had a very large judgment for copyright infringement thrown out. It had won at trial, been awarded money damages by a jury, then been awarded its attorneys’ fees, but the Ninth Circuit Court of Appeals threw the whole thing out¹Mostly. Practically. What the Ninth Circuit really did was suspend the awards, send the case back to the trial court, with instructions for the trial court to ask the U.S. Copyright Office whether it would have rejected the application had it known about the mistakes. The answer is very likely going to be “yes.” because the copyright owner mixed works into its group registration that shouldn’t have been there. This was wrong, but the only harm was that the U.S. Copyright Office didn’t receive a few bucks in filing fees. The punishment didn’t fit the crime.²The copyright owner will be able to sue again, once it fixes the mistake. But it will have lost its right to recover attorney’s fees, so a subsequent lawsuit will probably be too uneconomical to bring.

The eyes have it. I believe this (or something like it) is a “Squeezamal” at issue in this case.

I ended up questioning why we even have a copyright registration system at all, particularly one that requires you to be on a higher plane of existence of understand. Yes, you own the copyright of your creative work as soon as you make it³”Fix it in a tangible medium.”. No, you can’t enforce it until you register the work. It’s like buying a car without a gas tank.

Yes, the copyright holder could’ve avoided the whole problem by consulting with lawyers more. But copyright registrations are ministerial in nature: they just record what’s already there. And anyone who regularly produces creative goods will be filing a lot of them. The process of getting a copyright registration should not require a lawyer. It’s not only an unnecessary expense but an unnecessary intrusion on the business side of creation.

One of the holdings of Unicolors was that, for a copyright holder to make a mistake “knowingly,” it just has to know what information it is providing. It does not need to know that that information is legally incorrect. Thus, it didn’t matter that the copyright holder thought including those nine designs was legal. It only mattered that it knew it was including those nine designs. This holding isn’t unreasonable, but there are some unpleasant consequences that might flow from it—consequences every bit as a bad as what happened to Unicolors.

In (Legal) Conclusion…

Now, to back up for a moment. To invalidate a copyright registration based on erroneous information, you have to prove two things. First, you have to prove that the copyright holder knew about the mistake. Second, you have to prove the U.S. Copyright Office would have rejected the application had it known about the erroneous information. The Unicolors case was mostly about the first prong. The Ninth Circuit kicked consideration of the second prong back to the trial court (but it’s fairly clear how that’s going to go).

Unicolors’ mistake was the result of failing to read various U.S. Copyright Office circulars carefully. The U.S. Copyright Office really does try hard to explain the vagaries of rules governing copyright registration. The mistake Unicolors made was understandable but avoidable.

But I can think of some unavoidable mistakes. There are several instances in filling out an application for copyright registration where the applicant must reach legal conclusions based on facts. You know, the sort of things that courts do after a trial.

Consider authorship. Yes, most of the time, the “author” of the work is just the person who created it. But much of the time, the author is someone else. Or there are more than one authors. And often, it’s not clear who the author(s) are.

Main Squeezes

In Beverly Hills Teddy Bear Co. v. Best Brands Consumer Products, Inc., the defendant attacked the copyright registration at issue on authorship grounds.⁴And also on grounds related to date and place of publication, which is just lame. Beverly Hills Teddy Bear (we’ll just call it “BHTB”) sells and holds the copyrights in a line of squeeze-y stuffed animals, called “Squeezamals.” It sued Best Brands for copyright infringement, alleging that Best Brands’ “Fuzzy Squishy”⁵I cannot help must notice that this retailer uses the SQUEEZAMALS trademark to describe what appears to be Best Brands’ products. line of stuff animals copied the “Squeezamals.”

What’s interesting is how BHTB came up with the designs for the Squeezamals. It held a design contest through 99 Designs, in which artists were invited to submit designs, with the winner(s) receiving a cash prize.⁶This process isn’t that rare, actually. BHTB provided the contestants with pre-existing designs (some its own, some from competitors) to give them an idea of what it had in mind.

There ended up being two winners. BHTB liked one design overall, but liked another design’s eyes. It asked the main winner to incorporate the other design’s eyes into his design. That ended up being the final design. From there, BHTB employees figured out how to express the two-dimensional design into three-dimensional stuffed animals—a process, one imagines, that’s fairly conventional and well-understood.

As part of the contest, the two winners assigned their copyrights to BHTB. As the copyright holder (by assignment), BHTB applied to register the stuffed animals based on the final design, not the final design itself. It named the main winner as the sole author. And it made no mention of any of the works it provided as inspiration for the contest.

Author! Authors!

Best Brands seized on these facts to attack the registration on three grounds:

1. The “real” author was whoever adapted the main design into stuffed animals. BHTB should’ve named that “person” (almost certainly itself, as the employer) as the sole author, then noted that it was derived from the main design.
2. There should have been two authors, the main winner and the winner who designed the eyes.
3. The work should have noted that it was derived from the works the competitors were to use as inspiration.

Luckily, the court decides that it doesn’t need to refer these issues to the U.S. Copyright Office, on grounds that you don’t need a weatherman to know which way the wind blows. For each of these issues, Best Brands didn’t meet its burden to prove that there was even a question about error. I’ll explain briefly:

1. The process of converting a two-dimensional design to a three-dimensional stuffed animal lacks creativity. The BHTB employees were just trying to replicate the main winner’s design into a different form.
2. While it’s true that the final design was the result of two different author’s contributions, it takes more than that for authorship to be “joint.” The two authors must intend their contributions to make a unified whole. In this case, the designer of the eyes wasn’t involved the the creation of the final design, so she couldn’t have intended for her design to be combined with another design.
3. Inspiration isn’t derivation. If that were the case, every work would be derived from other works. That would be stupid (legally speaking).

No Good Faith? No Safe Path

But what if the questions of authorship and derivation were closer? What if the final design was missing a lot of details that had to be supplied by BHTB’s employees? What if the other winner were consulted about how to integrate the eyes into the main design? What if the winner design looked a lot like one of the inspiration works? In each of these cases, reasonable minds could differ about who the author or authors were. What if the court decided that, though the questions were close, BHTB had guessed wrong?

We might brush this off: BHTB would’ve had a good-faith basis for providing the information it provided, right? That would be a forgivable mistake, right? But under the Ninth Circuit’s interpretation of “with knowledge” in Unicolors, good faith would have nothing to do with it. If the court disagreed with BHTB’s interpretation of the facts, BHTB’s inclusion (or failure to include) certain information would still be “erroneous,” and it would still “know” that it had provided the erroneous information.

Note that there’d be no “safe” path for BHTB where the questions are close. If it included the other winner as a joint author, that information would be “wrong” if the court found no joint authorship. BHTD would be trying to guess which way a coin flip would go, and it might not know until it had already sued a blatant infringer and was three-quarters of the way through a lawsuit—or worse, after it won and had its victory reversed on appeal because the appellate court saw the issue differently.

I suspect that courts will find ways to resist punishing copyright holders in this way. Good faith might be technically irrelevant, but it’s hard to remove from legal thinking. All the same, under Unicolors, any copyright that has difficult questions of authorship (among other things) should be vulnerable to these avenues of attack. Involving a lawyer would often help—but lawyers really shouldn’t be necessary!—but there will be times when even an experienced copyright lawyer might just be guessing.

Thanks for reading!

Rick Sanders

Rick is currently General Counsel for Software Freedom Conservancy. Previously, he has been practicing law as an intellectual-property litigator since 2000.