United States: Inaccurate Copyright Application, Without A Plausible Excuse From The Copyright Owner, Leads To Invalidation Of Registration

In defending against Sanctuary Clothing’s claim that Fiesta Fabrics knowingly included inaccurate information in its copyright application, Fiesta pled ignorance of the law. Specifically, Fiesta claimed that it didn’t understand the law regarding what constitutes a “publication.” The Ninth Circuit rejected Fiesta’s plea, concluding both that Fiesta’s claim wasn’t plausible and that, in any event, Fiesta’s “factual knowledge” was what was important, not its understanding of the law.

Fiesta creates textile designs and sells fabrics used by its customers, including Sanctuary, to make clothing. Fiesta sued Sanctuary for copyright infringement, alleging that Sanctuary copied Fiesta’s 1461 Design to manufacture and sell blouses in Sanctuary’s retail stores. Sanctuary counterclaimed to invalidate Fiesta’s U.S. Copyright Registration No. VAu 1-151-509 (“’509 Registration”), which covered the 1461 Design.

Fiesta’s ’509 Registration included not just the 1461 Design, but thirty-three other designs, and was registered as an “unpublished” collection. The Copyright Act permits this registration format, allowing individual works to be registered as part of a group of related works—but only under certain circumstances. To be registered as a group, the individual works must be “recognizable as self-contained works,” and they must be either all published or all unpublished. Whether a work is considered published is governed by 17 U.S.C. § 101, which defines what constitutes publication. A group of published and unpublished works cannot be registered together.

That limitation created a problem for Fiesta. It had certified in the ’509 application that none of the works in the collection had been published. But prior to filing the application, Fiesta had sold samples of fabric with the 1461 Design to a group of existing and potential customers, hoping to secure future orders.  Based on this sales evidence, Sanctuary had moved in the district court for summary judgment that the ’509 Registration was invalid because it contained inaccurate information.

As a legal matter, though, the inclusion of some inaccurate information in a copyright application does not automatically render the registration invalid.  Rather, to invalidate a copyright based on inaccurate information, the claimant must show both that (1) “the inaccurate information was included on the application . . . 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) (emphasis added).

The district court found that both elements had been established and entered summary judgment for Sanctuary. The court determined that Fiesta knowingly included inaccurate information in the ’509 application because it knew that the 1461 Design had previously been sold.  And after obtaining the Copyright Office’s views, as required by 17 U.S.C. § 411(b), the court found that the Copyright Office would have not have granted the ’509 Registration as an unpublished collection because the 1461 Design had been published.

On appeal to the Ninth Circuit, Fiesta argued that the district court was wrong on both counts. However, reviewing the grant of summary judgment de novo, the Ninth Circuit affirmed.

After disposing of Fiesta’s argument that its ’509 application included no inaccurate information, the court addressed the main issue: Fiesta’s argument that it did not act with the knowledge required to invalidate the ’509 Registration because it did not know that the sale of samples constituted “publication” under the Copyright Act. The district court characterized Fiesta’s argument as “ignorance of the law,” which it said was “no excuse.” Addressing this issue, the Ninth Circuit concluded that “Fiesta provide[d] no reasonable basis” for its claimed lack of knowledge. Thus, the court said, Fiesta’s “lack of authority or plausible explanation for its position distinguishe[d] this case from others in which a claimant’s good faith or inadvertent mistake did not constitute a knowing inaccuracy.” Moreover, drawing from criminal law concepts, the court noted that the term “knowingly” does not necessarily mean “a culpable state of mind” or “knowledge of the law.” Quoting from Bryan v. United States, the court said that “the knowledge requisite to [a] knowing violation a statute is factual knowledge as distinguished from knowledge of the law.”

And the court had no trouble finding that Fiesta had “factual knowledge” that its application included inaccurate information. As the court concluded, “Fiesta was admittedly aware of the facts regarding its fabric sales,” and the inclusion in its application of “designs that it knew had been sold, and therefore published, in an unpublished collection” could not be characterized as an “inadvertent “ or “good faith mistake.” As a result, the court said, Fiesta had “included inaccurate information on its application with knowledge that it was inaccurate.”

In short, Fiesta’s claimed ignorance of the law did not save the day. In the court’s view, the claim wasn’t plausible, and the court also found it didn’t matter anyway, since it’s “factual knowledge” that matters, not knowledge of the law

The case is Gold Value Int’l Textile, Inc. v. Sanctuary Clothing, LLC, No. 17-55818 (9th Cir. June 4, 2019).

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