Fashion Giant H&M Walks the Supreme Court Runway

Aron Solomon

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H&MSorbis / Shutterstock.com

Many people love H&M because they see the massive Swedish fast-fashion retailer as stylish and inexpensive, allowing them to have a far more extensive wardrobe than if they had to buy similar styles elsewhere at significantly higher prices. But few people realize that the designs at H&M may not exclusively be their own.

In 2011, Unicolors, a fabric design company, copyrighted 31 of their fabric designs, 9 of which were for the exclusive use of certain customers. Four years later, H&M allegedly sold clothes with the fabric designs they were not entitled to use and were sued by Unicolors.

The jury at the trial court agreed with Unicolors, finding that H&M had willfully infringed upon their copyright and was liable for $846,720 in damages - this after Unicolors offered to settle the case before trial if H&M would pay a $790,000 settlement.

When the case made it to the Ninth Circuit, they reversed and remanded, agreeing with H&M’s argument that the Unicolors copyright application had known inaccuracies.

The statute in issue here is 17 U.S.C. § 411, which deals with registration and civil infringement actions of copyrights. Unicolors argued before the Supreme Court on Monday morning that in breaking with its own precedent and similar decision of other circuit courts, the Ninth Circuit made a mistake when they held that that this statute requires referral to the Copyright Office where there is no indicia of fraud or material error as to the work at issue in the subject copyright registration.

The initial question presented for the Supreme Court - the one on which they granted certiorari - was:

“Did the Ninth Circuit err in breaking with its own prior precedent and the findings of other circuits and the Copyright Office in holding that 17 U.S.C. § 411 requires referral to the Copyright Office where there is no indicia of fraud or material error as to the work at issue in the subject copyright registration?”

After certiorari was granted, Unicolors changed the question presented to ask the Court:

“whether that ‘knowledge’ element precludes a challenge to a registration where the inaccuracy resulted from the applicant’s good-faith misunderstanding of a principle of copyright law?”

What complicates things (and makes them more interesting) here is that Unicolors is alleged to be a well-known copyright troll. As noted in this 2015 Fortune article, Unicolors was included in a group of copyright trolls seeking to take over the fashion industry. The article addresses the type of design in issue in the H&M case:

“Prints have received protection for more than 60 years, stemming from a 1954 Supreme Court case. But it was only about 10 years ago that one textile company, L.A. Printex, and its law firm, Doniger/Burroughs, attempted to engage the law full on and target companies they believed had stolen their prints—the florals, paisleys, geometric designs, animal skin patterns, and the like which so often appear on clothing.”

This same law firm brought the Unicolors suit against H&M. As a piece this past weekend in SCOTUSblog highlighted, Unicolors has brought hundreds of copyright infringement suits against companies such as Amazon, Dillard’s, JCPenney, Neiman Marcus, Nordstrom, and Walmart, among others.

As Joseph Marrone, a Philadelphia lawyer observed:

“When a litigant gets a reputation as a patent troll, it’s generally well-deserved and not something that goes away quickly.”

The author of the SCOTUSblog piece argued that an amicus brief filed by some prominent law professors about the dangers of copyright trolls could influence the justices in this case:

“I would be surprised if the large group of justices traditionally skeptical about the value of speculative securities litigation do not take a visceral skepticism about Unicolors from that filing.”

Part of the substantive problem in this case is that there are no infinite numbers of ways that you can make, for example, what I would describe as a “faux American Southwest” fashion print.

From the same fashion law article:

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Unicolors (left); H&M (right)

Even if the copyrights were properly filed, my very untrained eyes don’t see much of an infringement here. Nothing about the Unicolors textile print strikes me as particularly unique or creative. We can imagine a company seeking copyright protection on a range of patterns such as the one on the left, and then filing lawsuits against any company that decided to make a visually busy piece of clothing such as the H&M did with the jacket on the right.

In Monday’s oral arguments, counsel for Unicolors was asked why a change in the question presented at the merits stage of the briefing shouldn’t result in the case being dismissed as having been “improvidently granted.” Unicolors was also chided for failing to understand or appreciate the errors in their copyright filing.

Several justices referenced that Unicolors may indeed be a “troll,” rather than, as their counsel was trying to convince the Court, properly viewed in the same league as “poets and artists,” in relation to a cited case involving rappers. Unicolors counsel argued that their client isn’t a copyright troll and that they had honestly misunderstood the law. Because of this, they argued that the Supreme Court should reverse the Ninth Circuit’s decision because Congress "considered it more important to give authors and artists an effective remedy against IP thieves" than "demand perfect compliance with complex legal requirements."

Listening to the oral argument in real time, it was difficult to believe this theory that Unicolors is in the same group as authors, poets, artists, or rappers would get a lot of play from the justices, but it did. In fact, this poets and artists angle might actually win the day for Unicolors in this case.

While it is a reasonable argument that copyright laws that punish the layperson for failing to file a copyright in a perfect manner is oppressive for creators of all types of content, it seems like a massive stretch to view Unicolors in the same light as a layperson.

Yet, after a robust oral argument, it seems as if the Court is going to focus less on Unicolors as a patent troll and more on the need for actual poets and artists not to have a copyright system that makes imperfect filing a fatal flaw. If that’s the case, then it seems likely that the Court will reverse the Ninth Circuit’s decision. This end result might be a good one for the poets and artists among us, but an even better one for patent trolls.

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Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital, who has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.

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