Supreme Court Rules: Copyright Registration Required to File Suit

On March 4, 2019, the U.S. Supreme Court resolved an intriguing circuit split in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC. Justice Ginsburg authored the unanimous decision, holding: “registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright.” The Court rejected the argument by Fourth Estate that the registration requirement of the Copyright Act was accomplished by filing an application for registration. In its rationale, the Court leaned heavily on the language of the statute.

The Copyright Act (17 U.S.C. §411(a)) reads: “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights.”

Simply put, the Court stated that, “if application alone sufficed to ‘make’ registration, §411(a)’s second sentence –allowing suit upon refusal of registration –would be superfluous.”

The Court examined other provisions of the statute to interpret the meaning of §411. The Court found that the phrase “after examination” in §401 meant that “registration,” as used in the statute, follows action taken by the Register. The statute provides an exception to the registration requirement before suit through preregistration of a work that may be “vulnerable to predistribution infringement –notably a movie or musical composition,” and permits the start of an infringement action prior to registration for some live broadcasts.

How will the fashion business be affected by the ruling? This being an industry that spans the world, many creators argued in amicus briefs that requiring pre-suit registration for U.S. authors and domestic works placed them at a disadvantage since such a requirement conflicted with the Berne Convention’s de-emphasis on copyright formalities. However, the Court’s decision noted that the U.S. Congress had the opportunity to amend the copyright statute in 1988, 1993, and 2005, but declined to remove the registration formality in each instance.

The Court also pushed back against Fourth Estate’s argument that the Copyright Office’s processing time for applications was too slow, and instead pointed out that expedited processing was available, albeit for an additional $800 fee. The Court also indicated that the Copyright Office’s slow processing times could be improved should Congress address budgetary and staffing shortages.

In practice, the amount of time the Copyright Office takes to process an application is less relevant once the registration issues.

Since copyright subsists from creation in tangible form, requiring registration prior to commencing a suit for infringement does not preclude copyright owners from recovering compensatory damages from infringement that occurred prior to registration. A registration within three months of first publication will relate back to the publication date for purposes of recovery of statutory damages and attorneys’ fees; and the effective date of the registration is the date on which the copyright application is submitted and completed with the submission of the deposit copy and payment of the registration fee.

The Court’s decision is understandable as it is compelled by the statutory language. But what does this mean for creators, practitioners, and other stakeholders? Only the future will tell the long term effects in the fashion industry, but the message remains clear: if a design that is protectable by copyright is important, register it as soon as you can, preferably before it is distributed or displayed to the public, if you want to obtain the best protection and the broadest remedies in the United States.

Credit: Candace R. Arrington

See post: Supreme Court to Resolve When Copyright Suit Can Commence


Supreme Court to Resolve When Copyright Suit Can Commence

On January 8, 2019, the U.S. Supreme Court heard oral arguments in, Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC. The court is expected to resolve a decades-old split of opinion among the federal Circuit Courts on whether the Copyright Act permits a lawsuit to be filed upon submission of a copyright application or not until the copyright registration certificate has been issued or refused.

The language in the statute is simple. 17 U.S.C. § 411 reads: “no civil action shall be instituted until … registration of the copyright claim has been made in accordance with this title.” The statute also provides that, “[i]n any case … where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights.”

In this case, Fourth Estate sued Wall-Street.com when the website continued to publish Fourth Estate’s work after the expiration of the limited license that had been granted to the website. Fourth Estate filed copyright applications for the misappropriated online publications and then asserted a claim for copyright infringement; however, its claim was dismissed by the Eleventh Circuit because the Copyright Office had not yet issued registration certificates. As have the Courts of Appeal for the Third and Seventh Circuits, the Eleventh Circuit follows the Tenth Circuit’s “registration approach,” which requires the Copyright Office to have acted on an application for registration by approving or denying it prior to initiating a lawsuit. The Fifth and the Ninth Circuits, however, follow the “application approach,” which allows for the commencement of an action upon filing a copyright application.

The split among those courts has large implications for photographers, writers, musicians, and fashion designers. For instance, the Copyright Office application processing time is notoriously slow: it can range from six months to more than a year to issue a registration. Creators are forced to endure an unpredictable wait time – or avoid that delay by paying an additional $800 special handling fee for expedited processing. In a seasonal industry such as fashion, where trends evolve so quickly and styles head to market within just a few months from creation, a small company cannot afford to sit back and wait for its copyright applications to be processed if infringement appears to be a credible threat, but it may also find that filing multiple applications with very significant expedited processing fees imposes an unacceptably great financial burden.

The fashion industry is a multi-billion dollar international industry. It has been argued that requiring the issuance of a registration certificate (or a refusal to register from the Copyright Office) for American authors and domestic works before litigation can commence conflicts with the de-emphasis on copyright formalities established by the Berne Convention, which governs copyrights across the globe. For now, this is all in the hands of the Supreme Court. We will provide a follow-up post when its decision is rendered.

Credit: Candace R. Arrington


Textiles and Tariffs

Just as fashion designers and retailers have been struggling to adapt to changing consumer demands, they now must face a new battle: a trade war.

Back in May, the White House announced its plan to impose tariffs on $50 billion of Chinese goods in the hope of pressuring China to stop alleged unfair trade practices and intellectual property infringement. After the U.S. Trade Representative, Robert E. Lighthizer, released the final list of goods subject to the new tariffs, China responded with tariffs of its own on U.S. goods. Upping the ante in July, the U.S. next threatened to impose a second round of levies, resulting in 25% aggregate tariffs on an additional $200 billion of Chinese goods. Once again, China hit back with more tariffs of its own.

Many economists have warned that the effect of a prolonged trade war between China and the U.S. will ultimately increase prices for American consumers and will damage U.S. businesses. Those working in the fashion industry are likely to agree. The May round of tariffs placed on Chinese imports, which covered a range of industrial, agricultural, and medical goods, left the fashion industry relatively unscathed. But the next round of tariffs, initially rumored to include textiles, handbags and suitcases, is likely to hit designers, retailers and, ultimately, the American shopper.

Following the U.S. threats made in July, Mr. Lighthizer agreed to hold a hearing to discuss market opposition to the proposed tariffs. In attendance at the hearing, held in August, were more than 350 stakeholders, including the Council of Fashion Designers of America, the American Apparel & Footwear Association and the Accessories Council.

To say that the American apparel industry relies on Chinese manufacturing may be an understatement. Kathryn Hopkins of Women’s Wear Daily (WWD) has noted that “China is vitally important to the industry with government data showing the U.S. imported $27 billion worth of apparel from the country last year, accounting for 34 percent of all apparel imports. That is more apparel than was imported from any other country, dwarfing second-place Vietnam at $12 billion.”

Concerned about impending tariffs, Edward Rosenfeld, the CEO of Steve Madden, told WWD: “We and others will certainly try to pass on a good chunk of this to the consumer in the form of higher retail prices.” Steve Madden is also looking to move its handbag manufacturing from China to Cambodia in response to the higher duties.

National Retail Federation President and CEO, Matthew Shay, told WWD: “This round of tariffs amount[s] to doubling down on the recklessness of imposing trade policy that will hurt U.S. families and workers more than they will hurt China – it’s two-and-a-half times the amount already imposed.”

Smaller businesses are particularly vulnerable to the proposed levies. Anne Harper, the CEO of OMG Accessories (annual sales: approximately $2 million), expressed her concern for the impending tariffs, stating: “I can’t just absorb that percentage…. The bread and butter of my business is selling to retailers, so that’s a big challenge. Q4 is where we ship all of our holiday goods. If the 10 percent comes into effect right before the goods ship from China, we’re subject to that extra 10 percent so it represents hundreds of thousands of dollars for my business. It’s basically a loss.”

On August 26, 2018, China filed a formal dispute with the World Trade Organization (WTO), alleging that the U.S. tariffs violate WTO rules.

On September 17, 2018, the White House made good on its warnings in July, confirming that tariffs of 10% would be placed on $200 billion worth of Chinese imports – ranging from silk to handbags. China promptly responded again, stating it would impose its own tariffs, of 5% to 10%, on $60 billion worth of U.S. goods. Meanwhile, the U.S. has threatened to increase tariffs on Chinese goods to 25% total on January 1, 2019, unless the two countries can conclude a trade deal.

Is there an endgame in sight? At this point, there are more questions than answers. The White House is slated to share more information following its September 17th announcement. One can only wait for the next episode of Textiles and Tariffs.

Credit:  Candace Arrington


An American in Paris

Greg Kessler
Rodarte S/S 2018 Paris Haute Couture Week July 2017

Looking back on Paris Fashion Week 2018, it is fun to reflect on the undeniable allure of Paris. Maybe it is the Parisian lights. Maybe it is because it is the City of Love. But there is something that attracts Francophiles from all over the world. A long-time fashion hub, Paris has been winning the hearts of more and more American fashion designers. Traditionally, New York Fashion Week is the reference mark for American design. Yet in just the past year, American designers Rodarte, Proenza Schouler, Thom Browne, and Joseph Altuzarra have opted to show their collections in Paris instead.

All of the Americans in Paris cited creativity as the major reason for relocating their spring and fall shows to Paris. Prior to Rodarte’s Paris Haute Couture Week debut last summer, co-founder Laura Mulleavy told The New York Times’s Elizabeth Paton: “I like being part of a new situation.” Co-founder Kate Mulleavy expanded:

“Ultimately a process should fuel creativity…France treats fashion as art; it just isn’t like that in America. Just spending time in [Paris], being part of it, is a reminder that enjoying new experiences fuels your best ideas and designs. Your imagination can totally come alive.”

Nevertheless, new opportunities also bring new legal issues. The initial question regarding work in France often is: Will I need visas or work permits for my American staff in order to show my collection in Paris? The good news: since 2016, if you are working in France for three months or less for the purpose of putting on a trade show, an art exhibition, or a fashion show, you need neither visas nor work permits.

Also, keeping in mind that French law emphasizes employee well-being, France requires its foreign employers to have documentation on file with the French counterpart to the United States Social Security Administration.

France and the United States have a reciprocal agreement whereby time spent working in France is considered eligible for social security and future benefits, like retirement, disability, and survivor’s insurance, in the United States. US employers must file a social security form for each employee working abroad. However, those benefits (as with so many others) do not apply to independent contractors. Therefore, those make-up artists, hairstylists, and public relations personnel employed by others but who are “hired out” by designers for shows must have their own full-time employers file social security forms for them.

Before starting work in France, an American employer transferring employees temporarily must file a declaration of workplace safety with the office for the International Posting of Workers in France, also known as Prestation de Services Internationales en France (SIPSI). Upon such filing, SIPSI will alert the French authorities responsible for inspecting the posting locations of foreign employees to examine the proposed fashion show site. Unlike the multiple social security forms required by an employer in the US, only one SIPSI filing is needed per employer, per location.

Much as in the critically acclaimed movie, as an American in Paris you will want to spend your free time eating baguettes, sightseeing, taking pictures, creating memories, and perhaps falling in love. It therefore would be wise to consult counsel and to address the business and legal issues in advance so that, once the fashion show has been completed, you will be able devote your time to drinking wine, eating cheese, and indulging in the many facets of French culture.

Greg Kessler
Rodarte S/S 2018 Paris Haute Couture Week July 2017

Credit: Candace R. Arrington

Photo Credit: Greg Kessler


MoMA: Is Fashion Modern?

The Museum of Modern Art (MoMA) is currently hosting the exhibit, “Items: Is Fashion Modern?” So, what is modern? Back in 1944, the MoMA asked, in an exhibition titled, Is Clothing Modern? in the hope of inspiring museumgoers to, “reconsider their relationship with the clothing they wore.” Today, MoMA asks: Is fashion modern? to provoke thought about the world’s relationship with fashion and to examine how and why it is made. In this exhibition, we see fashion born out of creativity and necessity; created by man and machine. The museum’s elevation of both the evening gown and the flip flop illustrates society’s multifaceted relationship with fashion, clothing, and art.

The curators walk you through the history of fashion, using fashion as a lens through which to view and analyze culture and society. Upon entering, I was pleasantly surprised. The galleries, sparsely but carefully filled, teased visitors with vivid colors, sounds, textures, and interactive displays. The exhibit progresses chronologically and also practically, by starting with base layers like undergarments, switching to classics like the little black dress, then working toward wardrobe fundamentals such as pants and later on, accessories.

Underwear starts out not to be a simple thing. Brassieres, stockings, and then jumpsuits pique visitors to contemplate form, function, and aesthetic. Subsequently, the exhibition moves to khakis, trousers, and collared shirts. This casual wear showcase also highlights how pants have evolved for women. With images of a pants-clad Audrey Hepburn in Breakfast at Tiffany’s and Mary Tyler Moore in capris on the Dick Van Dyke Show in the 60’s, the exhibit’s wall labels provide gender-charged commentary on how pant suits became socially acceptable for women.

The exhibit moves forward to a survey of the quintessential little black dress. Just within the exploration of the little black dress, one can see the evolution of fabrics, design, class, and social custom. This collection contains a range of dresses from Christian Dior to Thierry Mugler; starting with a modest Chanel evening dress from 1925 and ending with the controversial, close-fitting Versace cocktail dress worn by Elizabeth Hurley in 1994. The exhibit even highlights the relationship between technology and fashion by including a 3-D printed dress designed via a form of classical mechanics and motion called, kinematics.

Next, fashion is studied as an extension of culture. The collection exalts prints, fabrics, and silhouettes from all over the world, showcasing an anthology of Indian saris, Cuban guayaberas, Ghanian gowns, Brazilian jumpers, and Dashikis inspired by Nigerian prints, yet made right in Harlem.

Flanking one side of the exhibition is a spotlight on men’s suits. The stylistic progression goes from the zoot suit to the power suit, and even a double-breasted pant suit by Ralph Lauren for women. The wide range of tailoring, fabric, and shape is also a reflection on style, age, and class.

After covering each major piece of clothing, the exhibit moves on to highlight accessories. What some may consider superfluous or merely decorative additions, the accessories prove to be staples on their own. This collection looks at show-stopping shoes, handbags, hats, furs, and jewelry. The curators even established a small homage to the famous Hermès Birkin bag and Alexander McQueen’s platform armadillo boots, as worn by Lady Gaga.

But wait: there’s more. The exhibition has small fashion asides where one can find a biker jacket derivative made from polymers and LED lighting, and a textile designed through a computer-programed knitting machine.

“Items: Is Fashion Modern?” is indeed a modern take on fashion. After examining the entire 111 items, it is impossible to walk away uninspired and unprovoked. The curators do an excellent job of covering a wide range of subject matter, addressing the fundamentals of fashion, and examining where fashion is purely aesthetic and less functional, yet nonetheless enthralling and important. The exhibition demonstrates the complexity of fashion, as it can serve as adornment, a reflection of culture, or counterculture. If modern is to reflect the present and recent times, then yes, fashion is modern.

The Museum of Modern Art exhibit, “Items: Is Fashion Modern?” runs through January 28, 2018. https://www.moma.org/calendar/exhibitions/1638

Credit:  Candace R. Arrington

Candace Arrington works in Phillips Nizer’s Intellectual Property, Corporate, Fashion, and Entertainment Law Practices.


What’s In A Letter?

Recently, the New Balance footwear company won a landmark $1.5 million trademark decision in the Suzhou Intermediate People’s Court, near Shanghai, China. Daniel McKinnon, the New Balance senior counsel for intellectual property, told the New York Times: “If the China marketplace can be thought of as a schoolyard, New Balance wants to make it abundantly clear we are the wrong kid to pick on.”

The schoolyard brawl all started when New Balance alleged that three Chinese brands infringed upon its well-known New Balance “N” trademark. The three Chinese shoemakers, New Boom, New Barlun, and New Bunren, saw fit not only to use similar brand names, but also to trade off of New Balance’s international acclaim by mimicking its slanted “N” design on their shoes. A Suzhou Court cited the defendants’ free-riding, consumer confusion, and market harm as the basis for its ruling in favor of New Balance.

What makes this case important is not only that New Balance was prepared to fight for its rights in China—often a challenging thing to do—but also that it was willing to do so over a single-letter trademark.

A trademark is a source indicator that can convey a range of messages about your brand such as quality, price, taste and reputation—the sometimes obvious and sometimes mysterious factors that, in total, are the goodwill of the brand.
Brand owners often reflect upon the value and protectability of words, names, logotypes, slogans and even colors as trademarks. The victory by New Balance in a famously tough territory tells us that a lot can ride on who is found to own and have the rights to exploit a single letter.

Minimalism is as much a factor in trademark recognition as anywhere else in the broad field of visual expression. Mercedes Benz has made a simple three-pointed star one of the most recognizable marks on earth. In the USA, Louboutin owns the color red for the soles of shoes, and Federal Express owns the truncated version of its mark popularized by the public: FedEx. Take it down even further, and you get marks with one or two letters: PayPal is recognized by two cerulean stylized “P’s” and Facebook by a solitary but consequential byzantine blue lower-case “f”. Uber upgraded its former “U” mark to a modernized “U” enclosed by emerald green.

In fashion, designers have been using single-letter marks for decades. Hermès uses its elegant “H”; and of course, New Balance is using its slanted “N”. A few logos have doubled letters: Gucci has made the twin “G” into a brand; as with the seemingly reflective Tory Burch “T”, the mirrored Fendi “F”, and the interlocking “Cs” of Chanel.

Single-letter marks can be significant in fashion because a single letter can serve not only as a logo, but also as a design that can be emblazoned on clothing, handbags, shoes, etc. Meanwhile, the boom in online retail—where a mark may be only barely visible—has been the basis for the further simplification of marks. The large British online retailer Asos recently abbreviated its trademark to the letter “a,” the better to identify the brand on its mobile app.

 

Credit: Candace R. Arrington

Candace Arrington provides research support as a law clerk to our corporate and business law, intellectual property law and entertainment law practices.