Tag: SCOTUS

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Business Law Cases Intellectual Property

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

Categories
Cases Federal & State Laws General / Musings Intellectual Property Licensing

Star Athletica: An Unsatisfying End

If you were hoping that following the Supreme Court’s decision in Star Athletica you might learn whether common stripes, chevrons, color blocks and zig zags are sufficiently original to be copyrightable—a question expressly reserved by the Supreme Court and the Sixth Circuit– you will be disappointed. On August 10, 2017, the district court permitted Varsity Brands to voluntarily dismiss its copyright infringement action against Star Athletica with prejudice, over the objection of Star Athletica, which wished to pursue its counter-claims seeking to invalidate the Varsity Brands copyrights.

You might well ask, as we did, why after seven years of largely successful litigation, Varsity Brands would be permitted to walk away. Or you might ask, as we also did, why Star Athletica would object to having the suit end with no apparent injunctive or other relief awarded against it. Both are fair questions and the answer to each is unusual: The insurance company that was defending Star Athletica reached a settlement agreement with Varsity Brands, without the participation or approval of Star Athletica. The terms of the settlement are confidential. The only clue is the court’s reservation to Varsity Brands of the right to return to court if it does not receive the payment from the insurer required by the settlement. As far as Varsity Brands is concerned, not only does it get money, but it also avoids the potential for invalidation of its copyrights, having made its point that the two dimensional designs reflected in its uniforms are separable from their utilitarian features and theoretically capable of copyright protection. It now has a stronger threat to hurl at potential competitors.

But what of Star Athletica and its interest in settling its rights to compete with Varsity Brands in the cheerleading uniform market? In the view of the court, Star Athletica receives what is in effect immunity from future claims of copyright infringement related to the copyrights and uniforms at issue in the action. And also in the court’s view, Star Athletica’s counter-claims to invalidate the copyrights were only defenses to the copyright infringement claims and not independent bases for legal action once the threat of copyright liability was removed. And that is the rub: Varsity Brands has many other copyright registrations for which similar challenges to their validity might (or might not) have merit. Because the court did not provide guidance on that fundamental point, competing uniform makers remain exposed to similar infringement claims.

One can’t help feeling that the broader fashion public had an interest in the resolution of the question of whether stripes and chevrons are original when applied to garments. But it is an axiom of federal court litigation that the courts do not decide hypothetical cases or controversies for the edification of the public.

For now, if you are interested in whether stripes can be protected in fashion, you will have to focus on trademarks and not copyrights. There is always Gucci’s suit against Forever 21 for knocking off what it claims is its stripes trademark. And then, too, there is Adidas’ pending suit against Skechers for knocking off its three stripe trademark. The district court in Oregon just decided that Adidas’ trademark infringement suit can proceed.

Credit:  Helene M. Freeman

Categories
Accessories Cases Federal & State Laws Intellectual Property Womenswear

Legally Chic in Barcelona

Hotel El Palace (Barcelona) rooftop twilight | © Alan Behr

In the cosmopolitan city of Barcelona, several of us, including my colleague Alan Behr, gathered for a private fashion industry meeting at the exquisite Hotel El Palace. While sipping tea and sampling fine pastries, we heard brief presentations on important legal developments from around the world.

Owen Tse, a partner at Vivien Chan & Co. in Hong Kong, presented on the New Balance case before the Intermediate Court in the People’s Republic of China. The court ruled in favor of the Chinese company New Barlun, which New Balance had accused of selling infringing footwear. The court relied on the fact that New Barlun had filed the Chinese mark before New Balance had made an attempt. To add insult to injury, the court awarded the equivalent of US $15.8 million to New Barlun, which was subsequently reduced to the equivalent of approximately US $700,000 by the Appeals Court. Owen also reported an interesting fact—“Ivanka Trump” in Chinese was the subject of more than 300 trademark applications in the PRC since 2016.

In addition, the practice of using “shadow companies” to infringe the Chinese translation of well-known brand owner’s trademarks is on the rise in Hong Kong. Infringers promote themselves by claiming they have authorization or license from the shadow companies. Example: Pearl Bay vs. Peony Bay in English and Chinese.

From Amsterdam, Herwin Roerdink of Vondst Advocaten gave a presentation regarding fashion brand owners and European Union data protection regulations. Herwin discussed the issue of smart products, such as socks that collect running data of their wearers and golf shirts that track swings, all in connection with EU privacy regulations. Specifically, a new EU privacy law, GDPR, EU 2016/679, which will become effective on May 25, 2018, imposes heavier regulation and more obligations on data controllers and data processors, whether or not the data is processed in the EU. GDPR also applies to the processing of data of those in the EU by non-EU entities that offer goods and services that monitor behavior in the EU. Non-EU fashion brand owners who target EU customers with monitoring products will therefore be subject to the regulation.

Herwin also explained the differences between the approach of the Dutch data protection authority and the United States Federal Trade Commission regarding the permissibility of WiFi tracking by retailers. Although the Dutch decision was based on Dutch implementation of the EU Privacy Directive, which focuses on whether the processing is necessary to achieve the desired purpose, the FTC decision was based on balancing the concern for customer harm and the legitimate interests of the retailer.

From London, Roland Mallinson of Taylor Wessing updated us on the implications of Brexit to fashion IP, on the assumption that the United Kingdom will not leave the EU before March 2019. Roland predicted that existing European Union Trade Mark (EUTM) registrations will likely continue to be recognized in the UK. He posited that parallel filing in the EU and UK is not imperative now, especially if you are not yet using your mark in the UK. He expressed confidence that there will be some arrangement by which current EUTM trademarks and those being filed now will result in protection in the UK, from the current priority date; however, because nothing is for certain, Roland recommended that strategically key brands continue to file UK applications in parallel with any new EUTM applications. For existing UK and EUTM registrations, it does not automatically follow that a new UK application should be filed now – even for strategically key brands.

The discussion also focused on the practical issue of transferring 900,000 EUTM registrations to the UK system, a process made more complex by the fact that a fair number of the registrations were not filed in English. Some issues, like parallel imports and European design rights, have political sensitivities.

Finally, I made a presentation regarding the important Star Athletica case, which was decided by the US Supreme Court in March 2017. We have previously reported on that development in our blogs on March 22, 2017 and May 5, 2017.

In short, we had a very enjoyable and productive meeting. And as anyone who attends the INTA annual meeting knows, half the pleasure for us was being able to sit down while we networked with friends and colleagues.

Credit:  Monica P. McCabe

Thank you to Phillips Nizer law clerk Candace Arrington of our Corporate & Business Law and Intellectual Property Law Practices for providing assistance with the review and preparation of this blog post.

Categories
Cases Federal & State Laws Intellectual Property Textiles

The Curious Case of the Cheerleader Uniforms

Cheerleader-with single focus

One of the hot topics du jour in the fashion press is the copyright battle in the Supreme Court involving cheerleader uniforms. It poses the question of when a two-dimensional design that is part of a useful article is copyrightable—in this case, designs consisting of color blocks, chevrons, and lines in uniforms for cheerleaders. The Copyright Act provides that a “useful article” is not copyrightable, but it allows for copyright in the “pictorial, graphic and sculptural” features of useful objects as long as those features are “separable” from and can exist independently of the object itself.

Under the statutory definition, you can secure a copyright for a fabric or lace design, but you cannot secure a copyright in a dress made with the fabric or lace. An artist who draws a dress can secure a copyright in the drawing and can prevent someone from using it on greeting cards or wastebaskets, but the artist cannot use the copyright to prevent anyone from actually making the dress depicted in the drawing.

Although the concept of separability is easy to state in the abstract, at times it has been hard to apply in practice. Cheerleader uniforms present a particularly difficult problem. The designs here are not printed on the fabrics used in the uniforms. They are part of the garment’s construction. The placement of the design features—color piping around the neckline and arm holes, lines down the sides in color blocks, chevrons in the center, lines marking the boundaries between blocks of color—results from the contours of the garments. The placement also serves the functional purposes of hiding seams that are sewn on the outside (instead of the inside) of the garments to prevent chafing, strengthening parts of the garments so that they hold their shape, and creating optical illusions that lengthen the torso and slim the waist. The designs also help make the garments recognizable as uniforms and not street clothing.

The challenger, Star Athletica, focuses on those functional considerations and argues that the designs are inherent in the useful objects and do not exist independently. It argues that, if the designs have any function, they are not separable from the uniforms.

The United States and Varsity Brands, the copyright owner, argue that, because the graphic designs can be applied to products other than dresses, they are separable, can exist independently and are therefore copyrightable. The government further argues that the Copyright Office cannot be in the business of determining how any particular two-dimensional design functions in any given context when called upon to determine whether it can indeed exist independently. Under that argument, any two-dimensional design could potentially be deemed independent and separable from the three-dimensional objects to which it is applied.

In a great irony, the case was argued before the Supreme Court on Halloween. Halloween costumes frequently have been the subject of litigation under the particular provisions of the Copyright Act at issue in the case. (In case you are wondering, under current precedent, costumes are generally not copyrightable, but masks generally are.)

Reading the oral argument before the Supreme Court and the briefs, I was struck by the fact that the case is not unlike the famous figure ground optical illusion in which you can simultaneously see either a goblet or the profile of two faces. Star Athletica sees the goblet. If the lines define the goblet, it is the design of a useful object, and Varsity Brands cannot prevent Star from making the goblet. But Varsity Brands and the government see the profile pictures, which are separable, and it would be irrelevant whether they also define a goblet from the perspective of another viewer.

Stanford Law School Professor Mark Lemley, as the lead author of a brief submitted by a number of law professors in support of Star Athletica, attempts to separate the figure from the ground. He argues that copyright could protect the designs, but not the coordination and arrangement (i.e. placement) of the elements of the designs that result from the shape or construction of the garments. In effect, this proposed test would exclude from the protection of copyright those elements of the designs dictated by the needs of making the useful article truly useful.

There are other relevant questions that none of the lower courts in the case considered and which none of the briefs submitted to the Supreme Court addressed: What are the two-dimensional designs that are protected and are those designs copyrightable under more general principles of copyright law? Are they original or are they in the public domain? Is there a merger of the general idea with its expression so that there is nothing that is copyrightable? Are the decorative aspects what copyright law refers to as “scènes à faire” (stock representations implicit in the subject matter, in this case cheerleader uniforms)? Both the trial court and the appellate court expressly said they were not addressing whether the two-dimensional designs were copyrightable and were reserving that question. And the Supreme Court, in accepting the case, refused to consider this question, because it was not ruled on below.

Justice Elena Kagan inquired at argument: What is your design; can someone just add another stripe to avoid infringement? Varsity Brands’ counsel did not address the first part of the question and, in response to the second part, said that merely adding something to a copyrightable design “usually” does not avoid infringement. The response did little to address the Court’s expressed concern for the anti-competitive effect on the market for cheerleader uniforms and markets for other products for which the design has a functional purpose, such as camouflage fabric for military use. Indeed, it is worth noting that Star Athletica made a point of informing the Court that Varsity Brands controls 80% of the U.S. market for cheerleader uniforms.

That may help explain why all of the Supreme Court Justices who asked questions were troubled by the idea of handing Varsity Brands a monopoly over cheerleader uniform designs through the use of its copyright registrations. How they might avoid that result is an open question. Star Athletica offered one alternative that might have a major impact on the fashion industry, particularly on the accessories market, where protection of three-dimensional designs is an on-going concern: Any aspect of the design that is functional in part is not conceptually separable. (Say goodbye to the Kieselstein-Cord belt buckle decision, a ground-breaking case won by this firm and which a number of briefs argued was wrongly decided.) Another alternative, endorsed by the American Intellectual Property Association, is to vacate the decision and instruct the court below to determine first the validity of the copyright in the designs under more general copyright law concepts that would factor into the analysis the use of routine design features in uniforms. Either way, one suspects that Star Athletica’s use of its copyrights to prevent competition in the cheerleader uniform market may be short lived.

Credit: Helene M. Freeman

Here’s a previous post that may be of interest…

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Cases Intellectual Property

Let Us All Cheer On The Supreme Court Of The United States

Supreme Court Of The United States of America

Every autumn, at my high school in New Orleans, for many, education was made to stand in line behind football. Ordinarily, in the heat and humidity of The Big Easy, any kind of activity beyond that needed to populate bars and strip clubs was considered unnecessary and even dangerous. (The older brother of a good friend died of heat stroke from playing high school football.)

And yet football, that proud exception to the rule, was worshiped every autumn. If the players were the priests of this brawny faith, what did that make the cheerleaders? The nuns? For their habits, the girls wore blue and yellow uniforms that were both comfortable and amenable to much athleticism, the requirements for the job being lots of jumping, pom-pom pushing and the occasional lift and twist into a fully inverted position. The garments were not all that successful in wicking away moisture, and the girls made quite an effort to maintain the required posture of irrepressible enthusiasm—while battling cascading perspiration.

That comes to mind as we consider that the Supreme Court has just agreed to hear an appeal from a copyright case about cheerleader uniforms: Varsity Brands, Inc. et al., v. Star Athletica, LLC. The Supreme Court rarely accepts copyright cases—it will accept one every few years—and barely will the Cheerleaders Uniformdecision have been announced before a cascade of articles by professors, lawyers, law students and the lay press will appear to interpret it and opine on its implications for the freedom of expression and the business of expression.

As the case currently stands, the Court of Appeals for the Sixth Circuit, in an appeal from a district court in western Tennessee, has ruled that simple designs on cheerleading uniforms consisting largely of “stripes, chevrons, zigzags, and colorblocks” are protectable by copyright. The court noted the basic rule, which we have discussed on these pages, that, “the Copyright Act protects fabric designs, but not dress designs.” The court went on to say, “Because we believe that the graphic features of Varsity’s cheerleading-uniform designs are more like fabric design than dress design, we hold that they are protectable subject matter under the Copyright Act…as pictorial, graphic, or sculptural works.” Functionality, such as wicking away all that perspiration, proved not to be a consideration for the court.

The court also rejected the argument of the defendant that the designs in question simply represented by the cheerleading uniform should be unprotected. There are just so many ways to make a uniform for an adolescent girl look like she is a cheerleader by the uniform alone—without, that is, making her shake her pompoms until you get the point. Although there may indeed be characteristics common to most cheerleading uniforms, those stripes, chevrons, zigzags and colorblocks, when sewn into a dress, were sufficiently unique as to warrant protection as a copyrightable design.

What the Supreme Court will be reviewing is quite specific: the standard employed by the court in determining how to separate (only conceptually because it cannot be removed physically in these fashion cases), a two-dimensional design from the functional garment on which it is placed in order to examine whether it is protectable by copyright. The lower court previously examined nine such standards (or “tests,” as they are often called) that have been floated or actually used and then went on to adopt one of its own invention, formed around five questions it asked itself.

The adage that the Supreme Court does not accept cases in order to affirm them may possibly apply here, but with its own tenth test now on the books (by the Sixth Circuit’s reckoning), it also seems quite possible that we will either be seeing the embrace of one of the prior nine or will be presented with an eleventh that will potentially replace all its predecessors nationwide.

And that, in short, throws open for speculation whether, in applying the test the Supreme Court will enunciate, the lower courts will still hold that uniform designs such as those at issue in this particular case are subject to copyright protection. Whatever the outcome on that point, the general rule does not appear in any way in danger: at least for the purposes of copyright, in the USA, copying a dress pattern (but not necessarily the pattern of the fabric itself) is largely permissible. The rest, as in so much about both fashion and law, is all about the details.

Credit: Alan Behr

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