Earlier this month, the 7th Circuit Court of Appeals reversed a district court’s decision invalidating a copyright registration, in spite of its agreement with the lower court’s factual finding that the copyright registrant had lied about the authorship of the work in question and had lied about the supposed transfer of that work to him. The 7th Circuit held that the district court had committed legal error in invalidating the registration without first consulting the Register of Copyrights, as required by law.
In DeliverMed Holdings v. Schaltenbrand, Case No. 12-3773 (7th Cir. Oct. 7, 2013), the plaintiffs sued former partners in a mail-order pharmacy venture. The next year, Mark Swift, the owner of DeliverMed, obtained a copyright registration for the logo the partnership had used and the plaintiffs amended their complaint to allege copyright infringement. In the application, Swift claimed that a third party, Deeter Associates, had designed the logo and has transferred the rights to Swift. Neither of these claims was true; in fact someone else had designed the logo and had actually licensed the copyright to the defendants to use on behalf of the partnership.
The district court invalidated the copyright registration after a bench trial, based on Swift’s “knowing material misrepresentations” in the copyright application. And while the 7th Circuit had “no problem upholding the trial court’s ultimate factual finding,” it held that the district court had erred in invalidating the registration, based on language in the PRO-IP (Prioritizing Resources and Organization for Intellectual Property) Act of 2008, which amended the Copyright Act to include the following language regarding invalidation of a registered copyright: “In any case in which inaccurate information… is alleged, the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration.” 17 U.S.C. §411(b)(2). In light of this language, and even though the plaintiffs failed to raise this issue in their appellate briefs, the 7th Circuit concluded that the invalidation was in error because it “deprive[d] the Register of its right to weigh in on precisely this issue.”
Wary of the “obvious potential for abuse” this rule entails, because of its “potential as a weapon to delay proceedings,” the 7th Circuit also clarified that the party claiming invalidity must first establish that the application included inaccurate information and that the registrant knew the application was inaccurate. Only then should the court seek an advisory opinion from the Register of Copyrights whether the inaccuracy would have resulted in the application’s refusal.
The case has been remanded to allow the district court to consult the Register of Copyrights before invalidating the registration.
While the 7th Circuit appears to be the first appellate court to address the issue, a number of district courts have found that they need not consult the Register of Copyrights where there was insufficient evidence that a registrant had made knowing inaccuracies. See Olem Shoe Corp. v. Washington Shoe Corp., 101 U.S.P.Q. 2d 1631 (S.D. Fla. 2012); Libertas Technologies, L.L.C. v. Cherryhill Mgmt., Inc., 2013 WL 375452 (S.D. Ohio Jan. 29, 2013) (accepting Magistrate’s Report & Recommendation, 2012 WL 6085264 (S.D. Ohio Dec. 6, 2012)). The authors have not found any case in which a district court has sought an advisory opinion from the Copyright Office. In a call to the Copyright Office, an information specialist suggested that “anything from the court” requesting the opinion of the Register would be sufficient, but details regarding the number of times such a request has been made were unavailable.