Copyright Litigation and Recent Developments: Spring 2022

Manatt Entertainment Quarterly Roundup

In our May 2022 copyright update, Manatt’s attorneys summarize recent decisions of interest from the U.S. courts and Copyright Office, and highlight other matters that we’re watching in the coming months.

What Copyright Registration Mistakes Are Excusable?: Unicolors v. H&M Hennes & Mauritz, L.P.

On February 4, 2022, the Supreme Court held that “lack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration,” remanding for further proceedings a now six-year-long battle between Unicolors, a textile company that creates designs to be used on garments, and popular global fashion brand H&M.1

In 2016, Unicolors sued H&M for selling garments that included its copyrighted designs.2 After the jury rendered a verdict in favor of Unicolors, H&M asked the trial court to grant it judgment as a matter of law, arguing that Unicolors’ registration certificate was invalid under Section 411 of the Copyright Act3 because Unicolors had knowingly included inaccurate information therein. The basis for this argument was that Unicolors had allegedly violated the “single publication rule” of the Copyright Office4 when it registered 31 works at the same time, knowing that they would not be published together.5 Unicolors argued in return that it had no knowledge of this legal requirement when it filed the registration and that it therefore lacked knowledge that the registration was inaccurate.6 The district court held in favor of Unicolors, but the U.S. Court of Appeals for the Ninth Circuit reversed the decision, stating that a mistake of law cannot excuse an inaccurate registration and that only mistakes of fact can do so.7

Vacating the Ninth Circuit’s decision, the Supreme Court held that mistakes of both law and fact can excuse inaccuracies in copyright registration.8 The Court reasoned that the language of the statute makes no distinction between a mistake of law and a mistake of fact, drawing on textual interpretation, similar provisions of the Copyright Act defining “knowledge,” legislative history and previous cases decided before Congress.9 Thus, the Court held that a mistake is a mistake, and that an unknown mistake of either law or fact can excuse an inaccurate copyright registration.10

In dicta, the Supreme Court did issue cautionary lessons for copyright registrants, however, noting that they cannot necessarily stick their heads in the sand regarding potential mistakes of fact or law: “Circumstantial evidence, including the significance of the legal error, the complexity of the relevant rule, the applicant’s experience with copyright law, and other such matters, may also lead a court to find that an applicant was actually aware of, or willfully blind to, legally inaccurate information.”11

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Ninth Circuit Holds California Law’s ‘Exclusive Ownership’ of Sound Recordings Does Not Include Public Performance Right: Flo & Eddie, Inc. v. Sirius XM Radio, Inc.

In the most recent installment of a nearly decade-long dispute between Flo & Eddie and Sirius XM, the Ninth Circuit held in August 2021 that although California’s state copyright law provides copyright holders “exclusive ownership” of pre-1972 sound recordings, such ownership does not include an exclusive public performance right.12 In so ruling, the court of appeals applied a textualist view that considered the common-law meaning of “exclusive ownership” in 1872, when California enacted its first statutory copyright protection.

The long and winding history of this litigation began in 2013, when Mark Volman and Howard Kaylan (pka Flo & Eddie) of the Turtles filed a putative class action against Sirius XM for playing artists’ sound recordings without permission and without payment, alleging a violation of California copyright law, specifically Cal. Civ. Code § 980(a)(2).13 Flo & Eddie argued that they were entitled to the right to control the public performance of their recordings as exclusive owners and that Sirius XM had violated that right.14 While the parties ended up settling ahead of trial in 2014, which included a retroactive payment of royalties and a prospective license to Sirius XM, certain matters remained live, and Sirius XM appealed to the Ninth Circuit to determine whether California law recognized a public performance right in respect of sound recordings, and sought to stay the appeal pending the resolution of a related case that Flo & Eddie had also filed against music streaming service Pandora.15 In the meantime, Sirius XM successfully defeated similar lawsuits by Flo & Eddie in Florida and New York,16 and the case resumed with the dismissal of the Pandora case by the California Supreme Court in 2019.17

Here, engaging in a statutory construction analysis, the Ninth Circuit held that the district court’s interpretation of the California statute was incorrect because it had given the term “exclusive ownership” a “capricious” definition by combining the dictionary definitions of the words “exclusive” and “ownership.”18 The court of appeals instead analyzed the statute through a textualist lens, exploring the legislative history and context of the statute stemming from its inception, finding that “no court as of 1872 had recognized the right of public performance under any nascent understanding of copyright law.”19 Rather, the court said, “‘exclusive ownership’ referred, and still refers, to the owner’s common law copyright in an unpublished work to reproduce and sell copies of that work.”20 In reversing the district court’s grant of partial summary judgment, the Ninth Circuit indicated that this ruling may end the long-running saga between these litigants. It should be noted, however, that—as the court recognized here—in 2018, the U.S. Congress enacted the Music Modernization Act, which “extended earlier federal copyright protections to the prospective digital transmission of pre-1972 recordings.”21

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A Setback for AI Creators?: A Recent Entrance to Paradise

On February 14, 2022, the Copyright Review Board (the Board) of the U.S. Copyright Office (the Office) ruled that a two-dimensional artwork titled “A Recent Entrance to Paradise” (the Work) could not be registered for copyright protection because it was created by artificial intelligence (AI) without any human input. In doing so, the Board reaffirmed the Office’s long-standing position that human authorship is required for copyright protection under the Copyright Act.

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In 2018, Steven Thaler filed an application to register the Work for copyright protection as a work for hire, identifying the author as the “Creativity Machine.”22 The Office refused to register the Work, finding that it lacked the human authorship necessary to sustain a copyright claim, and the Board rejected Thaler’s initial request for reconsideration.23 In his second request for reconsideration, Thaler argued that the Office’s human authorship requirement is unconstitutional and unsupported by existing authority and runs counter to the underlying goals of copyright.24 The Office again rejected Thaler’s arguments, finding that copyright protection protects only works created by humans.25 In coming to its conclusion, the Board relied on Supreme Court and Ninth Circuit precedent limiting copyright protection for nonhuman creations26 and pointed to similar conclusions from federal agencies.27

The Board also rejected Thaler’s secondary argument that AI can be an author under copyright law under the work-for-hire doctrine, finding that the Work was not a work for hire because the Creativity Machine could not enter into a binding legal contract to that effect and also because the Work does not qualify for copyright protection in the first instance.28

The Board’s denial of Thaler’s second request for reconsideration is the agency’s final action in this matter, and as expected (and recently reported29), Thaler is planning to shortly challenge the decision in federal court.

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Genius Preempted: ML Genius Holdings, LLC v. Google LLC et al.

In a summary order dated March 10, 2022, the U.S. Court of Appeals for the Second Circuit affirmed a district court’s dismissal of the lyrics company Genius’ complaint against Google, finding that its contract and unfair competition law claims were preempted under Section 301 of the Copyright Act.30

Genius maintains an online database of song lyrics transcribed by music fans. It alleged that LyricFind copied those transcriptions and licensed them to Google, thereby depriving Genius of web traffic. Genius sued for breach of contract and unfair competition (among other claims) in New York state court; the defendants removed the case to federal court, and Genius moved to remand the case back to state court. The district court denied remand and dismissed Genius’ claims on the basis that they were preempted by the Copyright Act.31

The Second Circuit affirmed the dismissal, holding that Genius’ claims met both prongs of the statutory preemption test. First, the court concluded that the subject matter of Genius’ claims—the lyrics transcriptions—are literary or musical works covered by the Copyright Act.32 Second, the court held that the rights Genius was asserting in the transcriptions under its breach of contract claim—copying and reproducing the lyrics’ transcriptions—were equivalent to exclusive rights conferred by the act and that Genius failed to allege any “extra” element to differentiate its unfair competition claims from a federal copyright claim.33 The court of appeals also rejected Genius’ argument that its claim fell within the narrow “hot news” exception to copyright preemption, because Genius did not establish that the lyrics translations constitute time-sensitive information.34

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Up Next: What We’re Watching

  • Transformative Use Goes to SCOTUS: In March 2022, the Supreme Court granted the petition for certiorari filed by the Andy Warhol Foundation for the Visual Arts, thereby agreeing to review the question of whether Andy Warhol’s prints of musician Prince infringed the copyright in Lynn Goldsmith’s underlying photograph or whether they fall under the fair use doctrine. Andy Warhol Found., Inc. v. Goldsmith et al.
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  • SMART Moves: The Strengthening Measures to Advance Rights Technologies (SMART) Copyright Act of 2022 (S. 3880) would authorize the U.S. Copyright Office to establish a rulemaking process requiring platforms to take more active steps to protect against piracy on their sites.  

Copyright’s Small Claims Court Opens Its Doors: The commencement of proceedings before the new Copyright Claims Board is designed to provide a streamlined process for copyright owners to bring infringement claims valued under $30,000. The first cases are set to be heard this spring.

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1 Unicolors v. H&M Hennes & Mauritz, L.P., 142 S. Ct. 941, 945 (2022).

2 Id. at 945.

3 A certification of registration is valid even though it contains inaccurate information, as long as the holder of the copyright lacked knowledge that it was inaccurate. 17 U.S.C. §411(b)(1)(A).

4 Unicolors, 142 S. Ct. at 945; the Copyright Office allows multiple works to be registered together so long as they are included in a single unit of publication. Id.

5 Id.

6 Id. at 946.

7 Id. at 947.

8 Id.

9 Id. at 947–49.

10 Id. at 949.

11 Id. at 948.

12 Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 9 F.4th 1167 (9th Cir. 2021).

13 Id. at 1171.

14 Id.

15 Id.

16 Id.

17 Id. at 1169.

18 Id. at 1172–73.

19 Id. at 1173–76.

20 Id. at 1174 (citations omitted).

21 Id. at 1172.

22 Second Request for Reconsideration for Refusal to Register A Recent Entrance to Paradise (Copyright Review Board Feb. 14, 2022), p. 3.

23 Id.

24 Id.

25 Id. pp. 3–5.

26 Id. pp. 4–5 (citing, inter alia, Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53 (1884), Mazer v. Stein, 347 U.S. 201 (1954), Goldstein v. California, 412 U.S. 546 (1973), Urantia Found. v. Kristen Maaherra, 114 F.3d 955 (9th Cir. 1997)).

27 Id. pp. 5–6.

28 Id. pp. 6–7.

29 Eriq Gardner, “The Hollywood A.I.-I.P. Supernova,” Puck News (May 2, 2022).

30 ML Genius Holdings LLC v. Google LLC, No. 20-3113, 2022 WL 710744, at *1 (2d Cir. Mar. 10, 2022).

31 Id.

32 Id. at *4–5.

33 Id.

34 Id. at *5.

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