Withers trademark partner comments on Unicolors and H&M SCOTUS decision in dispute over textile design copyrights

On February 24, 2022 the United States Supreme Court delivered a ruling in a major copyright dispute case between Swedish fashion retail company, H&M, and wholesale fabric design company, Unicolors. The copyright dispute arose out of a sweater pattern that H&M used in 2015, which Unicolors alleged infringed on a design created by Unicolors in 2011. H&M claims that Unicolors did not properly register the design, and the registration should never have been granted because the application was factually inaccurate. The SCOTUS responded by ruling that unintended legal errors in applications do not void copyright registrations.

Withers fashion law partner, Deborah Greaves, who filed a brief of amicus curiae for the California Fashion Association in support of H&M, was interviewed by several media outlets discussing how infringement suits arising out of textile designs have hurt the fashion industry and why SCOTUS’s decision unfortunately does not help an industry plagued with frivolous lawsuits.

“Just because a similar pattern exists doesn’t mean a work infringes, as infringement requires exposure to the work. But lack of access can be difficult for defendants to prove,” Deborah explains in a Bloomberg Law article. “Even if a fashion company is being diligent, it can be liable for infringing the copyright of a fabric that a supplier, especially one abroad, falsely claimed it created or licensed it.”

Even if a fashion company is being diligent, it can be liable for infringing the copyright of a fabric that a supplier, especially one abroad, falsely claimed it created or licensed it.

In a World IP Review article on the topic from June 2021, Deborah shared that, in the United States, there is a pressing issue with textile design copyrights. For manufacturers that buy their fabrics in China or outside of the U.S., there is no concrete way of determining whether a design is registered and who owns the registration because there is no effective way to search for registrations of textile designs. Although manufacturers ask for indemnification from fabric brokers and/or mills, these indemnifications are virtually unenforceable, so it is a big risk for companies to buy anything except for US designed textile prints where the seller can prove they own a registration for the design. This limitation presents serious financial and logistical issues for an industry that is under severe pricing pressure from retailers and consumers.

Deborah notes that there is a loophole in the copyright registration process, which was the crux of the dispute in the H&M case. “The mistake that Unicolors made in its application was related to publication of the textile image. The image in question was filed as part of a ‘collection’ or a group of images, which is the manner in which Unicolors always files its copyright applications,” she said. Unicolors admitted that, contrary to the claims in its copyright application, the full collection of images was not made publicly available at the same time. This goes to the issue of whether the defendant had access to the image that it allegedly copied.

“What needs to be recognized is the importance of this case to the fashion industry, which has been plagued by copyright infringement suits over the past decade or longer, which are so prevalent that the plaintiffs have been coined as copyright trolls by the industry,” she argued. Textile companies have made a cottage industry out of suing fashion copies for copyright infringement of textile designs. Unfortunately, the SCOTUS ruling did not provide any relief for the fashion industry.

“If the applicant claims the design was published, the defendant must prove that it was not, which is virtually impossible,” emphasizes Deborah in a discussion with IP Law Daily. “Many small companies have been caught up in questionable infringement claims and are forced to settle because they do not have financial resources to put to a jury whether the designs are substantially similar, whether the design was original enough to justify issuance of a copyright registration, or whether the design was actually published,” concluded Deborah.

See recent articles featuring Deborah Greaves on this topic:
A stitch in time: Untangling H&M v Unicolors, World IP Review – March 17, 2022
Textile Design Copyrights Remain Tricky After High Court Ruling, Bloomberg Law – February 28, 2022
SCOTUS Hands Win to Unicolors in H&M Dispute, World IP Review – February 25, 2022
Lack of either factual or legal knowledge can excuse error in copyright registration, IP Law Daily – February 24, 2022

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