The U.S. Court of Appeals for the Ninth Circuit overturned an award of statutory copyright damages and attorneys’ fees, finding that since the alleged act of infringement commenced between the first publication and the effective date of copyright registration of the copyright in issue, neither was available to the copyright holder. Derek Andrew, Inc. v. Poof Apparel Corp., Case No. 07-35048 (9th Cir., June 11, 2008) (Wright, J.).

Derek Andrew, Inc’s clothing line (Twisted Heart) includes tags, first used in 2003, with artwork that was not registered with the U.S. Copyright Office until June 15, 2005. Poof sells clothing lines having tags that are nearly identical to the Twisted Heart tags; the difference being the word “Poof!” in place of the words “Twisted Heart.

Prior to the plaintiff’s copyright registration, a garment bearing Poof’s infringing hangtag came into plaintiff’s possession, resulting in the filing of a complaint for copyright and trademark infringement. Poof failed to respond to the complaint, whereupon a default judgment was entered. In a bench trial for damages, the district court awarded, among other things, $15,000 in statutory damages and almost $300,0000 in attorneys’ fees.

The Ninth Circuit reversed both the damage and attorneys’ fee award, citing 17 U.S.C. § 412(2), which states, “no award of statutory damages or of attorney’s fees … shall be made for any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.” In deciding the issue, the Court reviewed de novo whether the infringement “commenced” before the copyright was registered.

Having never expressly addressed whether § 412 bars an award of statutory damages for post-registration infringements when the initial act of infringement occurred prior to the effective copyright registration date, the Court determined that resolution of this issue depends upon interpretation of the term “commenced” as used in § 412. Agreeing with its sister courts that have considered the issue, the Court held that, for purposes of § 412, infringement “commences” when the first act in a series of acts constituting continuing infringement occurs. In support of its conclusion, the Court cited two policy considerations in support of the statutory encouragement for early filing for registration: denial of statutory damages and attorneys’ fees where infringement takes place before registration, as well as potential infringers’ ability to check the Copyright Office database to avoid infringement.

The Court reversed the award of the statutory damages and remanded the case to the district court to determine to what extent the awarded attorneys’ fees were improperly based on the Copyright Act.