The U.S. Court of Appeals for the Seventh Circuit vacated a lower court decision invalidating a copyright registration because of inaccuracies made in the application for copyright explaining that prior to invalidating a copyright registration, a federal court must first consult the Copyright Register to determine if the application would have been rejected had the inaccurate information been known. DeliverMed Holdings, LLC v. Schaltenbrand, Case Nos. 12-3773, -9774 (7th Cir., Oct. 17, 2013) (Williams, J.).
Marketing firm DeliverMed Holding and its owner Mark Swift (plaintiffs), entered into an informal partnership with Joey Siddle and Michael Schaltenbrand, employees of Medicate Pharmacy (defendants). The agreement was to provide mail-order pharmaceutical services.
DeliverMed hired Deeter Associates to design a logo for use by the partnership. The advertising company in turn hired an independent graphic designer, Allan Kovin, to finalize the “house and pestle” logo design. The oral agreement covering this relationship did not transfer the ownership of the copyright from Kovin to either the advertising company, Swift or the partnership.
After the partnership dissolved, the plaintiffs filed suit against the defendants for trademark and copyright infringement and other claims. The plaintiffs had filed an application (to the Copyright Office) to register a copyright in its “house and pestle” logo. The application stated that Deeter Associates had designed the logo and then assigned the ownership of the copyright to the plaintiff. The defendants filed a counterclaim seeking a declaratory judgment invalidating the plaintiffs’ copyright registration.
The district court found against the plaintiffs’ claim for copyright infringement, determining that plaintiffs had failed to demonstrate that it owned the copyright to the logo. The district court also granted the defendants a declaratory judgment invalidating the registration, finding that the application contained false statements and therefore should not have been issued in the first place.
Section 411 of the Copyright Act requires that a work be registered with the Copyright Office prior to the filing of a complaint for copyright infringement. In addition, the Prioritizing Resources and Organization for Intellectual Property Act (Pro-IP Act), enacted in 2008, added § 411(b), which states:
(1) A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, unless:
(A) the inaccurate information was included on the application for the copyright registration with knowledge that it was inaccurate; and
(B) the inaccuracy of the information, if known, would have caused the Register of copyrights to refuse registration.
(2) In any case in which inaccurate information described under paragraph (1) 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.
The 7th Circuit concluded that that the district court failed to comply with the statutory requirement that the Copyright Office be consulted to opine as to whether there was inaccurate information in the application such that, if known, would have resulted in a refusal to register.