DeliverMed Holdings, LLC v. Schaltenbrand, ___ F.3d ___, 108 U.S.P.Q. 1207 (7th Cir. 2013).

The Seventh Circuit recently addressed the Copyright Act’s addition of a new procedure for courts confronted with a registration allegedly obtained by knowing misstatements in an application. The court of appeals held that even though the trial court’s reasoning regarding its cancellation of the registration was likely consistent with the Register of Copyright’s practice, the trial should have obtained an opinion from the Register before invalidating the copyright registration at issue.

Following a bench trial, the district court found against plaintiffs on their copyright infringement claim. Additionally, it found that the plaintiffs had deliberately misrepresented facts in their copyright application for a logo. The court of appeals upheld this part of the holding, pointing out that the plaintiffs had represented on their application that the author of the logo had transferred ownership of the logo through a written agreement; such statement was false because the transfer was not executed until a week later the application was submitted. The Seventh Circuit held that the plaintiffs could not transform their misrepresentation into a true statement by later executing a transfer.

Based on its finding of a misrepresentation, the trial court then determined whether the copyright should be invalidated. The Copyright Act provides for invalidation of registrations where the registrant knowingly misrepresented information in his application and the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration. The trial court ruled that had the information been known, the Register would have refused registration; it therefore issued a declaratory judgment in favor of the defendants invalidating the copyright registration. The Seventh Circuit held that this was error: pursuant to the Copyright Act, the district court should have consulted the Register and obtained an opinion before invalidating the copyright registration. This was true even though the district court’s reasoning seemed consistent with the Register’s practice.

In reversing the trial court, the Seventh Circuit nevertheless cautioned courts and litigants to be wary of using the device of consulting the Register. It advised courts to only seek an opinion from the Register once the other preconditions to invalidity are satisfied, i.e, there is a finding of inaccurate information and the registrant knowingly included the inaccurate information. Otherwise, it reasoned, the procedure can be used to unnecessarily delay the proceedings.

Here, because the trial court had found the prerequisites met, the proper procedure was to consult the Register. Accordingly, based on the trial court’s failure to do so, the Seventh Circuit reversed and remanded the case to the trial court.

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