Cosmetic Ideas, Inc. v. IAC/InteractiveCorp

The Ninth Circuit joins the Fifth and Seventh Circuits by holding that, for purposes of the Copyright Act’s registration requirement for bringing an infringement claim, copyright registration occurs when the Copyright Office receives a complete application, rather than when the Copyright Office approves or rejects an application.

Plaintiff manufactures and sells costume jewelry and filed suit for copyright infringement against the defendants for the distribution of an allegedly “virtually identical” necklace three weeks after it submitted a completed copyright registration application to the U.S. Copyright Office. The defendants moved to dismiss for lack of subject matter jurisdiction and failure to state a claim.

Section 411(a) of the Copyright Act provides, in relevant part: “[N]o civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” 17 U.S.C. § 411(a). “Registration” is defined as “a registration of a claim in the original or the renewed and extended term of copyright.” 17 U.S.C. § 101.

The district court determined that the plaintiff failed to comply with the registration requirement of § 411(a) because it did not have a valid copyright registration when it commenced this action. The district court then concluded that the lack of registration deprived the court of jurisdiction and granted the defendants’ motion to dismiss for lack of subject matter jurisdiction. Plaintiff appealed, contending that it complied with § 411(a) by submitting a completed registration application before instituting the action.

The U.S. Court of Appeals for the Ninth Circuit vacated and reversed the district court’s decision. Relying on the U.S. Supreme Court’s recent decision Reed Elsevier, Inc. v. Muchnick, 130 S.Ct. 1237 (2010), the Ninth Circuit held that the registration requirement in 411(a) is a precondition to filing a claim but does not restrict a federal court’s subject matter jurisdiction, and therefore the district court’s dismissal of the plaintiff’s copyright infringement claim for lack of subject matter jurisdiction was error.

However, the Ninth Circuit stated that the district court still may have correctly dismissed the suit for failure to state a claim because an appeals court may affirm the district court on any ground supported by the record even if the ground is not relied on by the district court. For this reason, the Ninth Circuit addressed the defendants’ assertion that the plaintiff failed to state a claim because copyright registration is a necessary element of an infringement claim and the Copyright Office had not acted on the plaintiff’s registration application by the time the plaintiff filed suit.

The Ninth Circuit presented the issue as whether a copyright is registered at the time the copyright holder’s application is received by the Copyright Office (the “application approach”) or at the time that the Copyright Office acts on the application (the “registration approach”). The Fifth and Seventh Circuits have adopted the application approach while the Tenth and Eleventh Circuits have adopted the registration approach. The court looked at the plain language of section 411(a) and concluded that “the clause at issue gives no guidance in interpreting the meaning of ‘registration.’” The court then examined the language of the statute as a whole to determine the intended meaning. The court explained that copyright registration is addressed in five consecutive sections: §§ 408 through 412. According to the court, two subsections of the Act, § 410(a) and portions of § 411(a), contain language that suggests that registration requires some affirmative steps to be taken by the Copyright Office. However, other sections of the Act “cast doubt on this interpretation. In particular, § 408 blurs the line between application and registration and favors the application approach.” Section 408 states: “[T]he owner of copyright or of any exclusive right in the work may obtain registration . . . by delivering to the Copyright Office the deposit specified by this section, together with the application and fee specified . . . .” 17 U.S.C. § 408(a). This section, the court said, implies that the sole requirement for obtaining registration is delivery of the appropriate documents and fee.

Finding that the plain language of the Act did not unequivocally support either the registration or application approach, the court turned to the broader context of the Copyright Act as a whole and concluded that the application approach “better fulfills Congress’s purpose of providing broad copyright protection while maintaining a robust federal register” of copyrighted works. The court explained that the application approach avoids unnecessary delay which could permit an infringing party to continue to profit from its wrongful acts. The court also noted that a claimant may file an infringement suit even if the Copyright Office rejects a registration application, as long as the claimant notifies the Copyright Office. Citing Nimmer on Copyright, the court reasoned that the registration approach thus creates a strange scheme, requiring a claimant to wait for action by the Copyright Office even though a claimant will ultimately be allowed to proceed regardless of how the Copyright Office treats the application. Furthermore, the court stated that the registration approach could deprive a claimant of the ability to sue if the three-year statute of limitations for copyright infringement expired before the registration application was acted on by the Copyright Office. The court, therefore, held that receipt by the Copyright Office of a complete application satisfies the registration requirement of § 411(a).