Beverly Hills Teddy Bear Company v. Best Brands Consumer Products, Inc.

Background

Beverly Hills Teddy Bear Company (BHTBC) sued Best Brands Consumer Products, Inc. for allegedly infringing copyrights covering its “Squeezamals” toys. Best Brands renewed a request for referral to the Register of Copyrights under 17 U.S.C. § 411(b)(2). It argued that BHTBC knowingly included two types of inaccuracies in its copyright registrations: incorrect first-publication dates for registrations other than the unicorn registration, and the failure to identify related works in the unicorn registration. Best Brands also asked for summary judgment, which is a decision without a trial when there is no genuine dispute over facts that matter to the outcome, on the theory that the registrations would be invalid if the Register determined that registration would have been refused.

Legal standard

A copyright registration does not have to be error-free to remain valid. Under 17 U.S.C. § 411(b)(1), an inaccurate registration remains valid unless the applicant included the inaccurate information knowing it was inaccurate and the information, if known, would have caused the Register of Copyrights to refuse registration. Although § 411(b)(2) directs a court to ask the Register about alleged inaccuracies, the court explained that referral may be delayed until the factual record is sufficiently developed, including through trial.

The alleged publication-date errors

Best Brands argued that BHTBC’s registrations incorrectly listed December 21, 2017—the date BHTBC shipped Squeezamals to Target—as the first-publication date because Target had ordered the toys before November 27, 2017. BHTBC disputed that its earlier discussions and activities with retailers constituted “publication.” The court stated that even if Best Brands’s interpretation were correct, referral was premature because factual issues remained about whether BHTBC knew its position was legally wrong when it applied for registration.

The court noted that a lack of knowledge of either fact or law can excuse an inaccuracy. It also observed that determining a work’s first-publication date can involve difficult legal questions. The only evidence Best Brands identified regarding BHTBC’s knowledge was that BHTBC had counsel when it applied for the copyrights. The court found that this did not resolve whether any error was knowing. It also noted that Best Brands offered different theories about when publication occurred. The Copyright Office’s nonbinding Compendium supported BHTBC’s position that offering copies before they are ready for distribution does not constitute publication, and Best Brands did not identify contrary evidence concerning whether the toys were available for distribution in fall 2017.

The unicorn registration

Best Brands argued that the unicorn was derivative of BHTBC’s previously published narwhal, teal cat, and pink owl works and that the registration was deficient because it did not list those related works. BHTBC disputed that the unicorn was derivative and argued that it was not required to disclose its own preexisting works.

The court concluded that referral was also premature on this issue. Whether the unicorn was derivative was a factual question better resolved by a factfinder. In addition, courts disagreed about whether an applicant must disclose its own related works, making the legal issue unsettled. Best Brands therefore had not shown that no genuine dispute existed about whether BHTBC knowingly failed to list the works.

Ruling

Judge Arun Subramanian denied both of Best Brands’s motions: the request for referral to the Register of Copyrights and the request for summary judgment. The court emphasized that Best Brands had little evidence that any errors, if they existed, were knowingly made. It explained that if the alleged errors were inadvertent, the copyrights would remain valid regardless of whether the Copyright Office would have refused registration had it known the information. The court directed the Clerk of Court to terminate docket entry 292.