Property, intangible

a blog about ownership of intellectual property rights and its licensing

Application as Registration

William Patry is vocal in his disagreement with Nimmer about whether § 411(a) of the Copyright Act requires the issuance of a Certificate of Registration before suit can be filed. Patry says “yes,” Nimmer says “no.” 2 Nimmer on Copyright § 7.16[B][1].

CHM Industries v. Structural & Steel Products, Inc. demonstrates the mischief that can happen when a statute is stretched beyond its plain meaning. As Patry notes, the 5th Circuit has adopted the Nimmer position, i.e., one only has to file an application for registration, not actually receive the registration, before filing a lawsuit. 
In CHM Industries, the plaintiff and defendant were competitors in the manufacture of large outdoor lighting fixtures. A number of employees left plaintiff to work for defendant, including a draftsman. The defendant then began making lighting fixtures that were similar to the CHM Industries fixtures. CHM Industries sued for copyright infringement of the technical drawings for the lights, misappropriation, conversion and other causes of action.
The court said that the drawings were “registered” with the Copyright Office one day before the complaint was filed – the use of the word “registered” in this case means that the application was filed one day before and, in the Fifth Circuit, this is good enough to be “registered” by operation of § 410(d) (which states that the effective date of a copyright registration is the day on which a complete application has been received in the Copyright Office, assuming that the Copyright Office decides the work is entitled to registration). From the remainder of the discussion in the case, it’s clear that the plaintiff had not received its certificates of registration.
The mischief results when CHM Industries tries to claim that the registration is prima facie evidence of its ownership of the copyright in the drawings. Under § 410(c), “In any judicial proceedings the certificate of a registration made before or within five years after first publication of the work shall constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate.” CHM Industries’ theory goes that if, under § 411(a) as interpreted by the Fifth Circuit it has “registered” its work upon receipt by the Copyright Office of the application, fee and deposit, then it should also be entitled to the presumption of ownership at the same time. This is a theory that worked in In re Napster, Inc. Copyright Litig., 191 F. Supp. 2d 1087, 1101 (N.D. Cal. 2002).

The theory, of course, doesn’t make sense. The Copyright Office hasn’t passed on the copyrightability of the work by its mere receipt of the application, so logically no presumption should arise; indeed the Copyright Office might reject the application. Even Nimmer disagrees with the plaintiff’s theory. 2 Nimmer on Copyright § 7.16[B][1] (“To the contrary, however, one court concluded that an application alone suffices for a prima facie presumption to arise. [citing Napster] It is submitted that its summary determination was incorrect.”).
The CHM Industries court disagreed with Napster; the certificate is required before the presumption inheres. CHM Industries therefore had to prove ownership without relying on the prima facie proof of a certificate of registration. 
The defendants cast doubt on CHM Industries’ ownership claim by questioning whether the drawings were derivative works not claimed as such in the applications, so that the registrations might be fraudulent (N.B. that this wouldn’t have stopped the certificates from issuing, since the Copyright Office doesn’t investigate the truth of the statements in the registration), defeated a claim of ownership by assignment because it was raised only in the reply brief, and raised doubt about the originality of the works.  CHM Industries’ motion for preliminary injunction denied.
CHM Industries, Inc. v. Structural & Steel Prods., Inc., Civ. No. 4:08-CV-454-Y, 2008 U.S. Dist. LEXIS 86131 (N.D. Tex. Oct. 24, 2008).

© 2008 Pamela Chestek
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