Star Athletica v. Varsity Brands – Supreme Court Ruling’s Impact

By Michael Small

 

In a recent Supreme Court case regarding the compatibility between clothes and copyright, Star Athletica v. Varsity Brands, the justices ruled in favor of Varsity Brands in a 6-2 decision, holding that the Defendant’s cheerleading uniform designs are protectable under copyright because they were deemed conceptually separable[1] from the uniform.  This decision answered the question brought to them by Star Athletica’s petition,[2] to which they state the following regarding the compatibility of copyright on clothes using the conceptual separability test:

A feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article, and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.[3]

When placed into the context of the cheerleading uniforms, the justices noted that the surface decoration of the cheerleading uniforms are separable and when alone, allows them to appear as a pictorial, graphic, or sculptural work.  When the separated decorations are applied to any other medium, they would be considered a two-dimensional work of art.  Therefore, Varsity’s designs on their cheerleader uniform are protectable under copyright.

The initial case began in 2015 when Varsity Brands sued Star Athletica under copyright infringement of their cheerleader uniform designs, which are registered in the Copyright Office from the drawings and photographs taken of the outfits.  The district court ruled in favor of Star Athletica, agreeing with their argument that copyright could not be applied to the utilitarian nature of the uniform, regardless of how unique the patterns are on the uniform.  Varsity Brands successfully filed for appeal in the Sixth Circuit and the lower court’s decision was reversed.  The Sixth Circuit ruled in favor of Varsity Brands, holding that the design patterns are copyrightable as the photography made the designs into “pictorial, graphic, or sculptural works,”[4] which is protectable under the Copyright Act.  Star filed for a writ of certiorari in 2016, arguing that the Sixth Circuit’s decision “allows roundabout copyrighting of garment designs masquerading as separable decorative features, preventing competition and inviting new copyright claims for all manner of garments … based solely on the arrangement of stripes and color blocks.”[5]  Ultimately Star Athletica’s argument aimed to dismiss Varsity Brand’s copyright hold on their outfits.  The writ was approved and the case ascended to the U.S. Supreme Court.  The final decision was made in March 2017, in which the U.S. Supreme Court ruled in favor of Varsity Brands, thus concluding the issue.

Prior to the U.S. Supreme Court’s ruling, clothing design is not protectable by copyright law because clothes serve a utilitarian purpose and are identified as useful articles;[6] they keep the customer warm, covered, and protected from the elements.  The functionality of clothing outweighed the creative intent of any design added to the garment, and are therefore not applicable for copyright.  This is the same reason why most clothes cannot be protected by utility patents, although design patents and trademarks may apply on a case-by-case basis (e.g., purses and shoes, large logo T-shirts).  This lack of intellectual property (IP) protection meant that new, creative designs for clothes released in businesses such as the fashion industry, are prone to receiving knockoff versions being sold afterwards, often flooding the market with multiple copies of similar, but lower quality goods.  These knockoffs enter the market after or even before the original design is ready for sale, stealing profits from the original designer.

The U.S. Supreme Court’s ruling on this case will likely have a major impact on the fashion industry.  Fashion designers have been given a tool supported by the U.S. Supreme Court that can be used to argue that the conceptual nature of a design in their product can be protected under copyright by using the conceptual separability test.  This logic can give fashion designers an incentive to clamp down on the copycat/knockoff industry that manifested in the fashion industry due to being a copyright-free environment.  This would make it more difficult for copycat/knockoff designers to make and sell products in a market where copyright is enforced, thus returning profits to the original designers.  Although there is no bill that guarantees protection of clothing design, the conceptual separability test approved by the U.S. Supreme Court could be used to help grant designers the copyright protection they want for their works.  If the design concept can be separated from the clothing design and appear as a two-dimensional work, a copyright can be applied to a clothing design.

While the ruling may provide copyright benefits for the fashion industry, not all are in support of the potential impact.  Up until this ruling, the fashion industry maintained itself somewhat efficiently without the protection required from copyright.  In fact, there are arguments that support the lack thereof for copyright, stating that such an implementation would damage innovation for designers.  Previous attempts to make fashion design copyrightable through legislative bills such as the Innovative Design Protection Act (2012) and the Design Piracy Prohibition Act (2007) have been met with opposition from independent fashion designers and businesses alike, making them fail to pass in Congress.  Some argue that it would be impossible to make an original design from scratch because designers learn and become influenced from other creations.  Therefore, copying is essential in fashion design to promote innovation and new takes on fashion under Raustiala and Sprigman’s Piracy Paradox argument.[7]  Others are more concerned that designers would focus more on the risk of copyright litigation rather than making interesting designs, reducing innovation and creativity in the fashion design industry.  In addition, legal costs for fashion designers can rise should they consult with a lawyer regarding fashion design and copyright, which could indirectly lead to a rise in prices of clothes and designs for the consumer overall.  Finally, enforcement of copyright protection may not be a viable option due to the fast-paced nature of fashion design, where the ‘next big thing’ is only from months to less than a year away, as opposed to the length and complexity of filing a copyright litigation and going to court.  With an industry that has adapted to having limited IP protection since the Copyright Act’s implementation, arguments against copyright in the fashion industry center around the problem that its incorporation could severely damage the industry’s economic and creative value now and in the future.

Despite the opposition against implementing copyright into the fashion industry, the U.S. government has shown interest in the past to make such an introduction.  It could be argued that the Star Athletica v. Varsity Brands U.S. Supreme Court ruling is a representation of this interest, giving designers a tool to use should they feel that their design is being infringed.  The effort to include fashion design for copyright protection would also strengthen the U.S.’s global market to attract foreign direct investment, as several countries in Europe have their own copyright laws for fashion design, such as France and Germany.  This is further reinforced by the presence of the European Union (EU), which grants 25 years of design copyright protection for all its 28 member states.  The protection granted by the EU makes it viable for fashion design companies concerned about copycat/knockoff designs to doing business overseas in the EU’s member states than in the U.S.  The outcome of Star Athletica v. Varsity Brands could garner interest from politicians and businesses to try and compile another bill to include fashion as copyrightable, allowing the U.S. to garner interest in some fashion designers that were wary of the previous copyright-free area of clothing design.  At the same time, however, companies that relied on the copyright free environment for designing outfits, such as certain sports teams or other artists, would have to put resources into redesigning the product so that their goods do not infringe on the original copyright.  An introduction of a bill that would enforce an immediate change without a smooth transition could have a drastic effect on the fashion design industry, for better or worse.  The impact of the Star Athletica v. Varsity Brands ruling has yet to be fully measured as the decision was just made and there are not many cases that have tested the U.S. Supreme Court’s conceptual separability test.   It is very likely that a rise of copyright litigations will occur that will test the extent of the copyright protection granted to clothes by the conceptual separability test from both individual fashion designers and businesses.  Once its protection range has been analyzed, it will become easier to analyze the aftermath of the Star Athletica v. Varsity Brands ruling.

[1] “In its statutory form, the separability inquiry asks whether the aesthetic features of a useful article can be identified separately from, and can exist independently.”  See Barton Keyes, Alive and Well: The (Still) Ongoing Debate Surrounding Conceptual Separability in American Copyright Law, Ohio State Law Journal, 69 (109), (2012), http://moritzlaw.osu.edu/students/groups/oslj/files/2012/04/69.1.keyes_.pdf.

[2] “What is the appropriate test to determine when a feature of the design of a useful article is protectable under § 101 of the Copyright Act?”  See Star Athletica, L.L.C., v. Varsity Brands, Inc., Varsity Spirit Corporation, and Varsity Spirit Fashions & Supplies, Inc., On Petition for a Writ of Certiorari to the United States Court of Appeals for the Sixth Circuit, (2016).

[3] See Star Athletica, L.L.C. v. Varsity Brands, Inc., et al., 580 (U. S. Supreme Court, 2017), https://www.supremecourt.gov/opinions/16pdf/15-866_0971.pdf.

[4] See Varsity Brands, Inc. v. Star Athletica, LLC, 799 F.3d 468, 471 (6th Cir. 2015).

[5] See Petition for a Writ of Certiorari at 31, Star Athletica, LLC v. Varsity Brands, Inc. (Jan. 5, 2016) (No. 15-866), http://www.scotusblog.com/wp-content/uploads/2016/05/SACP.pdf.

[6] “A ‘useful article’ is an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information. An article that is normally a part of a useful article is considered a ‘useful article’.”  See 17 U.S.C. § 101.

[7] The Piracy Paradox argument revolves around the idea that the nonstop changing trends of fashion in the fashion industry is made aware of by the consumer, such as not wearing what everyone else is wearing, or the constant demand for new products even after acquiring new products.  This awareness makes copying a viable option that helps drive faster innovation in design, sales, and competition more than enforcing copyright or other forms of IP protection. See Kal Raustiala and Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design., Virginia Law Review, 92, (Nov. 13 2006), p. 1687-1777.

Summary on the Supreme Court’s Recent Kirtsaeng Decision

By Samantha Leiner

The Supreme Court released its decision regarding the case Kirtsaeng v. John Wiley & Sons, Inc., 579 U. S. ____ (2016, in June.  This case deals with what factors a district court is supposed to look at when awarding or rejecting attorneys’ fee under the Copyright Act Section 505. 17 U.S.C. § 505.  The original infringement issue was decided by the Supreme Court in 2013.  See Kirtsaeng v. John Wiley & Sons, Inc., 568 U. S. ___ (2013).

 

Kirtsaeng, a citizen of Thailand, came to the US to go to school at Cornell University.  He realized the same textbooks required for his class in the US were sold for a significantly cheaper amount back home in Thailand.  Kirtsaeng had family and friends buy the textbooks in Thailand and then sent the books to him in the U.S., where he sold them for a nice profit.  Wiley & Sons, the publishing company for the textbooks, sued Kirtsaeng for copyright infringement, claiming his activities violated the exclusive right to distribute under the Copyright Act.  Kirtsaeng’s defense was the “first-sale doctrine,” which allows for the lawful owner of a copyrighted book to resell “or otherwise dispose of” the product as he wishes.  Wiley’s counter to Kirtsaeng’s defense is the “first-sale doctrine” does not apply when the book was manufactured abroad.   While this case was taking place, multiple courts were in conflict as to whether the “first-sale doctrine” applied to products manufactured abroad.  Even the Supreme Court in a previous decision was undecided on this issue in a 4-to-4 split of the Court. See Costco Wholesale Corp. v. Omega, S. A., 562 U. S. 40 (2010) (per curiam). Here, the district court sided with Wiley, as did a divided Second Circuit court.  However, the Supreme Court reversed in a 6-to-3 decision and determined the first-sale doctrine allows the resale of foreign-made books, just like domestic books.   Being victorious, Kirtsaeng went back to the district court to seek more than $2 million in attorneys’ fees from Wiley.  The district court denied the motion based on the reasoning that Wiley’s infringement claim was objectively reasonable, which the district court argued was in line with the Copyright Act’s purpose.  The Second Circuit affirmed the district court’s holding that attorneys’ fees would not be awarded due to the objective reasonableness of Wiley’s position in bringing the infringement suit.

 

The major issue presented to the Supreme Court was whether a court, in exercising its authority to award or deny attorney’s fees to the winning party, should give substantial weight to the objective reasonableness of the losing party’s position.

 

The Supreme Court found that a court, specifically a district court, should give substantial weight to the objective reasonableness of the losing party’s position.  However, the Court also held that district courts, when determining whether attorneys’ fees should be awarded, should also give weight to all other factors relevant in granting the motion for attorney’s fees, such as a party’s litigation misconduct or if the infringer has repeated offenses of infringement.  The Supreme Court further held that it is in a court’s discretion to order or deny attorneys’ fees based on these relevant factors.  Therefore, the Supreme Court vacated the decision and remanded back to the district court because the Justices were not sure whether the district court understood the full scope the discretion it holds.

 

The Supreme Court started its analysis by citing to Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), a Supreme Court case where it decided two restrictions or limitations for courts to follow when determining whether attorneys’ fees should be awarded under the Copyright Act § 505.   The two restrictions/limitations on district courts are: (1) when a district court is determining whether to award attorney’s fees it may not “award [] attorney’s fees as a matter of court,” but on a case-by-case, more particularized basis, Fogerty, 510 U.S. at 533; and (2) the district court shall treat prevailing plaintiffs and prevailing defendants equally when determining a motion for attorneys’ fees, Id. at 527.   The Supreme Court in Fogerty noted with approval “several nonexclusive factors” to help a district court in deciding whether to award attorneys’ fees, while leaving open the possibility of additional guidance in determining attorneys’ fees: “frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence.”  Id. at 534, n. 19.    Here, Kirtsaeng and Wiley disagree as to “what else [the Court] should say to district courts” about what to consider when awarding attorneys’ fees.  Kirtsaeng, 579 U.S. at 4.  Both Kirtsaeng and Wiley argue that the Supreme Court should hold that the district court should put “substantial weight” on certain factors in determining whether attorneys’ fees should be awarded, but Kirtsaeng and Wiley differ on what factors should be given substantial weight.  Wiley argues that the district court, in deciding whether to award the prevailing party attorneys’ fees, should put substantial weight on the objective reasonableness of a losing party’s position in bringing or defending the infringement case.  In contrast, Kirtsaeng’s position was that the court should give “special consideration to whether a lawsuit resolved an important and close legal issue and thus ‘meaningfully clarifie[d]’ copyright law.” Kirtsaeng, 579 U.S. at 5 (quoting Brief for Petitioner 36).

 

The Supreme Court agrees that there is a need for additional guidance surrounding an application of § 505.  The Court states that, even when a fee-shifting law does not state any explicit limits or conditions, the Supreme Court has “found limits” in the laws in order to give individuals a predictor as to how a fee-shifting decision will result.  Kirtsaeng, 579 U.S. at 6.

 

The Court explains that to find the right guidance for a determination of attorneys’ fees under § 505, it must look at whether Wiley’s position above or Kirtsaeng’s position above advances the Copyright Act’s goals.  The Supreme Court in Fogerty explained, “copyright law ultimately serves the purpose of enriching the general public through access to creative works.”  510 U.S. at 527.  Section 505 achieves that purpose “by striking a balance between wo subsidiary aims: encouraging and rewarding authors’ creation while also enabling other to build on that work.”  Kirtsaeng, 579 U.S. at 6 (citing Forgery, 510 U.S. at 526.  Therefore, attorneys’ fees should “encourage the types of lawsuits that promote the purposes of the Copyright Act.” Id.

 

The Supreme Court sided with Wiley because Wiley’s argument falls within the purpose of the Copyright Act, while Kirtsaeng’s argument does not “produce any sure benefits.” Kirtsaeng, 579 U. S. at 7.   The Supreme Court’s reasoning on rejecting Kirtsaeng’s argument is even if the case advances public interest, fee shifting does not always encourage possible litigation, but will most likely have a chilling effect on people bringing suits, especially those of public interest, based on the punishment of attorney’s fees.  Further accepting Wiley’s argument, the Supreme Court found putting substantial weight on reasonableness discourages a copyright holder from bringing a suit with no reasonable infringement claim or an infringer from bringing a defense with no reasonableness.  Discouraging infringement claims or defenses with no merit saves the courts and the parties time and money.  Additionally, Wiley’s argument supports Forgery because it does not discriminate between plaintiffs and defendants.

 

However, the Supreme Court decided reasonableness is only a “substantial factor” in determining whether attorney’s fees shall be awarded, not a controlling one.  The Court found other factors may be considered by the district court to determine whether attorneys’ fees should be awarded, such as a party’s litigation misconduct, “to deter repeated instances of copyright infringement,” or “overaggressive assertions of copyright claims.”  A party’s litigation misconduct can mean unduly delaying the case through discovery, filing unneeded motions, failing to produce important documents, etc. This means the victor may be awarded attorney’s fees even if the losing party’s position was reasonable.

 

Conclusion:

 

The Supreme Court found that a court, specifically a district court, should give substantial weight to the objective reasonableness of the losing party’s position.  However, the Court also held that district courts, when determining whether attorneys’ fees should be awarded, should also give weight to all other factors relevant in granting the motion for attorney’s fees, such as a party’s litigation misconduct or the repeated offenses by the infringer.  The Court further held that it is in a court’s discretion to order or deny attorneys’ fees based on these relevant factors.  Therefore, the Court vacated the decision and remanded back to the district court because the Justices were not sure whether the district court understood the full scope the discretion it holds.