IS COPYRIGHT FRAUD?
HAVE YOU BEEN A VICTIM?
All levels of fraud are prevalent today in our society. There are credit card fraud, tax fraud, securities fraud, corporate fraud, identity fraud, fraudulent sales and promotions, fraud fraud and more fraud. So why should we as copyright practitioners assume that there is no such thing as copyright fraud? And, if we can bring ourselves to agree that it exists, how prevalent is it? Have any of our clients been unknowing victims? More importantly, what if anything is being done to prevent it? The simple answer is nothing, but the scariest answer is that under a deposit registration system as currently in effect in the United States nothing can be done in the vast majority of cases of copyright fraud, particularly in the area of textile prints and designs for use on clothing and accessories.
Under current U.S. Copyright Law, such a low level of originality is all that is required to meet the standard of copyrightability. Almost any print or design is registrable. That is not the problem. What is the problem is that all that is necessary for registration is that a short form application be completed and filed with the U.S. Copyright Office together with a photograph or visual copy of the work to be registered plus the $30.00 filing fee.
Based on that filing alone, the U.S. Copyright Office treats all information on the application as true and accurate and in reliance on it, issues a copyright registration. Admittedly, it has no means of verifying or determining the truth or accuracy of the information furnished to it, and the writer is not suggesting that it has or could. However, no company or lending institution would issue a credit card, open a bank account, grant a loan, lease a car, etc. without verifying information furnished to it on an application form furnished to it by an applicant.
Consequently, it would be so easy for any unscrupulous individual or company to locate prints or designs overseas which are not their original creations and which they did not legally acquire and register them with the
U.S. Copyright Office by fraudulently claiming them to be original works and that they are the authors or legitimate copyright claimants.
Notwithstanding the lack of any examination of a copyright application or verification of the information contained in an application for registration, the Copyright Act,§ 102 imbues the registration with a presumption of validity. As if that is not enough, the statute shifts the burden to the defendant to prove the invalidity of the copyright registration rather than placing the burden that exists in practically all cases on the plaintiff to establish the validity of its claim.
When a fraudulent copyright registration is asserted against a company, whether by way of a cease and desist letter or a civil action, how is it possible for defense counsel to discover the fraud?
If it is only a cease and desist letter, defense counsel can only request verification of originality and/or authorship. However, given that the copyright claim is fraudulent to begin with, the response will be equally fraudulent. If a civil action has been filed, discovery, including requests for production of documents and depositions may inquire into the validity of the copyright. However, here again, the responses are likely to be fraudulent as well.
It is impossible for defense counsel to search the world over to prove that a print or design registered with the
U.S. Copyright Office was either in the public domain prior to the party claiming copyright, or that the copyright claimant was not the author of the design, or that it did not legally acquire the copyright in the design. As a result, the client has no choice but to settle with the fraudulent copyright owner and to pay over, in many cases, substantial profits.
How prevalent is copyright fraud? Who can say, particularly since its victims are unknowing. There have been