UNICOLORS, INC. V. H&M HENNES & MAURITZ, LP

Citation: Not availableDocket: 18-56253

Court: Court of Appeals for the Ninth Circuit; November 9, 2022; Federal Appellate Court

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The United States Court of Appeals for the Ninth Circuit affirmed the district court's judgment in a copyright infringement case between Unicolors, Inc. and H&M Hennes. Mauritz, L.P., but vacated and remanded for a new trial on damages, contingent on Unicolors rejecting a remittitur amount of $116,975.23. Unicolors, a textile and garment design company, claimed that its 2011 design (EH101) was strikingly similar to H&M's 2015 design (Xue Xu). The Supreme Court clarified that a copyright holder's lack of knowledge regarding inaccuracies in a copyright registration can excuse such inaccuracies under the safe-harbor provision of the Copyright Act. 

Upon reevaluation, the panel determined that Unicolors's registration (No. VA-1-770-400) is valid despite inaccuracies, since Unicolors lacked the requisite knowledge of these inaccuracies. The panel established that to invalidate a copyright registration under 17 U.S.C. § 411(b), one must prove that the inaccuracies were known to the registrant and material to the decision made by the Register of Copyrights. 

Regarding H&M's pretrial challenges, the panel found that H&M forfeited claims related to statements by Unicolors's President, upheld the exclusion of H&M's expert testimony on substantial similarity and damages, and determined that the district court did not err in its jury instructions concerning the presumption of independent creation of the Xue Xu design based on a Chinese copyright. The panel concluded that any potential errors in jury instructions were harmless.

H&M contested the district court's decision to exclude evidence regarding Shaoxing County DOMO Apparel Co. Ltd.'s U.S. copyright registration for the Xue Xu design, which the panel found to be a non-abuse of discretion, rendering any error harmless. H&M's challenge regarding the admission of a physical exemplar of EH101 was deemed forfeited. In subsequent post-trial challenges, H&M's arguments against the denial of its renewed motion for judgment as a matter of law (RJMOL) were rejected. The panel confirmed Unicolors' valid copyright in the '400 Registration and upheld the jury's finding of striking similarity and the willfulness determination. H&M's claim that the district court improperly inflated Unicolors' post-remittitur damages was partially validated, with the panel deeming the profit-disgorgement figure of $247,675.33 an abuse of discretion. They recalculated the profit-disgorgement to $98,441.23 and the lost profits to $18,534, leading to a total remittitur amount of $116,975.23. The panel instructed that if Unicolors rejects this remittitur amount, H&M is entitled to a new trial on damages only. The court also upheld the award of attorneys' fees to Unicolors. The case returned on remand following the Supreme Court's clarification that inaccuracies in copyright registration can be excused under the safe-harbor provision, affirming the validity of the '400 Registration.

The panel has determined that the existing issues in this case do not warrant overturning the district court's judgment, which is affirmed except for the instruction to vacate and remand for a new trial if Unicolors declines the remittitur of $116,975.23—an amount lower than both the jury verdict and the district court's initial judgment. Should Unicolors reject this remittitur, the new trial will be limited to the issue of damages.

This case involves a copyright infringement claim by Unicolors, Inc. against H&M Hennes & Mauritz L.P. Unicolors alleges that H&M's garments, which began selling in 2015, infringe upon a design created by Unicolors in 2011. A jury found the designs substantially similar. Unicolors specializes in creating and marketing fabric designs, sometimes offering exclusive "confined" works to specific customers for a limited time, during which the designs are not offered to others. 

Unicolors holds a copyright registration (No. VA 1-770-400) for a two-dimensional artwork, EH101, which is part of a single-unit registration encompassing thirty-one designs. The registration indicates a first publication date of January 15, 2011, when the designs were presented internally to salespeople, not to the public. The designations “EH” and “CEH” pertain to the creation date and exclusivity status of the works, respectively. Unicolors aggregates designs into single registrations for cost efficiency.

Unicolors alleged copyright infringement by H&M for selling garments featuring the “Xue Xu” design, which Unicolors claimed was identical to its copyrighted EH101 design. The jury ruled in favor of Unicolors, affirming its valid copyright and determining H&M’s infringement was willful, awarding Unicolors nearly $846,000 in damages. H&M’s motions for judgment as a matter of law and a new trial were partly denied, leading to a conditional remittitur of damages that Unicolors accepted. The district court also awarded Unicolors attorneys’ fees and costs. On appeal, the court interpreted the “single unit of publication” requirement of copyright law, determining that Unicolors had inaccurately registered its works due to the inclusion of confined designs. The appellate court reversed and remanded the case, instructing the district court to consult the Register of Copyrights regarding the implications of the inaccuracies. The Supreme Court later clarified that knowledge of inaccuracies in copyright registration does not hinge on distinguishing between legal and factual mistakes, allowing for possible excusal of such inaccuracies. The case is now reevaluated based on this guidance.

Orders regarding motions for new trials and remittitur are subject to an abuse of discretion standard of review, while factual findings are affirmed unless deemed illogical, implausible, or unsupported by the record. Denials of motions for judgment as a matter of law are reviewed de novo. The admission or exclusion of evidence is also reviewed for abuse of discretion, with reversals only occurring if the error likely affected the verdict. Jury instruction formulation is reviewed for abuse of discretion, but the instructions’ accuracy regarding the law is reviewed de novo; errors may not warrant reversal if deemed harmless. Legal questions regarding attorneys’ fees are reviewed de novo, while factual findings are assessed for clear error. 

In the appeal, H&M raises multiple issues regarding the district court's proceedings related to Unicolors' copyright in the ’400 Registration. A crucial preliminary matter is the validity of Unicolors’ copyright registration, as registration is necessary to initiate an infringement lawsuit. The safe-harbor provision under 17 U.S.C. 411(b)(1) protects a copyright registration from invalidation due to inaccuracies unless the registrant knowingly provided false information. Courts must first confirm the registrant's knowledge of any inaccuracies before requesting the Register of Copyrights to determine if the inaccuracies would have led to a registration refusal.

The district court's reasoning that Unicolors lacked the necessary knowledge for the safe-harbor provision was previously disputed, with a focus on the interpretation that "knowledge" pertains solely to factual awareness rather than an intent to evade legal requirements. Following the Supreme Court's reversal, it is now established that a lack of knowledge regarding either factual inaccuracies or legal compliance can excuse inaccuracies in copyright registration. Courts must evaluate whether a registrant was aware of factual inaccuracies and legal noncompliance before determining materiality. Additionally, the Supreme Court’s interpretation of the safe-harbor provision raises questions about its protection of innocent mistakes of law alongside those of fact, linking it to the legal definition of fraud as a knowing misrepresentation of material fact. This interpretation contrasts with previous holdings that did not require intent to defraud under Section 411(b) of the Copyright Act. The historical context of "fraud on the Copyright Office," linked to the 1909 Copyright Act, indicated that inadvertent mistakes did not invalidate registrations unless there was intent to defraud. Despite the 2008 revisions, the court had treated the new safe-harbor provision as maintaining prior judicial doctrines. The distinction made in earlier cases between "knowledge" and "fraud" was based on the statute's wording, leading to the conclusion that knowledge pertains only to factual errors, irrespective of legal intent.

Section 411(b) necessitates knowledge of both legal and factual inaccuracies for a party to be found liable for fraud against the Copyright Office. The Supreme Court clarified that previous interpretations incorrectly implied that inadvertent legal errors could excuse fraud, which contradicts statutory requirements for knowledge of misrepresentation. The Court affirmed that the PRO-IP Act did not alter the established application of fraud under the 1909 Copyright Act, reinforcing that a safe-harbor provision requires proof of fraud.

To invalidate a copyright registration under 411(b), a party must show: (1) the registration application contained inaccuracies, (2) the registrant was aware of non-compliance with legal requirements, and (3) the inaccuracies were material to the registration decision. Essentially, a registration is invalid if it involved knowingly misrepresenting material facts.

To assess the validity of Unicolors's ’400 Registration, the first inquiry is whether its application had inaccuracies. The prior decision addressed the meaning of publishing multiple works as a “single unit” under 37 C.F.R. 202.3(b)(4)(i)(A). The Court determined that “single unit” implies a bundled collection of works published together. The regulation states that all copyrightable elements in a single publication, with the same copyright claimant, are considered a single work. The principle of noscitur a sociis indicates that contextual words enhance the understanding of statutory terms, leading to the conclusion that a “single unit of publication” must consist of works published together as a bundled collection.

202.3(b)(4)(i)(A) defines “copyrightable elements” as self-contained works that must be included in a “single unit of publication.” This regulation clarifies that a “single unit” does not encompass separate self-contained works but rather a collection of such works presented together. The U.S. Copyright Office’s Compendium of Copyright Office Practices defines a “single unit of publication” as a collection of works first distributed to the public in a bundled format, such as a board game with its components. Consequently, a collection of works can only qualify as a “single unit” if all works were initially published together. Unicolors inaccurately registered a collection of works in the ’400 Registration as a single unit when these works were not published as such, as they were made available only to individual customers.

Regarding Unicolors's knowledge of this inaccuracy, the court noted that it typically would need to remand to the district court to determine if Unicolors knew it was violating the single unit rule. However, the district court found no evidence that Unicolors intended to defraud the Copyright Office, which implies that Unicolors was also unaware of any inaccuracies in its application. The court upheld this finding, noting that Unicolors could not have knowingly violated the regulation before it was definitively interpreted. The existing circuit court precedent was not directly applicable as it did not construe the provision in question but allowed for multiple works to be registered together despite not being “related.”

The internal manual from the Copyright Office at the time of Unicolors’ ’400 Registration application lacked clear guidance on the term “single unit,” merely rephrasing the statute. The district court incorrectly concluded that Unicolors met the requirement of 37 C.F.R. 202.3(b)(4)(i)(A) by submitting both confined and unconfined designs simultaneously. The uncertainty surrounding the single unit requirement, as shown by the district court's ruling, indicates that Unicolors likely did not recognize any potential issues with their application. The U.S. Copyright Office expressed concerns about the ambiguity of "publication" and sought to create new regulations for clarity.

H&M argues that Unicolors committed fraud by knowingly misrepresenting facts in its application, citing two points: Unicolors understood it was combining confidential and public designs, and that Mr. Pazirandeh admitted the submission was partly to save costs. However, the first point does not demonstrate Unicolors’ awareness of the legal requirements, only their factual knowledge of the application’s composition. The characterization of Mr. Pazirandeh’s testimony as evidence of fraudulent intent is overstated; he indicated that the designs were bundled based on a belief in their market potential and consistent past practices. Given the legal uncertainty regarding the single-unit rule, it appears reasonable that he evaluated various interpretations and opted for a cost-effective approach, rather than engaging in fraudulent behavior.

The district court's determination that Unicolors lacked knowledge of submitting a false registration application is supported by factual inferences, particularly given the unsettled legal status of the single-unit issue at the time of the ’400 Registration submission. Consequently, the court's finding that Unicolors did not possess the requisite knowledge of inaccuracies in its application under 17 U.S.C. § 411(b)(1)(A) is affirmed as not clearly erroneous. This absence of knowledge places the ’400 Registration within the protections of the safe-harbor provision, validating Unicolors’s copyright and allowing it to pursue an infringement claim against H&M regarding the EH101 design.

H&M raises several challenges to the district court’s proceedings, specifically contesting the rulings on three motions in limine. H&M argues that the court erred by allowing expert testimony from Mr. Pazirandeh regarding the similarities between the EH101 and H&M's Xue Xu design, claiming that he was not properly designated as an expert. However, H&M forfeited this challenge by failing to object during the trial when Mr. Pazirandeh's testimony allegedly shifted from lay to expert. Although H&M’s pretrial motion sought to exclude Mr. Pazirandeh’s expert testimony, the district court concluded that if he only stated he saw similarities that motivated the lawsuit, such testimony would be considered lay testimony and permissible, consistent with representations made by Unicolors’s counsel.

The district court permitted Mr. Pazirandeh to testify, with a warning that any deviation from permitted lay testimony would prompt a reevaluation of the issue. During the trial, Mr. Pazirandeh made five statements that H&M claims constituted expert testimony, but H&M did not object to or move to strike these statements at trial. His statements included comparisons of the designs and assertions based on his 25 years of experience. H&M contends these statements violate the in limine ruling aimed at excluding expert testimony. However, H&M failed to preserve its objection for appeal as required by Federal Rule of Evidence 103(a)(1)(A) because it did not raise any objections at trial, nor was there a definitive ruling on the admissibility of those statements. The district court had indicated that Mr. Pazirandeh's testimony should remain within limited parameters, and H&M needed to object to any testimony that exceeded those limits to preserve the error for appeal. Since H&M did not object during the trial, it forfeited its right to contest the admissibility of Mr. Pazirandeh’s statements on appeal. Additionally, H&M challenged the exclusion of its expert Robin Lake regarding the substantial similarity between the EH101 and Xue Xu designs, arguing that the district court abused its discretion in excluding her testimony.

H&M disclosed Ms. Lake as a rebuttal expert after the April 7, 2017 deadline set by the court for initial expert disclosures. Unicolors filed a motion in limine to exclude her testimony, arguing it was untimely under Federal Rules of Civil Procedure 26 and 37. Rule 26 mandates timely expert disclosures as per court orders, while Rule 37 restricts the use of undisclosed expert testimony unless justified or harmless. H&M acknowledged the delay but claimed it was justified due to Unicolors' earlier actions, stating it only needed an expert after Unicolors presented declarations with opinion testimony. H&M also argued that any prejudice to Unicolors was self-inflicted, as they did not depose Ms. Lake prior to the discovery cutoff or seek an extension for rebuttal expert designation.

The district court ruled in favor of Unicolors, stating that H&M's justification for the late disclosure was insufficient since Unicolors did not designate an expert witness. This meant there was no expert testimony for Ms. Lake to rebut. The court noted that H&M’s failure to timely disclose was not harmless, as Unicolors had no reason to depose Ms. Lake without any planned expert testimony. However, the court indicated that its decision could be revisited if Unicolors' witnesses offered expert opinions at trial.

During the trial, H&M did not object to Mr. Pazirandeh’s opinion testimony nor did they proffer Ms. Lake’s rebuttal testimony, which could have prompted the court to reconsider its earlier ruling. On appeal, H&M reiterated its previous arguments and added that Mr. Pazirandeh's testimony further justified the late disclosure. However, the district court's prior ruling prohibiting Unicolors’ lay witnesses from providing expert testimony weakened H&M’s position.

During the motion in limine hearing, the district court considered Mr. Pazirandeh’s declarations and deposition testimony as potentially expert testimony, suggesting that Ms. Lake should be allowed to testify due to perceived strategic maneuvering by the plaintiff. Despite H&M initially indicating a desire to have Ms. Lake testify, they only raised a single objection related to her ability to observe other witness testimonies and did not mention her again throughout the trial. Once Unicolors indicated that Mr. Pazirandeh would only provide lay testimony, the court determined that H&M no longer needed Ms. Lake's expert testimony, rendering her late disclosure moot under Federal Rule of Civil Procedure 26(a)(2)(D)(ii). The court found that H&M had not justified the late disclosure, as Ms. Lake's testimony was no longer relevant. H&M's argument that Mr. Pazirandeh’s testimony justified Ms. Lake's late disclosure was also rejected because H&M failed to raise the issue during the trial. Furthermore, H&M's assertion of harmlessness was dismissed, as the court reasoned that H&M's designation of Ms. Lake as a rebuttal expert contributed to Unicolors' inability to prepare for her testimony, thereby creating the alleged prejudice. The court concluded that H&M's actions led to the situation and thus did not substantiate their claims regarding the late disclosure or any resulting prejudice.

The district court did not abuse its discretion in ruling that Ms. Lake's late disclosure of expert testimony was not harmless, leading to the exclusion of her testimony. H&M similarly attempted to introduce expert testimony from Mr. Lewis regarding damages and the calculation of profits to be disgorged if found liable. However, Mr. Lewis was disclosed after the expert disclosure deadline and labeled as a "rebuttal" expert. The court found that like Ms. Lake, Mr. Lewis’s late disclosure was unjustified, particularly since Unicolors had indicated it would not present testimony on H&M's profits at trial.

H&M argued that the late disclosure was justified because it only realized the need for Mr. Lewis's opinion after Unicolors filed a summary judgment motion that included a revenue calculation for H&M’s sales related to the disputed design. H&M also contended that the late disclosure was harmless since Unicolors had adequate time to depose Mr. Lewis before trial. However, the court upheld the exclusion of Mr. Lewis’s testimony, noting that even though Unicolors had provided revenue calculations, it had disclaimed any intention to call witnesses on H&M’s profits. Ultimately, the court found that the evidence for the over $800,000 disgorgement award was not lacking an evidentiary foundation, despite the absence of testimonial evidence.

H&M acknowledged the quantity of Xue Xu products sold, while Unicolors presented evidence including sales prices, packing lists, and a purchase order. Unicolors indicated that Mr. Pazirandeh would provide testimony focused on lost profits, but Mr. Lewis's expert report did not address lost profits, instead concentrating on measuring H&M’s profits for potential disgorgement. Unicolors did not present expert testimony on H&M’s profits to be disgorged. The district court ruled that allowing Mr. Lewis to testify as a rebuttal expert would have been inconsequential as he lacked evidence to rebut. The court determined that Unicolors suffered prejudice from the late disclosure of Mr. Lewis and the late introduction of H&M’s sales data. Despite the absence of an expert witness, Unicolors successfully demonstrated H&M's gross revenue from the Xue Xu products using basic arithmetic. The court found that Unicolors established its burden for disgorgement damages under 17 U.S.C. 504(b). During the trial, H&M raised three objections: the court's refusal to instruct the jury on the presumption of independent creation due to a Chinese copyright, the exclusion of a U.S. copyright registration from DOMO Apparel Co. Ltd., and the inclusion of a physical garment exemplar from Unicolors. H&M accepted that Mr. Pazirandeh’s testimony regarding lost profits was not expert testimony. The district court did not abuse its discretion in these pretrial and trial rulings.

H&M did not contest or seek to exclude testimony during the trial. The key issue revolved around H&M's argument that it could not be found liable for infringing DOMO's copyright of the Xue Xu design because DOMO owned the copyright. H&M presented Chinese documentation and intended to call Ms. Qian, the design's creator, as a witness, although she did not testify. The evidence revealed that DOMO's copyright was registered on September 22, 2015, after Unicolors had registered its copyright in the U.S. 

The district court admitted the Chinese copyright registration into evidence but H&M sought additional jury instructions regarding the legal status of the DOMO copyright, arguing that under the Berne Convention, Chinese copyrights receive the same protections as U.S. copyrights. H&M's requests for two specific jury instructions to clarify the evidentiary burden and the presumption of originality were ultimately denied by the district court. The first instruction related to establishing DOMO's ownership of copyright if H&M could prove the originality of the Xue Xu work. The second instruction aimed to equate the legal standing of the Chinese copyright registration with that of U.S. registrations. H&M's failure to adequately dispute the court's jury instructions on copyrightability led to a forfeiture of that argument, which the court deemed lacked merit. The jury was instructed to accept the fact of DOMO's Chinese copyright registration as judicially noted by the court.

A certificate of copyright registration creates a presumption that the design "Xue Xu" is an original and copyrightable work owned by DOMO Apparel. The plaintiff can challenge this presumption by demonstrating, through a preponderance of evidence, that the copyright is invalid, the work is not original, DOMO Apparel is not the author, or DOMO Apparel is not the owner. The district court did not provide jury instructions on this matter, noting that while U.S. copyright law requires originality for copyright protection, it was unaware of a similar requirement under Chinese copyright law. 

Jury Instruction No. 28 indicated that a copyright owner could obtain registration from the Copyright Office, suggesting that the registered design "EH101" is the original work of Unicolors. If H&M could prove by a preponderance of evidence that the copyright is invalid or that EH101 is not original, then Unicolors would not hold a valid copyright. The district court further reasoned that even if DOMO's copyright had a presumption of validity, H&M had not established a link between the Chinese copyright registration and its garments, thus an instruction was unwarranted.

On appeal, H&M argues the district court misinterpreted Chinese copyright law, asserting that a presumption of originality applies with valid Chinese copyright registration, citing the Berne Convention. The Berne Convention, which governs international copyright relations, mandates that U.S. law must afford foreign copyright holders the same protection as domestic ones. However, this does not alter the fundamental rules of U.S. copyright law. The district court was required to instruct the jury regarding the Xue Xu copyright as it would for a U.S. copyright registration.

Copyright law applicable to infringement cases is determined by the state where the infringement occurs, rather than the author's nationality or the state of initial publication. Under the Berne Convention, U.S. law dictates whether infringement has taken place, while foreign law addresses ownership issues. The district court outlined the burden-shifting approach of the Copyright Act, which treats a copyright registration certificate as presumptive evidence of validity, allowing the infringing party to challenge this presumption or the infringement claim itself.

In the case involving H&M, the jury was instructed that Unicolors carries the burden of proving, by a preponderance of the evidence, that it owns a valid copyright and that H&M copied from its work. The jury was also informed that H&M could avoid infringement liability if it proved its design was independently created. The jury could find a work original if it was independently created without copying and involved minimal creativity. 

Despite being granted presumptive validity, Unicolors had to prove that H&M’s garments were unoriginal copies of its design, even with evidence of a later Chinese copyright for the similar design. The district court noted that while independent creation could be challenged by evidence of access and striking similarity, it did not err in rejecting H&M's request for a different instruction on evidentiary burdens, as it merely reiterated Unicolors's existing burden. The jury's task was to determine if Unicolors had sufficiently shown that H&M’s design was more likely than not an unoriginal copy, which could lead to the conclusion that H&M's design was indeed original if Unicolors failed to meet its burden.

Unicolors did not meet its burden of proof, which could have resulted in its claim failing if the jury found the evidence balanced. However, two reasons support the conclusion that the district court's exclusion of a disputed jury instruction was harmless. First, the instruction framed H&M's burden as a “preponderance of the evidence,” leading H&M to believe it needed to present evidence slightly more persuasive than Unicolors'. Second, the district court's existing instructions already conveyed the legal principle absent from the excluded instruction, making its exclusion duplicative and irrelevant to the jury's verdict.

Regarding the instruction on DOMO’s Chinese copyright presumption of validity, the district court's decision is more complicated. It likely violated the Berne Convention by treating DOMO's copyright differently due to its foreign status, as U.S. law requires equal copyright protection for foreign authors. Conversely, one could argue that the court's decision was consistent with U.S. law because originality is necessary for copyright registration in the U.S. and there was no determination that Chinese law required the same. 

Despite the potential for disparate treatment under the Berne Convention, the district court indicated that even if there was a presumption of originality for the Chinese copyright, H&M's failure to present evidence linking its infringing garments to that copyright rendered the absence of the instruction harmless. H&M acknowledged it did not provide the jury with evidence to substantiate this connection, including a declaration from its CFO that was intended to support its argument against Unicolors's motion for summary judgment.

The jury lacked sufficient evidence to conclude that H&M was the licensee of DOMO's copyright, which prevented them from establishing the relevance of DOMO’s Chinese copyright to the trial. The district court's failure to provide a requested instruction on presumptive validity was deemed harmless, as the jury's decision would likely remain unchanged even if the instruction had been given. The court found that the jury had been adequately instructed on U.S. copyright law and the parties’ burdens. H&M's proposed instruction was redundant, and the exclusion of DOMO’s copyright references was also harmless due to H&M's lack of foundational evidence linking its designs to DOMO’s copyright.

Additionally, H&M challenged the district court's exclusion of DOMO's U.S. copyright registration of the Xue Xu design, obtained shortly before trial. The court deemed the registration irrelevant and prejudicial, asserting it was unrelated to whether the allegedly infringing designs were independently created. H&M contended that the registration was relevant for establishing a presumption of independent creation. While the district court erred in labeling the registration irrelevant, H&M's argument was insufficient to change the outcome of the trial since relevance is defined by its tendency to affect factual probabilities.

The court recognized the relevance of a copyright registration certificate as evidence of copyright validity, as established in Daubert v. Merrell Dow Pharms. Inc. and further acknowledged in C&J Wear. H&M sought to introduce U.S. copyright evidence to support its claim that the Xue Xu design was independently created and not a copy of the EH101 design. However, the district court excluded this evidence, citing concerns about its prejudicial nature. The exclusion was deemed not an abuse of discretion, as the district court determined that the probative value of the registration was limited, given it was obtained as part of H&M’s litigation strategy shortly before trial. This last-minute registration was viewed as an attempt to create favorable presumptions and raised issues of surprise and prejudice against Unicolors, who had insufficient time to prepare for this new evidence. The district court justified its ruling by stating that the unfair prejudice to Unicolors outweighed any probative value of the certificate. Even if the registration should have been admitted, the court concluded that its exclusion did not likely affect the verdict, as the jury could have drawn only a tenuous inference of originality from the registration, especially since they had already seen the Chinese copyright for the same design. The jury was also presented with sufficient evidence to support an inference of copying between the designs.

Xue Xu is determined to be an unoriginal copy of EH101, with the addition of DOMO’s U.S. copyright providing only weak support to the existing Chinese copyright previously reviewed by the jury. The introduction of DOMO’s U.S. copyright is unlikely to have changed the jury's verdict due to the evidence of striking similarity. The district court did not abuse its discretion despite potentially erring on the relevance of DOMO’s copyright. 

H&M's challenge regarding the admission of a black-and-white exemplar of EH101 is dismissed, as H&M failed to object during the trial when a colorized version was stipulated for admission, forfeiting their challenge. Furthermore, H&M did not present evidence connecting the Chinese copyright to the infringing garments, undermining their position regarding DOMO’s copyright relevance.

H&M's post-trial challenges include a renewed motion for judgment as a matter of law (RJMOL) and a contention that the court abused its discretion in awarding attorneys' fees to Unicolors. H&M's argument against Unicolors's copyright registration is rejected, as the district court's finding confirms Unicolors holds a valid copyright in the EH101 design. Consequently, H&M's challenge to the RJMOL is unsuccessful.

H&M challenged the jury's finding of "strikingly similar" designs between its Xue Xu pattern and Unicolors's EH101 pattern, arguing that the district court erred in denying its Renewed Judgment as a Matter of Law (RJMOL). The district court justified its decision by indicating that a reasonable jury could infer copying based on two key points: first, evidence that Unicolors had widely disseminated its fabric to H&M's competitors, implying H&M had access to the design; and second, the striking similarities between the two patterns created an inference of access sufficient to meet Unicolors's burden of proof regarding copying. The court emphasized that proof of access is essential for establishing copying, but even in its absence, substantial similarity could suffice if striking similarity is demonstrated. 

Furthermore, the court noted that the evaluation of striking similarity employs both an extrinsic test (objective comparison) and an intrinsic test (subjective impression). The district court upheld the jury's factual determinations, asserting they were not illogical or unsupported by the evidence. It concluded that the jury had a substantial basis for finding the two works strikingly similar, based on previously highlighted comparable elements during the summary judgment phase. The court also clarified that it would not reverse the jury’s findings unless there was a clearly erroneous application of the law, affirming that the jury's application of the intrinsic test was valid.

An independent review of the fabric designs reveals significant similarities between H&M's Xue Xu jacket and Unicolors’s EH101 design, with every line and arrangement closely matching. A reasonable jury could find these designs strikingly similar, supporting Unicolors's claim of copying. H&M's challenge to the jury's finding of willful infringement is unpersuasive for two reasons: 1) the district court did not err in presenting willfulness to the jury, as it is relevant to awarding attorneys' fees under the Copyright Act; and 2) sufficient evidence supported the jury's willfulness finding, despite H&M's argument that it relied on Chinese copyright registration. H&M failed to present evidence linking this registration to the garments, and its continued sale of the allegedly infringing items after the lawsuit's initiation further indicated willfulness. Consequently, the jury's determination of willfulness is upheld.

H&M challenges the district court's remittitur calculation, arguing that it improperly inflated Unicolors's post-remittitur damages. The remittitur involved two components: profit-disgorgement damages of $256,675 and lost-profit damages of $18,534. H&M asserts both amounts require adjustment. The court agrees that the district court abused its discretion regarding the profit-disgorgement damages but finds no reversible error with the lost-profit damages.

The jury had determined H&M’s liability for 48,000 infringing jackets and skirts, calculating profits to be disgorged based on H&M's gross profit per piece: $4.93 per jacket and $12.12 per skirt, totaling $818,400. However, the district court limited H&M's liability to U.S. domestic sales, leading to the sale of 6,535 jackets and 5,464 skirts. Instead of using the jury's gross profit figures, the court applied the “maximum recovery rule,” calculating profit-disgorgement at $247,675.33 based on the average gross sales price per piece, which H&M argues is incorrect.

The court's reliance on the average sales price contradicts the jury's findings, which were based on gross profit per piece. The appellate court notes that the district court should have started with the jury's calculations to determine the maximum sustainable amount. The ruling cites Oracle Corp. v. SAP AG to support the application of the maximum recovery rule, indicating that the jury's approach aligns with established legal principles.

Remittitur serves to uphold the jury's verdict while eliminating excess elements, as established by case law. Judicial interference with jury decisions should be minimized, and remittitur must reflect the maximum amount supported by evidence. A precedent indicates that any uncertainties in cost or profit calculations should favor the prevailing plaintiff. In this case, the jury's award was based on the gross profit per piece, despite a minor arithmetical error. The district court's remittitur calculation, which aimed to disgorge profits, was deemed an abuse of discretion, as it did not align with the jury's findings. The correct profit-disgorgement amount was calculated at $98,441.23, removing profits from extraterritorial sales while preserving the rest of the jury's verdict.

Regarding lost profits, the jury initially awarded Unicolors $28,800, assuming liability for both domestic and international sales. However, the district court adjusted this amount, determining that H&M could not be responsible for non-U.S. sales, reducing the maximum recoverable lost profits to $18,534 based on Mr. Pazirandeh's testimony about potential earnings per garment. H&M contested the entirety of the jury's lost-profits award, claiming Unicolors failed to provide evidence in initial disclosures, which led H&M to file a motion to exclude lost profits evidence, thus challenging the district court’s denial of that motion.

The district court denied H&M's motion to exclude certain evidence, allowing for evaluation at trial on a piece-by-piece basis. The court indicated it would exclude evidence that Unicolors failed to produce during discovery if H&M objected in a timely manner. H&M did not object to testimony regarding lost profits at trial, resulting in forfeiture of any challenge to the admissibility of that evidence. Consequently, the remittitur amount replacing the jury's damage award was determined to be $116,975.23, comprised of a profit-disgorgement award of $98,441.23 and a lost-profits award of $18,534.00. The court emphasized minimal interference with the jury’s verdict and decided that any new trial, should Unicolors reject the remittitur, would be limited to the damages issue, affirming the jury's liability verdict.

Regarding attorneys’ fees, H&M contended that the district court abused its discretion in awarding fees to Unicolors, arguing that the court erred in finding H&M's reliance on the Xue Xu Chinese copyright as “unreasonable” and in considering secondary factors that justified the fee award. The Copyright Act allows for the recovery of reasonable attorneys’ fees as part of costs at the court's discretion. The determination to award fees involves evaluating factors such as frivolousness, motivation, and objective unreasonableness, as established by the Supreme Court. The district court found H&M presented at least one unreasonable argument, influencing its decision to award attorneys’ fees to Unicolors.

H&M argued that the design on its garments was presumptively original due to a Chinese copyright registration obtained by a third party. While the argument was not deemed objectively unreasonable, H&M failed to connect the Chinese registration to its own garments, acting unreasonably by litigating an irrelevant issue. H&M did not present evidence at trial linking the Chinese registration to its infringing garments and conceded this evidentiary gap. H&M claimed the lack of evidence was due to the district court excluding certain deposition testimony, yet it did not specify why this exclusion was erroneous on appeal, resulting in a forfeiture of that challenge. H&M's submissions, including declarations from its Chief Financial Officer and the purported creator of the design, were not introduced as live testimony at trial, which further weakened its position. The court found H&M’s repetitive litigation of an unsupported issue unreasonable and upheld its discretion regarding this factor. H&M contended that secondary factors mitigated against a fee award, focusing on Unicolors’ lower success post-remittitur, but the court noted Unicolors had achieved substantial success by establishing H&M’s liability as a willful infringer.

Unicolors initially accepted a remittitur amount higher than what was deemed consistent with the jury's findings; however, this does not change the fact that Unicolors successfully held H&M liable for willful infringement. On remand, Unicolors can choose to accept or reject the assessed remittitur amount. The court acknowledged that willful infringement is a significant factor in awarding attorney’s fees and concluded that the district court did not abuse its discretion in awarding fees to Unicolors. The court found H&M's arguments regarding alleged errors by the district court largely unpersuasive, aside from the remittitur issue. Consequently, the judgment is vacated, and the case is remanded to the district court with instructions to conduct a new trial on damages if Unicolors declines the remittitur amount of $116,975.23. Each party will bear its own costs on appeal. The court affirmed part of the district court's decision while vacating and remanding the other part, and rejected H&M's other undeveloped arguments as forfeited.