Eighth Circuit Avoids Setting Knowledge Standard in Copyright Case

The Eight Circuit has issued an opinion in a copyright case that avoided invitations by both parties to address the “compelling legal question” left open by the U.S. Supreme Court in Unicolors v. H&M Hennes & Mauritz (2022) as to whether 17 U.S.C. § 411(b), which invalidates a copyright registration if “the inaccurate information was included… with knowledge that it was inaccurate,” requires only knowledge or a higher showing of fraud.

The case is LADS Network Solutions, Inc. v. Agilis Systems, LLC.

As the Eighth Circuit explained,

LADS develops and markets a suite of courier management software, the Local Area Delivery System. LADS licensed part of its system, GPStrac, to Agilis for use in Agilis’s delivery fleet tracking software. The license ran from 2004 through 2009. In 2014, LADS sought copyright protection for GPStrac. LADS’s president, Daniel Huber, asked an employee to prepare the original source code for the application. This unnamed employee assembled the first and last 25 pages of the source code, as required by the Copyright Office’s rules, and redacted trade secrets. LADS certified that the first publication date—and therefore effective date of the copyright protection—was May 1, 2000.

However, the Copyright Office found a 2004 copyright notice within the source code.

In other words, said the court, the code couldn’t have been published on May 1, 2000.

As the court noted,

The Copyright Office told LADS that the Copyright Act requires that the original published source code be submitted with the application and permitted LADS to resubmit with the correct code or change the claimed first publication date. LADS chose to resubmit with the correct code, and Huber tasked the same employee with identifying the correct set of files. The employee retrieved a second set of source code, assembled the first and last 25 pages, and redacted trade secrets. LADS resubmitted with the second set of code, and the Copyright Office approved LADS’s copyright.

In 2019, LADS sued Agilis for allegedly infringing LADS’s registered copyright by continuing to use GPStrac after Agilis’s license expired.

During discovery, LADS produced a set of unredacted source code that it claimed to have deposited with the Copyright Office.

However, Agilis discovered that the produced source code contained references to application programming interfaces (APIs) that didn’t exist on May 1, 2000.

Agilis moved for summary judgment, arguing that the copyright should be invalidated and that § 411(b)(1) didn’t protect it because the API references gave LADS knowledge that the submitted code was not the first published version.

The district court granted Agilis’s motion for summary judgment, agreeing that LADS’s copyright was invalid under 17 U.S.C. § 411(b) and rejecting LADS’s argument that § 411(b)(1) requires more, i.e., intent to defraud the Copyright Office.

The Eighth Circuit noted that

To maintain a copyright infringement action, LADS needs a valid certificate of registration. § 411(a). A valid registration requires an accurate statement of the year the work was first published. § 409(8). Generally, a registration is valid “regardless of whether the certificate contains any inaccurate information.” Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 595 U.S. 178, 181 (2022) (quoting § 411(b)(1)). But as relevant here, it’s invalid if “inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate.”

The court also noted that “Whether § 411(b)(1)(A) requires only knowledge or a higher showing of fraud is a compelling legal question.”

The court explained that “[T]o have ‘actual knowledge’ of a piece of information, one must in fact be aware of it.”

For willful blindness, said the court, LADS must be “aware of facts that put [it] on notice” that “‘there is a high probability that a fact exists’” and “‘must [have taken] deliberate actions to avoid learning of that fact.’”

Thus, said the court, willful blindness is more than mere recklessness or negligence.

As the court explained,

LADS’s application was inaccurate because the source code submitted with the application for registration could not have existed on May 1, 2000. But did LADS have actual knowledge of this inaccuracy? Whether it did turns on whether the redacting employee knew or was aware that the code he reviewed was created after May 1, 2000. … It is undisputed that the redacting employee reviewed the first and last 25 pages of code for trade secrets and that the redacted code contains two references to an API that post-dated May 1, 2000. Agilis argues that seeing these references gave LADS actual knowledge, relying on Bruhn NewTech, Inc. v. United States, where the applicant knew the code post-dated the claimed publication date because of a revision date “‘embedded in the code’ provided to the Copyright Office.”

But the court disagreed. Unlike in Bruhn, the court said, API references standing alone do not necessarily provide actual knowledge of when the code was created.

According to the court,

Agilis also needed to show that LADS had actual knowledge of the API’s creation date for LADS to have known that the code post-dated May 1, 2000. The API’s creation date is not obvious and is not found within the API references themselves. Agilis submitted no evidence that LADS knew or was aware of the API’s creation date from any other source. It did not depose the redacting employee or any other employee that had actual knowledge of the API’s creation date. A jury could infer, as Agilis argues, that the ability to redact this code for trade secrets required a subjective awareness of how the code works, including background knowledge like the API’s creation date. But a jury could also infer that the redactions could be completed without subjective awareness of the API’s creation date. “Because the record did not ‘in fact bear out [Agilis’s] claim that no genuine dispute existed,’ . . . [LADS] was not required to provide affirmative evidence.” … This genuine dispute of a material fact prevents Agilis from being entitled to judgment as a matter of law.

The court thus reversed and remanded.