Friday, January 28, 2011

United Fabrics v. C & J Wear (9th Cir. - Jan. 26, 2011)

Sometimes oral arguments matter.

United Fabrics has a copyright on a particular fabric design, and sues C & J Wear (as well as Macy's) for infringing this design.  United Fabrics got this design from an Italian design house though an agent, and registered the copyright in the United States.

The district court, however, dismissed United Fabric's lawsuit for lack of standing, on the ground that it didn't prove that it had a valid copyright because it couldn't establish a complete chain of title to the design -- i.e., ownership of the design from the Italian company to the agent to United.  United Fabric appeals.

The big problem with this analysis, however, is that registered copyrights are presumed valid.  So it was Macy's duty to prove that United Fabric didn't have the title, but Macy's didn't do that -- all it did was to show defects in the chain of title, and didn't present affirmative evidence of its own.

So the case gets briefed, and the time comes for oral argument.  The lawyers for C & J (and Macy's) decide that Scott Shaw -- a young partner (and 2002 graduate of USC Law) will argue the case.  Likely because Scott wrote most of the brief and so knows the case better than anyone else.  Plus, Macy's won below, and convinced the district court.  How hard can the oral argument be?  (To prove how confident the law firm was, even to this day, the case remains prominently on the firm's web site as an example of its stellar performance, under the firm's motto:  "When Results Matter".)

But, as one might expect, the Ninth Circuit picks up on the central problem with Macy's case, and wants to know what evidence Macy's has that rebuts the presumption.  The Ninth Circuit doesn't find it in the briefs, saying:  "Macy’s argues that United failed to establish the chain of title to the underlying artwork and therefore does not have a valid copyright. But Macy’s skips a step; nowhere does it set forth facts that rebut the presumption of validity to which United’s copyright is entitled, and Macy’s does not even argue that it has rebutted that presumption. The district court’s ruling suffers from the same defect. Although such evidence may be present in the lengthy and extensive record, it is not our place to find it, [citations] or to provide an argument on behalf of Macy’s as to how that evidence rebuts the presumption of validity."

So here's where the oral argument might matter.  Because, as one might predict, the panel bores in on this central question, and here's what transpires:  "It is true that, at oral argument, counsel for Macy’s asserted that it had rebutted the presumption of copyright validity. But, when we asked Macy’s attorney to identify evidence in the record sufficient to rebut the presumption of copyright validity, he merely argued, inter alia, that a United representative testified at a deposition that its designs 'were not published as a true collection' and that 'there is also no evidence that [these designs] met the requirements of an unpublished collection.' Counsel also asserted that Macy’s introduced evidence 'that the transfer was completely invalid,' but to support this assertion, he did nothing more than contend that United failed to provide evidence of the transfer. By repeatedly mentioning that United provided 'no evidence,' we are skeptical that Macy’s understands that it bears the burden of providing 'some evidence' of invalidity. Regardless, Macy’s cites no authority that such facts rebut the presumption of copyright validity."

Admittedly, maybe the problem was also with the briefs, as well as the evidence below.  Sometimes you've got nothing -- nothing -- that's truly on your side.  Though that's pretty rare, especially in appeals in which you won below.  And even if it is, that's a good sign that you should settle the case -- presumably on favorable terms, since the other side currently stands at a total loss -- rather than defend your nothing on appeal.

But this is also proof that oral argument isn't always a show trial.  Sometimes, judges tell you what they think, and if they have indeed missed something -- which is always possible -- being able to recognize their inquiries for what they are and having the ability to correctly respond to these questions matters.

Sometimes dispositively.