source: Caselaw Access Project

author: ORRICK, District Judge:

license: Public Domain

text:
    UNICOLORS, INC., a California Corporation, Plaintiff-Appellee, v. URBAN OUTFITTERS, INC., a California Corporation, individually and Beneficiary and Heir to the Estate of Free People, LLC, Defendant-Appellant.
    No. 15-55507
    United States Court of Appeals, Ninth Circuit.
    Argued and Submitted January 13, 2017, Pasadena, California
    Filed April 3, 2017

      Stephanie P. Alexander (argued), Tara L. Martin, and Miles D. Scully, Gordon & Rees LLP, Irvine, California, for Defendants-Appellants.
    Scott Alan Burroughs (argued), Trevor W. Barrett, and Stephen M. Doniger, Do-niger Burroughs, Venice, California, for Plaintiff-Appellee.
    Before: RICHARD C. TALLMAN and MICHELLE T. FRIEDLAND, Circuit Judges, and WILLIAM HORSLEY ORRICK , District Judge.

       The Honorable William H. Orrick, United States District Judge for the Northern District of California, sitting by designation.

   OPINION

ORRICK, District Judge:

INTRODUCTION

Urban Outfitters, Inc. and Century 21 Department Stores, LLC (collectively “Urban”) appeal the judgment against them in a copyright infringement case involving fabric designs. The district court granted plaintiff Unicolors Inc.’s motion for summary judgment on the issue of copyright infringement and, following a two-day trial, a jury found Urban liable for willful infringement. We reject Urban’s arguments that the district court erred in its application of the subjective “intrinsic test” and in its conclusion that Unicolors had validly registered the Subject Design, and further conclude that there was substantial evidence to support the jury’s verdict for willful infringement. We thus affirm.

I. BACKGROUND

Unicolors is a Los Angeles company in the business of designing and selling fabrics to customers in the apparel markets. Unicolors typically registers copyrights in its designs to protect its investment and maintain a competitive advantage in its artwork.

In September 2008, Unicolors purchased the intellectual property rights to an original piece of work named “QQ-692” created by art studio Milk Print, LLC. It used a computer drafting utility program to reformat and make minor alterations to the QQ-692 design so that it could be printed onto bolts of fabric. It renamed this derivative design “PE1130” (“Subject Design”). On November 26, 2008, Unicolors registered its “Flower 2008” collection with the Copyright Office. Under “Contents Titles,” Unicolors listed several designs, including QQ-692, and it attached an image of the design with the label “QQ-692 (PE1130).” Under “Material excluded from this claim,” the application listed “Milk Print: QQ-692.” Between 2008 and 2011, Unico-lors sold approximately 14,000 yards of fabric bearing the Subject Design to customers in the United States.

Urban Outfitters is a specialty retail company operating over 500 stores worldwide. Century 21 is a department store that purchases products from Urban Outfitters. In late 2010, Urban Outfitters developed a women’s dress (the “Accused Dress”) with a fabric design similar to the Subject Design. Unicolors sent a cease- and-desist letter to Urban’s counsel two years later, asserting that the Accused Dress infringed Unicolors’s PE1130 design. Unicolors then filed suit against Urban alleging copyright infringement of the Subject Design.

At summary judgment, the district court concluded that both defendants were hable for copyright infringement. The court held that Unicolors owns and properly registered a copyright in the Subject Design and that Urban created and sold garments bearing a design that was substantially similar to the Subject Design.

Following a two-day trial on the issues of willfulness and damages, a jury found that Urban had willfully infringed Unico-lors’s copyright in the Subject Design and awarded $164,400 in damages. The court then granted Unicolors $366,910.17 in fees and costs. Urban timely appealed the district court’s grant of summary judgment and the jury’s finding of willfulness.

II. STANDARD OF REVIEW

We review the district court’s grant of summary judgment de novo. Benay v. Warner Bros. Entm’t, Inc., 607 F.3d 620, 624 (9th Cir. 2010). In reviewing the jury’s verdict, we ask whether the verdict is supported by substantial evidence. See Harper v. City of Los Angeles, 533 F.3d 1010, 1021 (9th Cir. 2008). “A jury’s verdict must be upheld if it is supported by substantial evidence, which is evidence adequate to support the jury’s conclusion, even if it is also possible to draw a contrary conclusion.” Id. (quoting Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002)).

III. DISCUSSION

“To prove copyright infringement, a plaintiff must demonstrate (1) ownership of the allegedly infringed work and (2) copying of the protected elements of the work by the defendant.” Pasillas v. McDonald’s Corp., 927 F.2d 440, 442 (9th Cir. 1991). Urban asserts that the district court erred in concluding at summary judgment that these elements were met.

A. Copying

A plaintiff must show “copying” of a protected work to prove copyright infringement. Id. If there is no direct evidence of copying, a plaintiff may prove this element through circumstantial evidence that (1) the defendant had access to the copyrighted work prior to the creation of defendant’s work and (2) there is substantial similarity of the general ideas and expression between the copyrighted work and the defendant’s work. Sid & Marty Krofft Television Prods., Inc. v. McDonald’s Corp., 562 F.2d 1157, 1162 (9th Cir. 1977), superseded on other grounds by 17 U.S.C. § 504(b). Circumstantial evidence of access is generally shown through either evidence of a “chain of events ... between the plaintiffs work and defendants’ access to that work” or evidence that “the plaintiffs work has been widely disseminated.” Three Boys Music Corp. v. Bolton, 212 F.3d 477, 482 (9th Cir. 2000). If there is no evidence of access, a “striking similarity” between the works may allow an inference of copying. Baxter v. MCA, Inc., 812 F.2d 421, 423 (9th Cir. 1987).

In assessing whether particular works are substantially similar, or strikingly similar, this Circuit applies a two-part analysis: the extrinsic test and the intrinsic test. Three Boys Music Corp., 212 F.3d at 485. The extrinsic test requires plaintiffs to show overlap of “concrete elements based on objective criteria,” id. while the intrinsic test is subjective and asks “whether the ordinary, reasonable person would find ‘the total concept and feel of the works’ to be substantially similar,” Pasillas, 927 F.2d at 442 (quoting Krofft, 562 F.2d at 1164). Because “substantial similarity is usually an extremely close issue of fact ... summary judgment has been disfavored in cases involving intellectual property.” Litchfield v. Spielberg, 736 F.2d 1352, 1355 (9th Cir. 1984). However, “[a] grant of summary judgment for [the] plaintiff is proper where works are so overwhelmingly identical that the possibility of independent creation is precluded.” Twentieth Century-Fox Film Corp. v. MCA Inc., 715 F.2d 1327, 1330 (9th Cir. 1983).

1. The District Court’s Substantial Similarity Analysis

At summary judgment in this case, the evidence regarding access was relatively limited. Unicolors conceded that it could not show a chain of events linking its design to Urban, but it contended that the design had been widely disseminated because it had sold 14,000 yards of the fabric bearing the design for a three-year period prior to Urban’s creation of the Accused Dress. Alternatively, Unicolors argued that the court could grant summary judgment because the Subject Design and Accused Dress were so strikingly similar that Urban’s design could only be attributed to copying.

The district court determined that there was insufficient evidence to conclude on summary judgment that the Subject Design had been widely disseminated. It focused instead on whether the designs were strikingly similar. The court reviewed Exhibits 3 and 5 submitted by Unicolors, which showed both the Subject Design as it was submitted to the Copyright Office and photos of the Accused Dress. In applying both the extrinsic and intrinsic tests, the court analyzed the designs as follows:

Extrinsically, [the two designs] both feature crowded arrangements of splayed floral or feather motifs. The presentations of the petal groups, the overlays, shading and layout are all nearly identical. The floral or feather motifs have nearly identical cracks and spaces. Both designs use ombre colors. The two designs have some minor differences: for example, the color palettes are different, with the Subject Design having a red-purple-white palette on a black background and the Accused Dress[ ] having a blue-yellow palette on a dark blue background. However those differences are little more than artifacts from imperfect copying of the fabric or minor modification.
The intrinsic test also suggests that the two designs are extremely similar. Looking at two designs as a whole, the arrangements, shapes and details of all the floral or feather motifs are almost exactly the same. The colors are different, and only the Subject Design has white parts outlined in a different color, but otherwise the arrangement, shape, and details of all the floral or feather motifs appear to be almost exactly the same.

Unicolors, Inc. v. Urban Outfitters, Inc., No. CV 14-01029 SJO (VBKx), 2015 WL 12733470, at *7 (C.D. Cal. Feb. 17, 2015). The court concluded that “the design on the Accused Dress is substantially similar to [the] Subject Design.” Id.

2. The “Intrinsic Test”

Urban asserts that the district court erred by applying the subjective “intrinsic test.” Urban argues that only a jury may apply the intrinsic test, and that because a plaintiff must satisfy both the extrinsic and intrinsic tests to prove copying, copyright cases such as this one cannot be resolved at summary judgment. Its position has been adopted by one district court. See Reno-Tahoe Specialty, Inc. v. Mungchi, Inc., No. 2:12-cv-01051-GMN-VCF, 2014 WL 553181, at *8 (D. Nev. Feb. 10, 2014). 'But Urban’s position cannot be reconciled with our prior recognition that, in exceptional cases, works may be so identical that summary judgment in favor of a plaintiff is warranted. Twentieth Century-Fox Film, 715 F.2d at 1330 (“A grant of summary judgment for plaintiff is proper where works are so overwhelmingly identical that the possibility of independent creation is precluded.”). This is one of those exceptional cases.

The district court detailed the various objective factors and elements that are common between the Subject Design and Accused Dress. It correctly observed that both the Subject Design and Accused Dress include complex patterns with nearly identical orientation, spacing, and grouping of complicated florets and feathers. Although the colors vary slightly, each has an ombre color pattern and uses color in similar ways for highlight and contrast. Given the intricacy of the designs and the objective overlap between them, the district court properly concluded that the works are “so overwhelmingly identical that the possibility of independent creation is precluded.” Id.

Moreover, the cases relied upon by Urban are distinguishable. Urban relies primarily on L.A Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 852 (9th Cir. 2012), and Funky Films, Inc. v. Time Warner Entm’t Co., L.P., 462 F.3d 1072, 1077 (9th Cir. 2006), but neither of those cases dealt with works that were virtually identical. In each, the trial court granted summary judgment for defendants because it found that no reasonable jury could find the works substantially similar. In L.A. Printex, after conducting an independent review of the works, we determined that there were sufficient objective similarities between the works to create a genuine dispute of material fact under the extrinsic test. 676 F.3d at 852. We then held that “in light of our conclusion that the competing designs present a triable issue of fact under the extrinsic test ... the issue of substantial similarity must go to the jury.” Id. at 852. In Funky Films, we affirmed the district court’s grant of summary judgment, concluding that there were insufficient objective similarities between the works to meet the extrinsic test and, as a result, to find substantial similarity. 462 F.3d at 1081. The rationale behind these decisions is clear: if the court concludes that there are sufficient articulable objective similarities between the two works for plaintiffs to meet the extrinsic test, it is inappropriate for the court to then make a subjective determination that the works, nevertheless, are not substantially similar in their total concept and feel. In other words, once the objective threshold is met, it is the role of the jury to make a nuanced subjective determination under the intrinsic test.

However, L.A. Printex and Funky Films dealt with situations in which there was a triable issue about whether the works were similar enough to suggest copying, not a situation in which the works are “so overwhelmingly identical that the possibility of independent creation is precluded.” Twentieth Century-Fox Film, 715 F.2d at 1330. Where the extrinsic similarity is so strong that the works are near duplicates save for superficial differences, the court may properly conclude that no reasonable jury could find that the works are not substantially similar in their overall concept and feel. In such a case, the court need not delve into a complex subjective analysis of the works to assess substantial similarity and does not risk supplanting the jury’s subjective interpretation with its own.

Allowing district courts to grant summary judgment for plaintiffs in copyright cases plays an important role in preserving the effect and weight of Rule 56. When the works are “so overwhelmingly identical that the possibility of independent creation is precluded,” id. there is simply “no genuine dispute as to any material fact,” Fed. R. Civ. P. 56(a). As we have previously emphasized, “if Rule 56 is to be of any effect, summary judgment must be granted in certain situations.” Twentieth Century-Fox Film, 715 F.2d at 1330 n.6. If courts were never permitted to grant summary judgment in favor of plaintiffs on the issue of copying, even for identical works, the effect of Rule 56 would be substantially diluted.

We conclude that a district court may grant summary judgment for plaintiffs on the issue of copying when the works are so overwhelmingly similar that the possibility of independent creation is precluded. The works at issue in this case meet this standard. The objective similarities between the works are stark: the shapes, motifs, arrangements, spacing, and colors of the images in each design are nearly identical. Because of the decisive objective overlap between the works, no reasonable juror could conclude under the intrinsic test that the works are not substantially similar in total concept and feel. Therefore, the district court properly granted summary judgment.

3. Finding “copying” when there is no evidence of access

Urban asserts that even if a court finds striking similarity, it cannot find “copying” without some evidence of access. This argument is in direct conflict with the statement in Baxter that “[a]bsent evidence of access, a ‘striking similarity’ between the works may give rise to a permissible inference of copying.” Baxter, 812 F.2d at 423 (citing Selle v. Gibb, 741 F.2d 896, 901 (7th Cir. 1984)).

Urban attempts to dismiss Baxter and focuses on the Seventh Circuit’s decision in Selle v. Gibb, in which the court explained that while striking similarity can lead to an inference of copying, “striking similarity is just one piece of circumstantial evidence tending to show access and must not be considered in isolation.” 741 F.2d at 901. Urban mistakenly asserts that Selle establishes that both access and striking similarity are required to find copying. In Selle, the Seventh Circuit reviewed whether the district court had properly directed verdict for the defendants, overturning the jury’s decision that plaintiff Ronald Selle’s song “Let it End” infringed the Bee Gee’s song “How Deep Is Your Love.” Id. at 896. In its discussion, the court expressed skepticism that a finding of “striking similarity” on its own could establish copying and suggested that plaintiffs must, at a minimum, show that there was some opportunity for the defendants to access its work. Id. at 901 (“[I]f the plaintiff admits to having kept his or her creation under lock and key, it would seem logically impossible to infer access through striking similarity.”). However, the court ultimately concluded that striking similarity can allow a reasonable inference of access when “the similarity is of a type which will preclude any explanation other than that of copying.” Id. at 905.

Selle is precisely in line with Baxter on this issue, which is not surprising given the Baxter court cited Selle in asserting that “[ajbsent evidence of access, a ‘striking similarity’ between the works may give rise to a permissible inference of copying.” Baxter, 812 F.2d at 423. Here, the works are virtually identical. Given the complexity of these works and the striking similarity between them, “[i]t was ... unnecessary to consider the possibility that ... [the Accused Dress] was the product of independent creation, coincidence, a prior common source, or any source other than copying.” Id. at 424 n.2 (citing Selle, 741 F.2d at 901). In short, it is permissible to infer copying in this case, even absent evidence of access.

B. Whether the Subject Design was Included in Unicolors’s Registration

Next, Urban argues that the district court erred in granting summary judgment because there were disputed facts as to whether the Subject Design was included in Unicolors’s copyright registration. We disagree, because we conclude that the undisputed facts show that the Subject Design was registered as part of Unicolors’s “Flower 2008” collection.

Unicolors was required to show registration as an element of an infringement claim. See Cosmetic Ideas, Inc. v. IAC/Interactivecorp., 606 F.3d 612, 615 (9th Cir. 2010) (citing Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010)). A certificate of registration from the U.S. Copyright Office raises the presumption of copyright validity and ownership. Micro Star v. Formgen Inc., 154 F.3d 1107, 1110 (9th Cir. 1998).

The Subject Design was registered as part of a collection. The registration certificate for Unicolors’s “Flower 2008” collection lists “Flower 2008(11)” as the title of the collection, and then lists the titles of several works within the collection. Although the title list includes the name of Unicolors’s source artwork, QQ-692, it does not include the name of the Subject Design, PE 1130. Moreover, the “Material excluded from this claim” section lists “Milk Print: QQ-692” among its entries.

Unicolors properly submitted a copy of PE1130, the Subject Design, with its application for the Flowers 2008 collection, and neither party disputes that Unicolors owns all rights in PE1130 and its source work, QQ-692. Nonetheless, Urban asserts that there is a question of fact as to whether the Subject Design is included in the Flower 2008 registration because the name of PE1130 is not included on the certificate and because the Subject Design’s source material, QQ-692, is listed as excluded material. We address these arguments in turn.

1. Omitting the title of a work in a registration collection

An applicant does not need to list the names of the component works in a collection to register them as long as it holds the rights to the component works. Alaska Stock, LLC v. Houghton Mifflin Harcourt Publ’g Co., 747 F.3d 673, 683 (9th Cir. 2014). In Alaska Stock, we considered whether a stock photo company had properly registered copyright claims for the individual photos in a larger collection by registering the collection even though it did not list the names of the individual photos and only listed the names of some of the photos’ authors. Following decisions from the Second, Third, Fourth, and Fifth Circuits, and the rule backed by the Copyright Office, we concluded that “collective work registrations [are] sufficient to permit an infringement action on behalf of component works, at least so long as the registrant owns the rights to the component works as well.” Id. (quoting Metro. Reg’l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 722 F.3d 591, 598 (4th Cir. 2013)).

The record is clear that Unicolors submitted the PE1130 design as a component work in its application to register the Flower 2008 collection. Therefore, under Alaska Stock, Unicolors’s registration of the Flower 2008 collection was sufficient to register the component design PE 1130 even though the name of PE 1130 was not listed on the registration itself.

Urban highlights that the registration certificate lists the names of the other works in the collection but excludes PE 1130, and argues that this creates a question of fact as to whether PE 1130 is included in the registration at all. Urban does not cite any precedent for this assertion, which runs contrary to our holding in Alaska Stock that it is not necessary to list the names of component works in a collection. See id. There is no reason that listing some but not all of the component works would create a question of fact as to whether the omitted works are covered by the registration. Indeed, the registration certificate in Alaska Stock included the names of some, but not all, of the authors of the component works, but this had no bearing on our analysis or ultimate conclusion that the registration included all of the component works. See id.

The PE1130 design was submitted to the Copyright Office as part of the Flower 2008 collection and is a valid component work in that collection. The omission of PE 1130 on the registration certificate has no impact on the status of PE1130’s registration.

2. Listing the source work in the “materials excluded” section

Urban next argues that Unicolors did not properly register PE1130 because the source artwork was listed as an excluded work on the registration certificate. This argument fails because Unicolors’s infringement action is based on the derivative work and because good faith mistakes do not invalidate registration of a derivative work.

The Copyright Act defines a derivative work as “a work based upon one or more preexisting works, such as a[n] ... art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted[, and] ... consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship.” 17 U.S.C. § 101. The copyright protections for a derivative work are limited to the changes and contributions made by the derivative work’s author and are distinct from the copyright protections for the source work. Section 103(b) of the Copyright Act states that “[t]he copyright [of a derivative] work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material.” 17 U.S.C. § 103(b). As this section makes clear, the author of a derivative work cannot obtain a. copyright interest in the source work by registering a derivative work; rather, the author of the source work retains all rights and copyright protections in the source work independent of the creation or registration of any derivative works.

Presumably to make this distinction clear and to clarify the scope of a derivative work’s copyright protections, the Copyright Act requires applicants registering a derivative work to provide “an identification of any preexisting work or works that it is based on or incorporates, and a brief, general statement of the additional material covered by the copyright claim being registered.” 17 U.S.C. § 409(9). The current application form for visual arts registrants addresses Section 409(9) requirement via “Space 6.” However, Space 6 is a minefield for applicants attempting to properly register a derivative work. Applicants are instructed to complete Space 6 if the work is a changed version, compilation, or derivative work “and if it incorporates one or more earlier works that have already been published or registered for copyright, or that have fallen into the public domain.” The implication is that applicants should not fill out Space 6 if their derivative work incorporates an earlier work that has not been published, registered, or is in the public domain.

All this is to say that Unieolors’s claim that it inadvertently excluded QQ-692 is plausible. Although all works listed in Space 6 are eventually listed as “materials excluded from this claim” on the final registration certificate, Space 6 is the only place where applicants are able to identify source work. Thus, it was arguably reasonable for Unicolors to believe that it was required to list QQ-692 in Space 6 in order to comply with Section 409(9), even though it did not intend to exclude that work.

But regardless of whether Unicolors’s mistake was reasonable, Unicolors’s infringement claim is based on the derivative PE 1130 design — not the source artwork. Thus, Urban’s claim that QQ-692 was not registered is irrelevant because the registration of a derivative work “is independent of ... any copyright protection in the preexisting material.” 17 U.S.C. § 103(b). As discussed above, Unicolors properly registered PE 1130 by submitting a copy of the design with its registration application for the Flower 2008 collection.

Nonetheless, Urban argues that because Unicolors excluded the source QQ-692 artwork, it somehow invalidated registration of the derivative PE 1130 design. Contrary to Urban’s contention, a registration error does not bar an infringement action unless “the inaccurate information was included on the application [ ... ] with knowledge that it was inaccurate” and the inaccuracy, “if known, would have caused the Register of Copyrights to refuse registration.” 17 U.S.C. § 411(b)(1). Good faith mistakes in copyright applications do not preclude an infringement action. See Urantia Found. v. Maaherra, 114 F.3d 955, 963 (9th Cir. 1997) (“inadvertent mistakes on registration certificates do not invalidate a copyright and thus do not bar infringement actions, unless ... the claimant intended to defraud the Copyright Office by making the misstatement.”); L.A. Printex, 676 F.3d at 853 (“[A] misstatement or clerical error in the registration application, if unaccompanied by fraud, should neither invalidate the copyright nor render the registration certificate incapable of supporting an infringement action.” (alteration in original) (quoting 2 Nimmer on Copyright § 7.20[B][1])). Here, Unicolors’s exclusion of QQ-692 was a good faith mistake. Moreover, it is clear that the mistake would not have caused the copyright office to refuse registration because the copyright office later approved Unicolors’s request to correct the inadvertent exclusion.

In sum, Unicolors bases its infringement claim on PE1130, which was properly registered as part of a collection even though it was not named in the application. Moreover, because Unicolors’s exclusion of QQ-692 was inadvertent and not fraudulent, the district court properly held that Unico-lors had a valid registration in the Subject Design.

C. The Jury’s Willfulness Verdict

Finally, Urban seeks reversal of the jury’s finding of willfulness. “[T]o prove willfulness under the Copyright Act, the plaintiff must show (1) that the defendant was actually aware of the infringing activity, or (2) that the defendant’s actions were the result of reckless disregard for, or willful blindness to, the copyright holder’s rights.” Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 674 (9th Cir. 2012) (quotation marks omitted) (quoting Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc., 658 F.3d 936, 944 (9th Cir. 2011)). In reviewing a jury’s verdict, the court asks whether the verdict is supported by substantial evidence. Gilbrook v. City of Westminster, 177 F.3d 839, 856 (9th Cir. 1999).

At trial, Unicolors presented evidence that Urban adopted a reckless policy with regard to copyright infringement because it made no attempt to check or inquire into whether any of the designs it used in its apparel were subject to copyright protections. Unicolors showed that Urban keeps thousands of fabric swatches at its design studio that it has purchased from art studios or taken from vintage clothing remnants; Urban’s designers use these swatches to create thousands of apparel designs each year; Urban pays tens of thousands of dollars each year to purchase art and has a general awareness that fabric designs may be copyrighted; and that Urban does not take any affirmative action to determine if the specific designs it is using are copyrighted. Unicolors also showed that Urban did not attempt to discover the origin of the Subject Design in this case. These facts are sufficient to show that Urban acted with reckless disregard for the possibility that the fabric it sampled was protected by copyright, and such conduct is sufficient evidence of willful infringement to support the jury’s verdict.

Urban responds that these facts cannot support a finding of willfulness because there is no evidence that Urban had knowledge that its conduct constituted infringement. This argument relies on an improperly strict standard of willfulness; “merely reckless behavior” can support a finding of willful infringement. Barboza v. New Form, Inc. (In re Barboza), 545 F.3d 702, 707 (9th Cir. 2008) (quotation marks omitted). As we have repeatedly held, a finding of willful infringement does not require a showing of actual knowledge; a showing of recklessness or willful blindness is sufficient. See e.g., Wash. Shoe Co., 704 F.3d at 674.

Urban also argues that its conduct was not reckless because it is unreasonable to expect companies like Urban to exhaustively investigate whether any particular fabric design is protected by a copyright registration. It asserts that trying to definitively prove whether any individual design is copyrighted would require it to contact every fabric manufacturer or attempt to review over 10,000 works deposited with the Copyright Office — even though such deposits are unavailable for viewing. It contends that requiring Urban to make this type of exhaustive inquiry would be absurd and that Urban’s failure to engage in this type of investigation cannot result in a finding of willfulness. Urban’s argument is inapposite. Regardless of how difficult it may be to determine whether particular designs have been registered with the Copyright Office, a party may act recklessly by refusing, as a matter of policy, to even investigate or attempt to determine whether particular designs are subject to copyright protections. Unicolors presented substantial evidence of such conduct to support a finding that Urban acted recklessly or with willful blindness to Uni-colors’s copyright. The jury’s verdict finding willful infringement is therefore supported by substantial evidence.

In sum, none of Urban’s arguments on appeal, discussed above and in the memorandum disposition, has any merit. The district court properly granted summary judgment on the issue of copyright infringement, and there was substantial evidence to support the jury’s verdict.

Appellants shall bear the costs of appeal. See Fed. R. App. P. 39(a)(2).

AFFIRMED.

      . In a memorandum disposition filed concurrently with this published opinion, we also reject Urban’s arguments that the district court improperly relied on inadmissible evidence and abused its discretion when it ruled on a variety of evidentiary and procedural matters.

      . The district court held that the works are substantially similar. In our review of this issue de novo, we clarify that the works are not only substantially similar, but strikingly similar.

      . Although plaintiffs need not show evidence of access to demonstrate copying where the works are strikingly similar, Unicolors did present evidence that the Subject Design was not kept under lock and key: Unicolors sold approximately 14,000 yards of fabric with the Subject Design in the years before Urban created the Accused Dress. Urban represented that it created its dress design by making alterations to a fabric swatch of unknown origin that it found in its studio. This evidence demonstrates that Urban could have accessed and copied the Subject Design.

      . At oral argument, counsel for Urban asserted that Unicolors did not submit a copy of PEI 130 with its Flowers 2008 application and instead only submitted a copy of QQ-692. This assertion is not supported by the record. The record shows that the copy of the Subject Design submitted to the Copyright Office included both names and was labeled as "QQ-692 (PE1130).TIF.”

      . United States Copyright Office, Form VA (2016), https://www.copyright.gov/forms/.


author: MURGUIA, Circuit Judge:

text:
    UNITED STATES SMALL BUSINESS ADMINISTRATION, an agency of the government of the United States of America, Plaintiff-Appellee, v. Michael D. BENSAL, an individual, Defendant-Appellant, and Susan J. Bensal, as trustee of the Edward D. Bensal Trust; Michael Edward Bensal, an individual; Sophia Bensal, an individual, Defendants.
    No. 14-17404
    United States Court of Appeals, Ninth Circuit.
    Argued and Submitted December 12, 2016 San Francisco, California
    Filed April 4, 2017

      Brian D. Seibel (argued), Seibel & Finta LLP, Concord, California, for Defendant-Appellant.
    David M. Wiseblood (argued), San Francisco, California, for Plaintiff-Appellee.
    Before: MICHAEL DALY HAWKINS, MARSHA S. BERZON, and MARY H. MURGUIA, Circuit Judges.
   OPINION

MURGUIA, Circuit Judge:

This case requires us to interpret two provisions of the Federal Debt Collection Procedures Act (“FDCPA”), which Congress enacted “to create a comprehensive statutory framework for the collection of debts owed to the United States government.” United States v. Gianelli, 543 F.3d 1178, 1183 (9th Cir. 2008) (quoting H.R. Rep. No. 101-736, at 32 (1990)).

The United States Small Business Administration (“SBA”) guaranteed a loan between a private bank and Appellant Michael Bensal’s (“Bensal”) company, Bensal & Coburn Investments LLC (“BCI”). After BCI defaulted on the loan, the private bank sued BCI as the borrower and Ben-sal as a personal guarantor. The private bank recovered a default judgment and assigned that judgment to the SBA.

Several years later, Bensal inherited a share in his deceased father’s trust. Bensal did not accept his inheritance; instead, he signed a disclaimer, which legally passed his trust share to his two children and prevented creditors from accessing his trust share under California law. After Bensal executed his disclaimer, the SBA filed a lawsuit seeking to satisfy its default judgment. The district court held that: (1) the SBA is allowed to recover from Ben-sal’s trust share under the FDCPA despite contrary California law, and (2) the default judgment was a debt within the meaning of the FDCPA. We affirm.

BACKGROUND

In 1999, BCI sought to establish Trans-World Burgers, a fast-food restaurant with an airline-inspired theme and decor. To finance this operation, BCI took out two loans from Millennium Bank (“Millennium”). In connection with the second loan, but not the first, BCI sought a guaranty from the SBA.

The SBA is a federal government agency that assists small businesses by, among other things, guaranteeing commercial loans from private banks. By providing its guaranty that a commercial loan will be repaid, the SBA eliminates some of the risk private lenders face and encourages private lenders to extend more loans to small businesses. 15 U.S.C. § 636(a) (“The [SBA] is empowered ... to make loans to any qualified small business ... either directly or in cooperation with banks or other financial institutions through agreements to participate on an immediate or deferred (guaranteed) basis.”); see also United States v. Kimbell Foods, Inc., 440 U.S. 715, 719 n.3, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979) (noting that “[t]he SBA prefers to guarantee private loans rather than to disburse funds directly”).

A. The SBA Guaranty and BCI’s Default

Over the course of several months, the parties signed several documents as part of the SBA’s guaranty of the second loan between BCI and Millennium. First, Millennium submitted an application to the SBA for an SBA guaranty of 75% of a proposed $250,000 loan to BCI. In a signed document (“SBA Authorization”), the SBA reduced the loan amount to $175,000, but otherwise approved the bank’s application, agreeing to guarantee up to 75% of the loan. Next, BCI and Millennium executed a standard loan contract (“Business Loan Agreement”), in which BCI borrowed $175,000 from Millennium. BCI signed a form (“SBA Note”) acknowledging its second loan with Millennium, and Bensal signed a form (“SBA Guaranty”) personally guaranteeing repayment of the second loan if BCI defaulted. Both the SBA Note and the SBA Guaranty appeared on SBA letterhead, referenced the same SBA loan-identifying information, and defined rights SBA held against Bensal and BCI.

In January 2000, BCI defaulted on its payment obligations under both loans; some time before the default, Millennium had assigned both loans to First Bank & Trust (“FBT”). FBT filed suit in California state court and alleged, among other claims, that BCI had breached the SBA Note and Bensal had breached the SBA Guaranty. The state court entered default judgment against BCI and Bensal in the following sums: (1) $95,576.66 in principal and interest owed on the first loan, (2) $140,905.63 in principal and interest owed on the second loan, (3) $50,257.92 in attorney fees, and (4) $902.50 in costs.

Because neither BCI nor Bensal satisfied the default judgment, FBT requested that the SBA honor its guaranty of the second loan. In 2005, the SBA negotiated a monetary adjustment with FBT and ultimately paid $54,027.39 to satisfy its obligations as a guarantor on the second loan. In 2011, FBT assigned to the SBA its right to collect the entire amount owing on the default judgment (over $300,000) from BCI and Bensal.

B. Bensal’s Inheritance and Disclaimer

In July 2011, Bensal’s father died, leaving behind the Edward D. Bensal Trust (“EDB Trust”), which consisted of cash and securities valued at $400,692.94. The trust document awarded Bensal 40% of the EDB Trust. In October 2011, Bensal executed a “Disclaimer of Interest in Trust,” which means he renounced — refused to accept — his 40% share of the trust. The legal effect of the disclaimer under California law was that Bensal’s trust share passed to his two children. Cal. Prob. Code § 282.

After Bensal executed the disclaimer, the SBA filed suit in federal district court against the EDB Trust, Bensal, and Ben-sal’s two children. The SBA sought to void Bensal’s disclaimer under the FDCPA. In its complaint, the SBA claimed that Bensal had fraudulently transferred his trust share to his children by executing the disclaimer, thereby preventing the SBA from collecting the debt Bensal owed on the default judgment.

Bensal advanced two arguments in response. First, he asserted that his disclaimer was not a fraudulent transfer because the California Probate Code provides that “[a] disclaimer is not a voidable transfer.” Cal. Prob. Code § 283. Second, he maintained that the default judgment assigned to the SBA was not a “debt” within the meaning of the FDCPA.

The district court rejected both of Ben-sal’s arguments, granted summary judgment in favor of the SBA, and ordered the defendants to “transfer all property representing Bensal’s trust share to the SBA in satisfaction of the portion of the default judgment relating to the second loan.” At the time of the district court’s summary judgment order, the amount Bensal owed on the portion of the default judgment relating to the second loan was over $300,000, while the value of Berisal’s trust share totaled $153,944.03. Bensal timely appealed.

STANDARD OF REVIEW

This case involves only statutory interpretation, which we review de novo. See Millard v. United Student Aid Funds, Inc., 66 F.3d 252, 253 (9th Cir. 1995). We review a district court’s grant of summary judgment de novo. Entrepreneur Media v. Smith, 279 F.3d 1135, 1139-40 (9th Cir. 2002).

DISCUSSION

At the heart of this case lies the FDCPA’s “fraudulent transfer” provision, which allows the federal government to void a fraudulent transfer by a debtor owing a debt to the United States. 28 U.S.C. §§ 3301-3308. Specifically, the FDCPA provides that

a transfer made or obligation incurred by a debtor is fraudulent as to a debt to the United States which arises before the transfer is made or the obligation is incurred if—
(1)(A) the debtor makes the transfer or incurs the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation; and (B) the debtor is insolvent at that time or the debtor becomes insolvent as a result of the transfer or obligation[.]

28 U.S.C. § 3304(a).

Based on the statutory language, the SBA must prove: (1) the existence of a debt predating the transfer, (2) a transfer of assets, (3) lack of equivalent value in exchange for the transfer, and (4) the debtor’s insolvency at the time of transfer. Neither party contests that the third and fourth requirements are satisfied. Instead, the dispute centers on: (1) whether Ben-sal’s disclaimer qualifies as a transfer of property, and (2) whether the default judgment constitutes a debt.

I. Whether Bensal’s Disclaimer is a Transfer of Property

Bensal contends that California law, which expressly states that “[a] disclaimer is not a voidable transfer,” controls over the FDCPA and prevents the SBA from reaching the EDB Trust assets. Caí. Prob. Code § 283. We disagree and hold that the FDCPA displaces California’s disclaimer law.

A. Preemption

“The Supremacy Clause of the Constitution provides that any state law conflicting with federal law is preempted by the federal law and is without effect.” Nathan Kimmel, Inc. v. DowElanco, 275 F.3d 1199, 1203 (9th Cir. 2002) (citing U.S. Const. art. VI, cl. 2). "Where a statute contains an express preemption clause, we “focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ preemptive intent.” Chamber of Commerce of U.S. v. Whiting, 563 U.S. 582, 594, 131 S.Ct. 1968, 179 L.Ed.2d 1031 (2011) (quoting CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993)) (internal quotation marks omitted).

The FDCPA contains an express preemption elause, which “preempt[s] State law to the extent such law is inconsistent with a provision of [the statute].” 28 U.S.C § 3003(d). Echoing this preemption clause, federal regulations provide:

No person, corporation, or organization that applies for and receives any benefit or assistance from SBA, or that offers any assurance or security upon which SBA relies for the granting of such benefit or assistance, is entitled to claim or assert any local or state law to defeat the obligation incurred in obtaining or assuring such Federal benefit or assistance.

13 C.F.R. § 101.106(d) (emphasis added). "When Bensal signed the SBA Guaranty, in which he personally guaranteed the second loan, he agreed to a provision that tracks the language of the regulation: “As to this Guarantee, Guarantor may not claim or assert any local or state law against SBA to deny any obligation, defeat any claim of SBA, or preempt federal law.”

The state law at issue here is California Probate Code § 283, which provides that “[a] disclaimer is not a voidable transfer.” This law directly conflicts with the FDCPA, which defines “transfer” in such a way as to include Bensal’s disclaimer. The FDCPA defines “transfer” as “every mode ... of disposing of or parting with an asset or an interest in an asset....” 28 U.S.C. § 3301(6) (emphasis added). “ ‘Asset’ means property of a debtor....” Id. § 3301(2) (emphasis added). The term “property” is defined as

any present or future interest, whether legal or equitable, in real, personal (including choses in action), or mixed property, tangible or intangible, vested or contingent, wherever located and however held (including community property and property held in trust....

Id. § 3002(12) (emphasis added). Based on the plain language of the FDCPA, Bensal’s disclaimer of the trust property qualifies as a transfer of property because Bensal “disposed of’ a “present or future interest” in his 40% share of “property held in trust” by executing a disclaimer that chan-nelled the trust share to his children.

Under the FDCPA, Bensal’s disclaimer is a transfer of property that can be voided, 28 U.S.C. § 3304(a), but under the California Probate Code “[a] disclaimer is not a voidable transfer.” Cal. Prob. Code § 283. It seems quite clear that California law is inconsistent with the FDCPA and must give way to the federal statute in light of the express preemption clause.

B. Supreme Court Precedent

Even aside from the preemption clause, our conclusion that the FDCPA controls over California disclaimer law also finds support in the Supreme Court’s decision in Drye v. United States, 528 U.S. 49, 120 S.Ct. 474, 145 L.Ed.2d 466 (1999). Bensal argues that Drye is inapplicable to the facts of this case and urges us instead to apply the holding of In re Costas, 555 F.3d 790 (9th Cir. 2009). Because both Drye and Costas addressed state disclaimer laws that are virtually identical to the California law at issue here, these two cases are best discussed in tandem.

In Drye, the debtor, who owed a substantial tax debt to the federal government, inherited his mother’s estate. 528 U.S. at 52, 120 S.Ct. 474. Soon after being named sole heir, the debtor disclaimed his interest in the estate, which then passed by operation of Arkansas state law to his daughter. Id. Upon learning of the debt- or’s inheritance, the Internal Revenue Service (“IRS”) filed a notice of federal tax lien, but the debtor argued that Arkansas inheritance law disallowed creditors from reaching disclaimed property. Id. at 53, 120 S.Ct. 474. The Supreme Court rejected this argument and explained,

The question whether a state-law right constitutes “property” or “rights to property” is a matter of federal law. We look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer’s state-delineated rights qualify as “property” or “rights to property” within the compass of the federal ... legislation.

Id. at 58, 120 S.Ct. 474 (internal citation and quotation marks omitted). The Court then looked to state law and noted that Arkansas gave the debtor a choice: he could either “receive the entire value of his mother’s estate,” or choose to “channel that value to his daughter.” Id. at 61, 120 S.Ct. 474. Based on this choice, the Court concluded that the debtor held a “control rein” over his inheritance and, therefore, possessed “property” within the meaning of the federal tax lien statute. Id. at 61, 120 S.Ct. 474. Ultimately, the Drye court concluded that state law did not bar the IRS from recovering against the debtor’s trust share. Id.

In Costas, we addressed a nearly identical state disclaimer statute in the context of bankruptcy law and arrived at a different result. The debtor in Costas received a share in her father’s trust upon his death in 2002; shortly thereafter, she executed a disclaimer under Arizona law to relinquish her interest, which passed the trust share to her children. 555 F.3d at 791-92. A few weeks later, the debtor filed for bankruptcy, and the Chapter 7 bankruptcy trustee sought to void the disclaimer under the bankruptcy code’s fraudulent transfer provision. Id. at 792. The debtor argued that under Arizona law, creditors were prohibited from reaching disclaimed property; in response, the trustee invoked Drye for the proposition that Arizona disclaimer law does not control over federal law. Id. at 792-93. We distinguished Drye both factually and legally. Id. at 795-97.

First, we noted a factual distinction based on the timing of the disclaimer in the two cases. The debtor in Drye executed his disclaimer after the government already had a pre-existing interest in his property; therefore, “[a]pplication of the state law ... would have stripped the government of [its] interest.” Id. at 796. In contrast, the debtor in Costas executed her disclaimer before filing for bankruptcy, meaning that the bankruptcy estate did not have any prior interest in the disclaimed property and “the state law did not operate to defeat any pre-existing interests.” Id. We explained that Drye is more analogous to post-petition disclaimers (i.e., where the debtor executes a disclaimer after filing for bankruptcy) because in those situations “courts have generally included disclaimed property in the estate, reasoning that the right to disclaim itself belongs to the estate as of the time of filing.” Id. In short, we concluded that when a debtor executes a disclaimer after a debt has already been accrued, then a state disclaimer law does not control.

Next, we noted differences in the purpose and structure of the federal tax lien statute and the bankruptcy code. As to purpose, we explained that the federal tax lien statute is primarily concerned with collection of federal debts, which “justifies the extraordinary priority accorded” to the federal government and “contrasts sharply with the policy of bankruptcy law, which largely respects substantive state law rights.” Id. at 796-97. We also highlighted a structural dissimilarity between the two statutes, explaining that the federal tax lien statute recognizes “only a narrow range of [property] exemptions, none of which mention[ ] disclaimers,” whereas the bankruptcy code’s property “exemptions are ... quite broad, allowing a debtor to take advantage of all available state law exemptions.” Id. at 797 (citing 11 U.S.C. § 522).

Ultimately, we “refuse[d] to extend [Drye’s] logic to the bankruptcy context” in the Costas decision. Id. Unlike Costas, however, this case presents a situation that factually and legally fits within the Drye framework.

First, the IRS in Drye and the SBA here both had a preexisting interest in the disclaimed property because the debtor in each case executed a disclaimer after the debt had already accrued. Id. at 796. In contrast, the trustee in Costas had no prior interest in the debtor’s disclaimed property, because the disclaimer there occurred before the debtor filed for bankruptcy. Id. This factual distinction is crucial, as we recognized in Costas, because “[a]pplication of the state law [disclaimer] would ... strip[ ] the government of [its pre-existing] interest.” Id.,

Next, the purpose of the FDCPA is more similar to the federal tax lien statute at issue in Drye than the bankruptcy code involved in Costas. Much like the federal tax lien statute, the FDCPA is primarily concerned with the collection of federal debt, as it was enacted to “create a comprehensive statutory framework for the collection of debts owed to the United States government.” Gianelli, 543 F.3d at 1183 (quoting H.R. Rep. No. 101-736, at 32 (1990)). This purpose is also reflected in the legislative history of the FDCPA, which reveals that Congress’ goal was to

bring an end to the present situation whereby a crazy patchwork of laws in the 50 states dictate the debt collection remedies available to [the federal government] in collecting Federal debts. It would provide consistent and fair creditors’ rights to the Government regardless of the state of residence of the debtor and eliminate the preferences certain state laws presently confer on Federal debtors who just happen to live in states which are regarded as notorious ‘debtors havens.’

H.R. Rep. No. 101-825 (1990).

The FDCPA does share the bankruptcy code’s extensive list of property exemptions. See 28 U.S.C. § 3014(a)(1) (expressly incorporating the bankruptcy code’s property exemptions into the FDCPA). This single, shared feature between the FDCPA and the bankruptcy code, however, is dwarfed by the significant parallels between the FDCPA and the federal tax lien statute. More importantly, we acknowledged in Costas that despite the bankruptcy code’s extensive property exemptions, if the facts there had been more similar to the facts here (i.e., a disclaimer after the bankruptcy estate “gain[ed an] interest in the right to disclaim”) the state disclaimer law would not have, prevented creditors from accessing the disclaimed property. In re Costas, 555 F.3d at 796. The considerable similarity between the federal tax lien statute and the FDCPA supports extending the reasoning in Drye to the present case. See Exp. Imp. Bank of U.S. v. Asia Pulp & Paper Co., 609 F.3d 111, 117 (2d Cir. 2010) (extending the Drye analysis from the federal tax lien statute to the FDCPA context).

Applying the analytical framework set forth in Drye, we look “to state law to determine what rights the [debtor] has in the property the Government seeks to reach, then to federal law to determine whether the [debtor’s] state-delineated rights qualify as ‘property’ or ‘rights to property’ within the compass of the [FDCPA].” 528 U.S. at 58, 120 S.Ct. 474. To determine what rights Bensal possessed in his 40% share of the EDB Trust, we must turn to the California disclaimer law at issue here, which is virtually indistinguishable from the Arkansas disclaimer law addressed in Drye. Both statutes allow a beneficiary to channel inherited property to his children and expressly prohibit creditors from reaching disclaimed property. Compare Cal. Prob. Code § 282-83 with Drye, 528 U.S. at 53, 120 S.Ct. 474. In light of the nearly identical disclaimer statutes, the Supreme Court’s holding in Drye mandates a single outcome here: “[Bensal] had the unqualified right to receive the ... value of his [father’s] estate ... or to channel that value to his [children]. The control rein he held under state law ... rendered the inheritance ‘property’ or ‘rights to property’ belonging to him within the meaning of [the FDCPA].” Drye, 528 U.S. at 61, 120 S.Ct. 474.

Therefore, we conclude that Bensal’s disclaimer constitutes a transfer of property under the FDCPA, and California disclaimer law does not operate to prevent the SBA from reaching Bensal’s trust share.

II. Whether Bensal Owes a “Debt” to the United States

The second disputed issue is whether the state court default judgment assigned to the SBA constitutes a “debt” within the meaning of the FDCPA. The FDCPA defines a “debt” as follows:

(A) an amount that is owing to the United States on account of a direct loan, or loan insured or guaranteed, by the United States; or
(B) an amount that is owing to the United States on account of a fee, duty, lease, rent, service, sale of real or personal property, overpayment, fine, assessment, penalty, restitution, damages, interest, tax, bail bond forfeiture, reimbursement, recovery of a cost incurred by the United States, or other source of indebtedness to the United States, but that is not owing under the terms of a contract originally entered into by only persons other than the United States.

28 U.S.C. § 3002(3). Because the statute is written in the disjunctive, an amount owed constitutes a “debt” as long as it satisfies either subsection (A) or subsection (B). We hold that the default judgment assigned to the SBA is a debt under subsection (B), and therefore we need not address subsection (A).

Subsection (B) contains a broad definition of “debt” that encompasses a wide array of financial obligations as well as a catch-all provision for any “other source of indebtedness to the* United States.” Id. § 3002(3)(B). The expansive definition of “debt” set forth in subsection (B) is, however, cabined by limiting language that excludes any amount “owing under the terms of a contract originally entered into by only persons other than the United States.” Id.

Neither party disputes that a default judgment falls within the catch-all provision because it qualifies as an “other source of indebtedness to the United States.” Id. The only question before us, then, is whether the limiting language prevents the default judgment from qualifying as a debt under subsection (B); that is, whether the default judgment involves a debt “owing under the terms of a contract originally entered into by only persons other than the United States.”

The Fifth Circuit has issued an instructive opinion interpreting the limiting language of subsection (B). Sobranes Recovery Pool I, LLC v. Todd & Hughes Const. Corp., 509 F.3d 216 (5th Cir. 2007). In Sobranes, the Federal Deposit Insurance Corporation (“FDIC”), a United States agency, acquired the assets of a failing private bank in receivership. Id. at 218. Among those assets was a loan originally entered into between the defunct bank and a private borrower, who had defaulted. Id. Shortly after acquiring the bank’s assets, the FDIC brought suit against the defaulting borrower and secured a judgment. Id. At issue before the Fifth Circuit was whether the FDIC’s judgment constituted a “debt” under subsection (B). Id. at 223. The Fifth Circuit explained,

The subpart (B) limitation is directly applicable to this case: the note underlying the FDIC’s judgment was originally entered into by only private parties. Thus, even though a judgment obtained by the government can fall within the scope of subpart (B), the final clause prevents the judgment here from being an FDCPA debt.... The judgment does not create an obligation between the debtor and holder that is independent of the note. That is, the note establishes the rights and liabilities of the parties, what is owed and to whom.. .■. The subpart (B) limitation captures this relationship and applies it where the United States was not a party to the underlying contract.

Id. at 223-24 (emphasis added). The court looked beyond mere labels to the actual source of the debt in the default judgment and determined whether the United States was originally a party to the underlying contracts.

We find this to be a sensible approach that comports with the statutory language and purpose of the FDCPA. For instance, the FDCPA provides procedures allowing the government “to recover a judgment on a debt,” which indicates that the focus should be on the source of the debt. 28 U.S.C. § 3001(a)(1) (emphasis added). Moreover, the House report accompanying the FDCPA states, “ ‘Debt’ is defined broadly to include amounts owing to the United States on account of a direct loan or loan insured or guaranteed by the United State [sic] as well as other amounts originally due the United States.” H.R. Rep. No. 101-736 (emphasis added). Additionally, during legislative discussion preceding the enactment of the FDCPA, one representative explained that “[t]he definition of ‘debt’ was carefully written to make clear that the act will not apply to obligations which begin as purely private loan or contract obligations.” 136 Cong. Rec. H13288-02, H13288 (1990) (statement of Rep. Brooks). Overall, the language, purpose, and legislative history of the FDCPA suggest that the statute was intended to reach debt arising from transactions in which the federal government was originally a party.

Applying the Sobranes approach, we look to the contracts underlying the default judgment to determine whether the SBA was originally a party. The default judgment here stems from FBT’s lawsuit against BCI and Bensal, alleging breach of the SBA Note and the SBA Guaranty. Both of these documents were inextricably part of a larger, four-party transaction between the SBA, Millennium, BCI, and Bensal. In fact, the sole reason BCI and Bensal were required to sign the SBA Note and SBA Guaranty, respectively, was to secure the SBA’s guarantee of the second loan. Moreover, both the SBA Note and the SBA Guaranty appeared on SBA letterhead, referenced the same loan-identifying information, and defined rights held by the SBA against Bensal and BCI. Finally, the form and substance of the SBA Note and SBA Guaranty derive from the overarching SBA Authorization, in which the SBA set forth its terms for the overall transaction. Based on the underlying contracts, then, it appears the SBA was a party to the original transaction.

Our conclusion that the SBA was a party also finds support in the statutory authority delegated to the SBA by Congress. When guaranteeing a loan, the SBA can “authorize participating lending institutions to take actions relating to loan servicing on behalf of the [SBA], including ... loan monitoring, collection, and liquidation.” 15 U.S.C. § 634(b)(7) (emphasis added). Even though the SBA can authorize others to service a loan, the SBA remains a party to the loan and retains the power to take over the loan servicing, liquidation, collection, or related litigation activities. See id.; 13 C.F.R. § 120.535(d). The SBA also has statutory authority to “pursue to final collection, by way of compromise or otherwise, all claims against third parties assigned to the [SBA] in connection with loans made by [it].” See 15 U.S.C. § 634(b)(4) (emphasis added).

Bensal advances several arguments in support of his position that the default judgment was not a debt under the FDCPA. First, Bensal points out that the FDCPA defines “judgment” as “a judgment, order, or decree entered in favor of the United States in a court and arising from a civil or criminal proceeding regarding a debt.” 28 U.S.C. § 3002(8) (emphasis added). Seizing on this language, Bensal argues that the default judgment at issue here falls outside the purview of the FDCPA because it was not “entered in favor of the United States”; rather, it was entered in favor of FBT, a private lender. But § 3002(3)(B), which allows the federal government to recover any “other source of indebtedness to the United States,” does not use the term “judgment,” and so is not limited to the statutory definition of that term.

Next, Bensal contends that his financial obligation on the second note was merely a “guaranty” not a “loan,” and therefore it cannot constitute a “debt” under the FDCPA. However, Bensal fails to provide any legal support for the proposition that a “guarantor,” as opposed to a “direct borrower,” somehow falls outside the purview of the FDCPA. As explained above, the SBA is authorized to “pursue to final collection ... all claims against third parties assigned to the [SBA] in connection with loans made by [it].” See id. § 634(b)(4) (emphasis added). The claim against Ben-sal is a claim against a third party in connection with a loan guaranteed by the SBA, and therefore falls within the SBA’s statutory authority.

In fact, Bensal’s proposed rule— that a “guaranty” does not qualify as a “debt” under the FDCPA — would lead to disastrous practical consequences. The SBA requires personal guarantees from individuals who own at least 20% of or hold significant management positions in any business seeking a direct loan or guarantee. 13 C.F.R. § 120.160 (a) (“Holders of at least a 20 percent ownership interest generally must guarantee the loan.”); see also Collateral, Small Business Administration (last visited Jan. 20, 2017), https://www.sba.gov/loans-grants/get-ready-apply/check-your-credit/collateral (“For all SBA loans, personal guaranties are required from every owner of 20 percent or more of the business, as well as from other individuals who hold key management positions.”). These personal guarantees provide an additional level of financial security, allowing the SBA to extend and guarantee more loans to small businesses. Bensal’s argument would eliminate the SBA’s ability to recover from personal guarantors, which would undermine the financial viability of the small business loan program. This argument is legally unsupported and practically untenable.

Bensal also contends that the SBA would be receiving a windfall if allowed to recover the entire amount owed on the default judgment when the SBA only paid a fraction of that sum ($54,027.39) to satisfy its guaranty obligations. This argument fails because, as explained above, the SBA is authorized to pursue or delegate collection of guaranteed loans. 15 U.S.C. § 634(b)(7). An entirely separate provision addresses the SBA’s rights after it has paid an amount to satisfy its guaranty obligations: “In the event the [SBA] pays a claim under a guarantee ..., it shall be subrogated fully to the rights satisfied by such payment.” 15 U.S.C. § 634(g)(5)(A). By including these two separate provisions, Congress intended to grant two separate authorizations, one allowing the SBA to collect on a loan that it has guaranteed and another allowing the SBA to recover an amount that it has paid as a guarantor. Thus, the mere fact that the SBA did not pay the full amount it now seeks to recover does not somehow bar this action.

Finally, Bensal argues that the SBA improperly seeks to enforce the entire default judgment, even though only a portion of the judgment concerned the SBA’s guarantee of the second loan. This argument is unpersuasive based purely on the numbers here. As of January 31, 2013, the total value of Bensal’s share in the EDB Trust was at least $153,944.30. The amount Bensal owes as a guarantor on the second loan is over $300,000 ($140,905.63 plus 10% interest accruing from December 12, 2002). Therefore, it does not matter that the default judgment also encompasses the first loan because the amount owed to the SBA on the second loan by itself exceeds the value of Bensal’s share in the EDB Trust.

CONCLUSION

In sum, we hold that the SBA is allowed to reach Bensal’s trust share because the FDCPA displaces California’s disclaimer law. We also conclude that the portion of the default judgment based on the second loan, which was guaranteed by the SBA, is a debt within the meaning of the FDCPA.

AFFIRMED.

      . In the default judgment issued in 2002, the state court determined that BCI and Bensal owed $140,905.63 on the second loan. Since that time, interest has accrued at a rate of 10% annually, bringing the total amount owed on the second loan to over $300,000.

      . The SBA falls within the definition of the "United States” under the FDCPA. 28 U.S.C. § 3002(15).

      . "It is appropriate to take judicial notice of this information, as it was made publicly available by government entities.” Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010).

      . Bensal also argues that claim preclusion and issue preclusion bar the present action because the SBA’s claim is based on the second loan, which is now merged in the state-court judgment and barred from re-litigation. This argument fails because the SBA is not attempting under a federal statute to re-litigate any issues previously adjudicated in the state court action; rather, the SBA filed suit to void a fraudulent transfer — an issue not implicated in the state court litigation.