By Michael C. Loulakis and Lauren P. McLaughlin
When an owner or contractor contracts with an architect or engineer to design a project, the A/E remains the owner of the copyright, and the owner or contractor merely obtains a non-exclusive license to use the plans for that specific project. That means the A/E typically retains the ability to use the designs and plans on other projects for other clients, while the owner or contractor will not be able to use those designs and plans on any other projects.
A refresher on copyright basics
Copyright protection attaches from the moment an architectural work or engineering drawing is created. Engineers who express their ideas or concepts in the form of plans or drawings obtain copyright protection. It is generally not necessary for design drawings to be marked to indicate that they are subject to copyright protection, nor does the A/E need to have a copyright registration to claim copyright protection. However, a copyright registration is required if an A/E intends to file suit for copyright infringement.
Copyright laws governing a design professional’s work have evolved slightly over the past 35 years. In 1990, Congress enacted the Architectural Works Copyright Protection Act, which extends copyright protection to constructed architectural works. An “architectural work” is defined as “the design of a building as embodied in any tangible medium of expression, including a building, architectural plans, or drawings.” The work includes the overall form as well as the arrangement and composition of spaces and elements in the design but does not include individual standard features. However, certain standard features of an architectural work are not protected under copyright law. These include functional requirements based on building codes, zoning requirements, functional demands, and available technology.
In the last few weeks, two cases involving copyright protections for design professionals have been appealed to the United States Court of Appeals for the 5th and 8th Circuits. In both of those federal appeals, however, design professionals were unsuccessful in asserting that they retained copyright protections over their own designs. A closer look explains where courts have found holes in interpreting the AWCPA.
Architect’s claim of copyright denied
The principal question raised by Cornice & Rose International LLC v. Four Keys LLC concerns whether a bank, a bona fide purchaser of an uncompleted building in a bankruptcy sale, infringed the original architect’s copyright by completing the building without the permission of the building’s architect. Both the federal bankruptcy court and the 8th Circuit held that the subsequent owner's use of another design firm to finish the work did not constitute an actionable infringement.
The case
The facts giving rise to this case involved an owner, McQuillen Place Co. LLC, who retained a design firm, Cornice & Rose International, to design a building in Charles City, Iowa. C&R obtained copyright protection for its technical drawings and the building itself, the tangible embodiment of its design work. When the building was almost 90% complete, the owner stopped work and filed for bankruptcy. C&R had not been paid in full for its design services. The two primary construction lenders, Four Keys LLC and First Security Bank and Trust Co., purchased the building in a liquidation proceeding. The banks then hired another architectural firm, Atura Architecture, to take measurements and generate drawings for the completion of the building.
C&R asserted that under the AWCPA, an unpaid architect may block completion of a building without its consent. The bankruptcy court disagreed and held that although the owner was not able to use C&R’s copyrighted plans or drawings, it could occupy and complete the building with another design firm.
The architect’s appeal
C&R appealed, arguing that the completed building was, in fact, a tangible embodiment of its design work product. Because the building was 90% complete, C&R argued that completion should not have been allowed to proceed without its consent.
The 8th Circuit agreed with the bankruptcy court. At its core, the court determined that while the AWCPA extends to the structure itself, here, there was no evidence that C&R’s work was being used for the completion effort. Instead, the new owner retained its own architect to complete the building in accordance with the completion architect’s own plans. As a result, the court held that completion of the building was not a “copy” of the building and did not create an unauthorized derivative work. According to one concurring opinion in the case, “copying is a necessary element of a derivative works copyright infringement claim.”
In other words, completing an unfinished building does not “make a copy of the building.” The appellate court also noted that the AWCPA expressly grants a building owner the right to “alter or destroy” a building without the consent of the copyright owner of the architectural work. By extension, the court opined that this should be interpreted to include the completion of a building. The decision does not indicate to what extent the original architect was unpaid prior to the bankruptcy filing, but litigation costs to sue and then appeal an adverse ruling in the bankruptcy court could have well exceeded (or dwarfed) the amount of nonpayment.
Architect unsuccessfully asserts copyright infringement
A recent federal appeals court also had occasion to decide whether an architect’s affirmative act in granting its client a license to “reproduce” its preliminary design schematics conferred the right to create derivative works from the copyrighted drawings. Let’s take a look at the factors the court considered in answering that question in the affirmative.
The case
In Loeb Architects LLC v. MaKo LLC dba Padua Realty Co., Padua Realty Co. had engaged Loeb Architects for the early design phases of an assisted living facility complex. Under the agreement, Loeb was to provide one set of schematic plans for the client to “reproduce, scan, and/or dry mount and laminate as desired.” Padua agreed to pay Loeb $10,800 for the service. The agreement stated that schematics remained the property of Loeb and “could not be used on other projects or extensions to the Project,” except by agreement in writing and with commensurate compensation paid to Loeb. Loeb produced the schematics and was paid the agreed fee. Padua later brought in another architect to complete the design and provided Loeb’s schematics to the new architect. Loeb challenged the action, contending that Padua violated the AWCPA by generating a derivative work from the schematics.
A federal district court found that the agreement between Loeb and Padua created an express, nonexclusive license to use the schematics in connection with the project. In other words, whatever subsequent use was made of the schematics, Padua had acted properly and was within the scope of the license it paid for.
The appeal
Loeb argued on appeal that the schematics were intended solely for the purpose of obtaining financing for the project. The court was not persuaded, as the license was silent on the purpose of the design schematics. Instead, the court focused on the client’s permission to “reproduce” the schematic designs. Additionally, the court noted that the agreement prohibited the use of the schematics “on other projects or extensions to the Project.” The court construed this language to imply permissive use of the preliminary schematic drawings in subsequent phases of the project.
The court found instructive the definition of reproduce, which is “to imitate closely” or “to make a representation” (such as an image or copy of something). Derivative works are by definition substantially similar to the copyrighted work. As a result, the court deduced that the right to “reproduce a work” encompasses the right to create a “derivative work.” The court concluded that the contract granted the owner a license to use the schematics in connection with the project, including to create derivative works.
Conclusion
While these two appellate decisions denied the architects’ claims under the AWCPA, the facts of both cases reflect that this is hardly an erosion of the AWCPA or a trend. Instead, these appear to be somewhat expected legal outcomes. The takeaway in one is that a design professional may have difficulty enforcing a copyright claim where a follow-on A/E uses its own design to complete the remaining 10%. Another fact pattern not likely to prevail for a design professional's claim of copyright infringement concerns where an express license to reproduce the design schematics was given.
A few general reminders regarding risk mitigation concerning copyright protections, however. Design professionals are well advised to use industry forms, such as those of the Design-Build Institute of America or the American Institute of Architects that preserve the copyright interest of the architect. Secondly, establishing in writing who owns the design ensures that even when written agreements do not get executed, the actions of the parties performing in a manner consistent with the terms of the unsigned contract may be evidence of the contractual intent of the parties. Another issue of importance, as always, concerns due diligence in client selection — choosing clients that are financially sound and have experience with similar projects and contracts so that expectations may be managed and the project may be completed as anticipated by the design professional.
This article is published by Civil Engineering Online.
