Most people know that software, movies, and music are protected against unauthorized copying by U.S. copyright laws. But since at least 1990, constructing habitable buildings from architectural plans is also considered to be "copying" the plans, and thus subject to the same law. As the Ninth Circuit recently made clear to a hapless residential housing developer, it is not “fair use” to reuse an architect’s plans without permission. LGS Architects, Inc. v. Concordia Homes of Nevada, 434 F.3d 1150 (9th Cir. 2006). Therein lies a cautionary tale for not only builders and contractors, but also architects and other design professionals.
The facts of LGS are simple. Concordia Homes hired LGS Architects to provide architectural plans for a master-planned community outside of Las Vegas. The parties’ license agreement (based on the standard form AIA agreement for residential projects) provided that the architectural documents were licensed to the builder solely for use on that project and no other, and that any other use of those design documents was prohibited unless the builder first obtained express written authorization from the architect. The license agreement also had an agreed-upon reuse fee for such future use, but again reiterated that any reuse was subject to the architect’s written authorization.
The builder here made at least two mistakes. First, the builder did itself no favors by failing to pay promptly and in full the required reuse fee when it decided to reuse the plans in Phase 2 of its development. The second mistake it made was deciding to proceed with the development even in the face of the architect’s express disapproval of any further use of its drawings on that phase.
Although the builder had already completed that second phase of development by the time this case made its way up to the Ninth Circuit, the Ninth Circuit still found that the architect was likely to succeed on the merits of its copyright-infringement claim and that the builder should be enjoined from any further use whatsoever of the architect’s plans. As observed by the court, “[w]hen a licensee exceeds the scope of the license granted by the copyright holder, the licensee is liable for infringement.” The Ninth Circuit also suggested, without actually deciding, that the license agreement probably gave the architect, as the author of the plans, the absolute (i.e., moral) right to refuse to allow reuse even if the builder had properly offered to pay the reuse fee, and even if withholding such agreement appeared unreasonable. While such "moral rights" are a key part of copyright's protection in much of the rest of the world, assertion and enforcement of such rights is relatively uncommon in the United States.
The court remanded for further proceedings, which will probably involve a damages trial. And on remand, those damages are likely to be substantial. The Copyright Code provides that a copyright holder may recover (1) its actual damages, (2) any profits of the infringer attributable to the infringement, or (3) statutory damages of between $750 and $30,000 per work infringed. 11 U.S.C. § 504. The court may also elect to award punitive damages of up to $150,000 and/or attorney fees if the court decides that the infringement was willful. 11 U.S.C. §§ 504, 505.
In the end, it is likely that any profit the builder hoped to realize from the second phase of its development will have evaporated by the time this lawsuit is finished. Builders and design professionals can learn a number of lessons from this case as to how best to protect their respective interests.
For design professionals:
- Register all your works. Registration of your drawings, plans, and other works with the Copyright Office is easy and inexpensive, and is also a prerequisite to bringing a lawsuit as well as to receiving statutory damages.
- Negotiate your licenses carefully. While standard form AIA contracts are a good place to begin, as shown by the LGS case, such contracts may contain ambiguities that work against the design professional. Make sure your licenses and contracts convey the actual agreement reached regarding use of your work.
- License, don’t assign. Once you assign away your copyright, you have no further claims regarding future use. A well-crafted license, on the other hand, can leave open the possibility of a future income stream from your plans and drawings.
For builders and contractors:
- The copyright belongs to the design professional. In the ordinary course, unless you have negotiated an assignment of all rights, your design professional will own an enforceable copyright in the plans it provides. Indeed, even if you decide to create your own plans by copying the design of an existing building, the person who designed that building may ultimately be able to bring infringement claims against you.
- Negotiate licenses carefully. A handshake deal is not good enough, and with respect to acquiring a license to use a copyrighted work, it is almost wholly ineffective. Pay attention to the license that you receive from your design professional, and ensure that it covers all the use that you expect to make of the works provided. If you want absolute ownership of the plans, negotiate an assignment of the copyright (but expect to pay more for such outright ownership).
Take copyright seriously. If you reuse architectural plans without the architect’s written permission, the law will treat you no differently than a thief, and any profits you hope to realize on the project will evaporate. The copyright holder does not need to prove that you acted negligently or with bad intent––it needs to prove only that you had access to its plans, and that the building you built appears to be similar to the building described in those plans. Thus, it pays to consider copyright issues at the very beginning of the project, rather than finding yourself facing a lawsuit after the project is complete.