Builder Beware: Copyright Infringement for Architectural Designs

An often overlooked function of the Copyright Act is the protection it provides for architectural works.  Recently, however, the Eastern District of New York was called upon to decide a copyright infringement claim involving architectural designs for residential homes.  Axelrod & Cerveny v. T. & S. Builders Inc., 2013 U.S. Dist. LEXIS 63206 (E.D.N.Y. May 2, 2013).  In that case, Plaintiffs owned valid copyrights in an architectural design entitled “Georgetown II,” as well as the derivative work referred to as “Home Design 2434.”  Plaintiffs alleged Defendants infringed by designing, marketing, constructing and selling four homes which Defendants referred to as the “Franklin” model. 

Defendants distributed sales brochures which included a copy of the cover of Plaintiffs’ sales brochure, depicting the exterior of the Georgetown II model.  Another of Defendant’s brochures for the Franklin model contained an exact copy of the floor plan for the Georgetown II.  Yet another of Defendants’ brochures contained a copy of the floor plan for the Georgetown II with only minor variations, such as differing placement of the bathroom on the first floor and the number of walk in closets on the second floor.  In several instances, Defendant’s brochures did not even bother to remove the “Georgetown II” designations on its Franklin brochures.  Although Plaintiffs had their own sales brochures for the Georgetown II, these brochures were not copyrighted. 

With respect to the homes themselves, the contracts for sale for three of the four homes in question included the two-page floor plan for the Georgetown II, copied directly from Plaintiffs’ brochure.  Defendants claimed that as constructed, the four homes in question exhibited more than 35 modifications from the original Georgetown II floor plan as a result of customizations, and that therefore all of the homes were substantially different from each other. 

In deciding whether to grant Plaintiffs’ motion for partial summary judgment the court grappled with two issues:  1) Whether or not Defendants’ copying of the exterior of the Georgetown II infringed on Plaintiffs’ copyright if there were substantial modifications to the interior of Defendants’ Franklin model, and 2) whether the use of the Georgetown II brochure in Defendants’ brochure is an infringement.

The court examined the precedent of district court outside the Second Circuit to determine that infringement can be established based upon copying of the floor plans, the exterior or both.   The Court analyzed the substantial similarity by evaluating the “total concept and feel” of the works under the ordinary observer test.  The plans or structures do not have to be exact but merely show that a substantial part was copied.  Thus, for an architectural work it is what’s on the inside or what’s on the outside that counts; it need not be both for the “total concept and feel.”  The Court granted summary judgment to Plaintiffs for exterior copying by Defendants.

The Court also granted summary judgment for Plaintiffs based upon Defendants’ copying of the floor plans from Plaintiffs’ Georgetown II brochure.    While recognizing that there was no copyright registration for the Plaintiffs’ brochure, the court found that the brochure did state that the floor plans themselves were copyrighted and cited a list of cases where the copyright protection in the floor plans extended to unregistered sales brochures.  The Court distinguished between the final construction and the brochures stating, “…[d]efendants have failed to explain why purported modifications made to the designs during the homes’ construction absolve defendants of liability for improperly using plaintiffs’ copyrighted floor plans in the sales contracts…” and brochures.   

Ray Charles Foundation told to "Hit the Road Jack."

In The Ray Charles Foundation v. Robinson (C.D. Cal. 12-cv-2725), the court takes an interesting side-step around what will undoubtedly be the hottest copyright issue in the very near future – termination.  The musician Ray Charles composed and recorded numerous musical works which were copyrighted.  From the facts listed in the case, it is an open question about whether the works were works made for hire with Atlantic (sound recording) and Progressive (composition).    Charles negotiated new terms (including royalties) for these works with the record companies.

Prior to Charles’s death, he made an agreement with his 12 children which stated:

My father, Ray Charles Robinson, has told me that he will set up an irrevocable trust for my benefit, to be funded with $500,000.  This gift is my entire inheritance from him and I understand that I will not inherit anything further under my father’s estate plan and that I am waiving any right to make a claim against his estate. 

Upon his death, the rights in his works were left to The Ray Charles Foundation.  In 2010, seven of Charles’s children served copyright termination notices on parties who had interests in Charles’s works, including Progressive. 

The Ray Charles Foundation sued the children claiming a breach of contract and seeking declaratory judgment on a variety of grounds.  The Foundation alleged that Charles’s works were works made for hire and thus not subject to the termination provisions of the Copyright Act.  17 U.S.C. Section 203 (thus maintaining the Foundation’s continued royalties). 

However, the Court was unsympathetic to The Foundation’s claims.  First, it found that the termination notices are not claims against the Charles estate.  The estate was closed in 2006, 4 years before the termination notices were served in 2010.  Second, the Foundation’s claim that Charles’s works were works made for hire would mean that the works were never in the estate anyway.  Third, even if the works were not works made for hire, the Court cannot interpret Charles’s agreement with his children as limiting a termination right under the Copyright Act.  The termination rights are unalienable notwithstanding any agreement to the contrary.  17 U.S.C. Section 304(c)(5).   The Court finds that the language would be an agreement to the contrary and is not able to prevent the right to terminate.  The Court goes on to award attorney’s fees to the Defendant under California’s Anti-SLAPP statute. 

The Court does not stop there.  It found that The Foundation does not even have standing to bring the lawsuit.  The Foundation is not the owner of Charles’s works if they are a work made for hire. (Progressive and/or Atlantic would be.)  The Court further found that The Foundation is not within the zone of interests protected by the statute invoked in the lawsuit.  The statutes (Sections 203 and 304) provide for authors, statutory heirs owning a termination interest, and grantees of transferees and their successors as those within the zone of interests.

While beneficial owners may have the right to sue for infringement under Section 501(b), no similar provision exists under Section 203 or 304 for the right to terminate.  Thus, the Court also rejects The Foundation’s claim that they have standing as a beneficial owner.  Finally, the Court rejects The Foundation’s third-party standing argument because it cannot show a close relationship with Progressive or its successors-in-interest. 

Arbitron sues Cleveland television station

Plaintiff Arbitron is an audience measurement firm which provides ratings information for such media as radio and television.  Plaintiff prepares different reports for different media markets including Cleveland, Ohio.    Arbitron licenses its reports to its customers and owns copyright registrations in its Cleveland Radio Market Reports.    Defendant WKYC is a television station in Cleveland.  Plaintiff alleges that part of WKYC’s promotional media kit presentation to potential advertisers included a list of demographic ratings from Arbitron reports.  (In one of the footnotes in the media kit – WKYC lists the Arbitron Reports as its source for the information.)  Arbitron alleges that WKYC is not a licensee of Arbitron.  The list containing the information from the reports is alleged to have been distributed in over 40 media kits.

Defendant has not yet answered. 

Prince Georges County Public School system considers making student's works the property of the Board of Education

A proposal under consideration by Prince Georges County would make a student's works for the public schools in Prince Georges County the property of the Board of Education, even if done on the student's own time and with use of their own materials.  The law does not work that way. 

While a work made for hire may apply to the teachers and educators employed by the County public school system, students are not employees of the public school system. 

It is possible that the county could obtain rights to a student's work through a license or assignment.  However, the better question, would be why would any student agree to such an arrangement? 

http://www.washingtonpost.com/local/education/prince-georges-considers-copyright-policy-that-takes-ownership-of-students-work/2013/02/02/dc592dea-6b08-11e2-ada3-d86a4806d5ee_story_1.html

The lack of understanding of copyright law is alarming.  But on another level beyond the complexities of the law, there is a moral problem with the county's proposal.  What possible reason would the county school system have to believe they own the rights to a student's work? 

2nd Annual IP Enforcement Report Released

The 2011 Annual Report on Intellectual Property Enforcement from the U.S. Intellectual Property Enforcement Office was recently released. It is the second of three reports stemming from the 2010 Joint Strategic Plan.

Some of the highlights include:

• Coordination with payment service groups to deter sales of counterfeit goods
• Coordination with internet service providers to notify subscribers regarding misuse of peer to peer to networks to deter online piracy
• Formation of a non-profit conglomeration of private companies to combat fake online pharmacies

There was also a notable uptick in seizures – 200% increase for counterfeit pharmaceuticals, 44% increase for counterfeit safety and critical technology goods, and 24% increase in overall seizures.

The government also touted its increased arrest and conviction rates as well as increased sentences.

The Report also notes that 3 members of the Notorious List – Baidu, Savelovskiy Market and Ladies Market have now been removed from the list.

The Report also emphasizes a focus on economic espionage and trade secret theft. (The discussion includes specific examples and criminal cases.)

The Enforcement coordinator also advocates legislation that gives Customs the right to issue penalties for infringing exports. (Currently, Customs can only seize exports and have them forfeited.)

GOLAN V. HOLDER – SUPREME COURT AFFIRMS CONGRESS HAS AUTHORITY TO GRANT COPYRIGHT PROTECTIONS TO WORKS THAT FELL INTO THE PUBLIC DOMAIN

As previously reported here, the Supreme Court considered whether Congress had the right under Section 514 of the Copyright Act to provide copyright protections for works that were previously in the public domain because: (1) the U.S. did not offer protection to works form the country of origin when first published; (2) sound recordings were not protected before 1972; or (3) a formality under U.S. copyright law was not met (such as failure to include copyright notice prior to 1989).

The Petitioners included those who used the works that were previously in the public domain due to one of the three reasons listed directly above. Petitioners argued that Congress did not have the right to remove works from the public domain under the Copyright Clause or under the First Amendment.

The Court decided that Congress did have the right to enact Section 514 removing works from the public domain. The Court rejected Petitioner’s argument that the “limited times” portion of the Copyright Clause of the Constitution relying heavily on its precedent in Eldred (upholding the extension of the term of copyright). The majority also relied on instances where Congress previously granted protection to works that were not protected or in the public domain such as the Copyright Act of 1790, several acts in the mid to late 1800’s and patent statutes.

The majority was also deferential to Congress in weighing the political choice of joining and complying with an international treaty and removing works from the public domain. The Court found that Congress was well within its authority under the Copyright Clause to enact Section 514 and making the decision to adhere to the Berne Convention for the purposes of reciprocation of rights with other member countries. The Court did not find that the action of retroactively removing works from the public domain did not overstep Congressional authority to promote the Progress of Science and the Useful Arts. Another factor for the Court was that Section 514 provided remedial measures to avoid immediate impact of copyright infringement actions for those in a similar position to Petitioners who relied on the works being in the public domain.

As to Petitioner’s First Amendment Claim, the Court noted that both the Copyright Clause and the First Amendment were enacted close in time and that copyright did and was intended to restrict expression under the First Amendment. The Court also noted that there are safeguards built into the Copyright Act that accommodated the First Amendment such as fair use and the idea/expression dichotomy. Because such safeguards are already provided in copyright law, the Court found that there was no need for heightened review based on the First Amendment.

Contrary to the Petitioner’s position, the Court dispelled the notion that the public had vested ownership rights once the work falls in the public domain. (“Once the term of protection ends, the works do not revest in any rightholder. Instead the works simply lapse into the public domain.”)

In addition, Section 514 does not prohibit defenses such as fair use nor their application to these works which have been removed from the public domain.

[As an interesting aside, the Court’s opinion also references the Google Book settlement case and states that addressing issues such as orphan works are more appropriate for Congress to resolve than the Courts.]

The majority also sidesteps some of the dissent’s questions about orphan works by simply claiming that a resolution about orphan works is not necessary to resolve whether retroactively removing works from the public domain to comply with the Berne Convention is within the Constitutional authority granted to Congress.

A Statutory Medical Copyright License?

While it is well known that there is a statutory license for use of music (Section 112 (e) and 114(d)(2) of the Copyright Act), many other license agreements are reached with royalty payments scheduled. (For example, YouTube's agreement with the National Music Publishers Association)

Understandably, statutory licensing schemes usually resolve complex issues. Given the recent uproar over SOPA and PIPA, maybe Congress could focus on something a little less controversial.

I came across this recent article regarding a copyright dispute over cognitive screening tests.

While such works may receive copyright protection, I do not believe that anyone wants to face copyright liability for administering what may be an important medical test. While some defenses such as fair use may be available, some medical professionals, or even the hospitals or companies that employ these professionals may not want to assume the risk.

In general, the government should want to encourage the creation of new screening tests and copyright creates this incentive. However, a simple licensing scheme with royalties may provide the appropriate balance so that those in the medical field may administer these tests without risking copyright infringement actions.

A statutory license could be an assessment on the patients to whom the test is administered in the form of a fixed cost. A statutory license could be assessed on the medical professional who administers the test in the form of a fixed royalty rate based on the number of times the test is used on an annual basis. A statutory license could be based on a single flat fee for use of an entire library of such tests. There are hundreds of other ways in which Congress could devise such a statutory license. (Perhaps the most difficult task would be to determine which tests qualify for medical screening tests.)

I think this is a proposed legislation that Congress could pass with relatively little opposition.