Builder Beware: How to Avoid Blueprint & Building Design Lawsuits

All right class. Time for a little quiz.  Questions? Yes, I know it was a bad idea to invite a lawyer. No, you cannot use a carpenter pencil. No. 2 pencils only. Another question from the back row? No, I do not know if golf scorecard pencils are No. 2 pencils. Okay, that’s quite enough questions; time for our quiz.

Questions:

Question No. 1

Consider the following scenario: a builder conceptualizes a design for a house in a new subdivision. He meets with an architect to describe his general ideas for the design of the house, and the architect puts the design on paper and draws up the blueprints. The builder constructs the house according to the design and sells it to a very enthusiastic homeowner. In fact, the homeowner loves the house so much that the builder figures he will duplicate the design elsewhere, so he quickly starts work on seven more houses in another part of town. Naturally, since the builder came up with the general idea for the design, he figures he owns the rights to construct as many buildings as he wants using that design. Is the builder correct?

Question No. 2

A customer walks into a builder’s office and requests that the builder construct the customer’s “dream house” using a set of blueprints the potential customer got from a friend who had built the same house in a neighboring town. The friend has given your new customer permission to use the blueprints. Can you build the “dream house?”

Question No. 3

On a Sunday, you take the family for a drive through a successful new subdivision. You love the house designs and understand why the development has been so successful. After taking digital pictures of the houses, you bring them to your in-shop draftsman on Monday morning and ask him to create some new plans for your own new subdivision. Can you legally do this?

Answers:

Question No. 1

No. In a similar case, two Virginia builders were quite wrong-to the tune of $5.2 million. The builders built over 300 additional homes based on seven sets of blueprints provided to them by an architect. In response, the rightful owners of the copyright in the blueprints-the architectural firm-sued the builders for copyright infringement and won a $5.2 million jury verdict, representing the entire amount of profits the builders made from the houses.

Question No. 2

No. Once again, the builder would be well-advised to think hard before accepting the offer. If another person owns the copyright to the blueprints, then the builder himself could potentially be liable for copyright infringement if he builds the house. A South Carolina builder used a third party’s copyrighted blueprints several years ago to build a customer’s dream house-and a federal judge promptly slapped an injunction on the builder, barring him from completing the house which he had already begun to build!

Question No. 3

No. Federal law protects the design of a house, not just architectural plans. If you create blueprints copying the design of an existing building built after 1990, you are liable for copyright infringement.

So how did you do on our little quiz? Yes, I know. It was still a bad idea to invite a lawyer. However, the intricacies of copyright law represent huge risks to home builders and contractors. The author of a blueprint owns not only the rights to the blueprint itself, but-more importantly-the right to prevent others from constructing duplicate or similar buildings using that same design. In other words, unless builders think ahead and negotiate for the rights to a design-or ensure that the design they are using is not infringing-they could potentially expose themselves to millions of dollars in liability, whether for the current building or for future buildings. Fortunately, however, as long as a builder takes several important steps before he commissions new blueprints and/or uses existing blueprints, he can protect his company.

Basics of Copyright Law

Intellectual property consists of three primary areas: patent, trademark and copyright.  Patent protects inventions or discoveries of any new and useful process, machine, manufactured articles or composition of matter such as the telephone, a transistor or even a new piece of construction machinery. Trademarks are brands that identify the source of a product, such as Nike, Caterpillar or John Deere. Although patents and trademarks can be important for construction owners, this article will address copyrights.

The federal Copyright Act provides a set of legal rights to “original works of authorship fixed in any tangible medium of expression.” A “work of authorship” can be one of a number of original artistic or technological creations, ranging from a John Grisham novel, to a Bon Jovi song, to Microsoft Windows, to a set of architectural blueprints. The “fixed in a tangible medium” requirement is a fancy way of saying a person must put the work down on something permanent to get protection. Examples could include paper, digital recordings or computer files.  All copyright protectable materials are known as “works.” All creators of works are known as “authors,” even if the work is a song, blueprint or computer file.

Copyright law does not protect mere ideas. To receive protection for a work, an author must essentially “put pen to paper.” The author is not necessarily the person who came up with the original idea; rather, it is the person who transformed a simple idea (which is not copyrightable) into a copyrightable work fixed in a tangible medium (which is copyrightable).  As soon as the author-or creator-begins to create the work, the legal rights immediately and automatically are owned by that author. Nothing needs to be registered in the Copyright Office.  Even if the creator does not use a © notice on the work, he still owns it.

The only exception to the “author-as-owner” rule is that when an employee of a business creates a work, then the employer owns the rights to the work. However, if an independent contractor creates a work, that independent contractor owns the copyright, unless a written “work for hire agreement” exists. Copyright ownership can only be assigned or transferred by a written agreement signed by the copyright author. Oral promises do not work.

The ownership rules for a copyright can produce chilling results for construction business owners that use independent draftsmen to generate drawings. Unless the independent contractor contractually agreed to assign those rights back to you, the independent draftsman will be the author and own the copyrights in the drawings. This is why the builders in Question No. 1 did not own the copyrights to the blueprints, even though the builder originated the “idea” for the design in the first place.

Once ownership is established, the owner of the copyright has a set of both “positive” and “negative” rights to the work. He has the exclusive “positive” right to make or sell copies of the work, and the right to prepare new works (“derivative works”) which are mostly based on the original, underlying work. Also, he has the “negative” right to block others from copying, selling, manufacturing, licensing or building his legally protected works. Indeed, a copyright owner has the right to sue an individual for infringement if that individual had initially received a license to use the work for a specified number of times, but then exceeded his license and produced additional products (such as the builders who legally built one house, but then illegally built many more houses based on the same design).

In copyright law, it is significant to understand the difference between rights associated with the copyright and rights associated with a copy of the work itself. You may own a copy of a set of blueprints. They are yours if legally obtained. You can build a building from them. You can sell them. You can line a birdcage with them. Regardless, they are yours to do with as you please. However, even though you own the physical copy of the plans that does not give you ownership of the copyright in the plans. Unless you get the permission of the creator, you cannot make copies of the plans, use them to build multiple houses or use them as a basis for the design of a new house.

When someone takes an unauthorized action, the copyright owner can sue for copyright infringement, with the potential to recover either money (usually the profits earned from the infringement) and/or to stop further infringement from occurring. To prove copyright infringement, the copyright owner must show either that the defendant directly copied the work (i.e., the defendant admits it), or more typically, that the defendant had access to the material, and that the infringing work was so “substantially similar” to the copyrighted work that copying must have occurred.

Like a Barbra Streisand song, copyright protection lasts for a significant amount of time, but does not last forever. Any copyrightable work is protected for the author’s entire lifetime, plus an additional seventy years (or ninety-five years after publication for a company’s “work for hire” works created by an employee). After the copyright ends, the work goes into the “public domain,” meaning that anyone can copy it. For example, if you love that old colonial house down the street built in 1848, you can use it as the basis for your plans for a new house. You will not own rights to any of the design features taken from the old house, but you can own copyright protection for the design features added by you.

The rights protected under copyright law are automatically owned by the author, even if the work is unpublished and/or unregistered. However, in order to sue a copyright infringer, the author must register the work with the Library of Congress, which is a fairly simple and inexpensive process. Go to http://www.copyright.gov/ for more details. Unlike the past, an author is not required to place the copyright © “notice” symbol on the work to receive protection. So, if you do not see a © notice on a set of blueprints, that does not mean a builder is free to copy them.

Copyright Law and Architectural Works

While copyright protection has been in existence for over 200 years for works such as novels and songs, copyright laws did not protect architectural works-specifically, habitable buildings-until 1990. Previously, the architect or draftsman of a set of blueprints received only limited protection. While a paper set of blueprints was protected by copyright, the design and structure of the building itself were not. Thus, “cloning” a building based purely on using photographs or site visits was perfectly legal.  Infringement was quite difficult to prove, unless the defendants made copies of the blueprints themselves.

In 1990, Congress expanded the copyright laws to apply to the physical structure of buildings in the Architectural Works Copyright Protection Act (AWCPA). With several limited exceptions, the new protections apply only to buildings built after December 1, 1990.Generally, if the building was built before December 1, 1990, then the AWCPA protections on the physical structure do not apply.

Examples of AWCPA Protected & Unprotected Buildings

Protected under AWCPA

• Houses
• Office Buildings
• Churches
• Museums
• Gazebos
• Garden Pavilions

Not Protected under AWCPA

• Dog houses
• Mobile homes
• Tents
• Boats or other recreational vehicles
• Individual parts of buildings (e.g., windows) and standard functional elements of buildings that have a utilitarian function (e.g., doors)
• Structures that are means of transportation, including:
• Bridges
• Highways and roads
• Dams

The AWCPA exempts from infringement several activities that would normally be prohibited under the Copyright Act. First, if a homeowner (or at his insistence, a builder) wishes to alter or destroy a building but does not own the copyright, he has the right to do so. Second, members of the public may take photographs or make drawings of a building and publish them to the public as long as the building is visible from a public place.

Otherwise, the copyright laws apply fully to the structures of buildings. Just as you may own a DVD of Gladiator with a limited license for home use, it does not give you the right to charge admission from others to watch the DVD. The purchaser of blueprints for an AWCPA-eligible building typically has a limited license to use the blueprints to build one individual building-but only one building. Also, just as you may sell your Tim McGraw CD to a used music store but cannot make bootleg copies to sell to others, similarly, a homeowner whose house was built with a valid copyright license may sell his individual house as he pleases, but cannot produce identical or similar houses based on the building design.

Helpful Tips for Builders

Nightmarish scenarios such as those in Questions 1 to 3 can be avoided, as long as builders and contractors sign agreements in advance with architects and homebuyers regarding the scope of the copyrights. Several tips are outlined below.

Dealing with Architects

• Work-for-Hire or Assignment Agreement Warranty of Ownership of Copyright – If an owner provides blueprints to a builder, the owner may not own the copyright to the design-and the builder could be committing copyright infringement when he constructs the house. To protect itself against a claim, a builder should get proof that the owner actually owns the copyright in the blueprints.
• Indemnification Agreement – In construction contracts, a builder should always include a clause that the owner will indemnify the builder for the defense of any copyright infringement claims for the use of owner-provided blueprints. Unless there is an agreement to the contrary, if an architect produces blueprints for a builder, then the builder will own nothing but a one-time license to build one house according to those specifications. AIA form contracts (and many others) specify that the architect is the sole author and copyright owner. However, if a builder, as in Question 1, wishes to preserve the option of producing additional houses anywhere using the same or similar design that an architectural firm created for him, he must get a written assignment of the architect’s copyright. If the design has not yet begun, the architect would sign a “work-for-hire” agreement, where the architect essentially agrees that he should be treated like an employee of the builder (rather than an independent contractor) and thus relinquishes any potential rights in the future design. Otherwise, after the design has commenced and the copyright interest has already vested, the architect must sign an “assignment agreement” with the builder. To be enforceable, both agreements must be in writing and could be included in a normal builder/architect contract.
• Right to Purchase Additional Licenses for Design Warranty of Ownership of Copyright – If an owner provides blueprints to a builder, the owner may not own the copyright to the design-and the builder could be committing copyright infringement when he constructs the house. To protect itself against a claim, a builder should get proof that the owner actually owns the copyright in the blueprints.
• Indemnification Agreement – In construction contracts, a builder should always include a clause that the owner will indemnify the builder for the defense of any copyright infringement claims for the use of owner-provided blueprints. If the architect refuses to assign his copyright in the design, the builder could negotiate to receive the right to purchase a set number of individual “licenses” at a later date, in order to duplicate a limited number of copied buildings.
• Indemnification Agreement Warranty of Ownership of Copyright – If an owner provides blueprints to a builder, the owner may not own the copyright to the design-and the builder could be committing copyright infringement when he constructs the house. To protect itself against a claim, a builder should get proof that the owner actually owns the copyright in the blueprints.
• Indemnification Agreement – In construction contracts, a builder should always include a clause that the owner will indemnify the builder for the defense of any copyright infringement claims for the use of owner-provided blueprints. A builder should include in its contract that the architect will indemnify the builder against any copyright infringement claims based on the architect’s blueprints and/or the building design. Infringement claims could arise when and if another architect asserts that he/she, rather than your architect, owns the copyright to the building design.

Dealing with Owners

• Warranty of Ownership of Copyright – If an owner provides blueprints to a builder, the owner may not own the copyright to the design-and the builder could be committing copyright infringement when he constructs the house. To protect itself against a claim, a builder should get proof that the owner actually owns the copyright in the blueprints.
• Indemnification Agreement – In construction contracts, a builder should always include a clause that the owner will indemnify the builder for the defense of any copyright infringement claims for the use of owner-provided blueprints.

Construction business owners are typically in the business of saying, “Yes.” That is, you want to build the new house. You want to create the new development. If you build nothing, pretty soon you are saying “yes” to the state unemployment worker. However, when you’re asked to build a house using blueprints and it is not clear if owner has the right to use the plans, at that point you should say “no.” Likewise, when you get tempted to re-use a set of plans for a new development, if you did not get an assignment or license from the architect, it is smart to again say “no.”

With a little planning and understanding of the rights and pitfalls associated with the use of blueprints, you can spend more of your time saying “yes” to your Lexus dealer, and less time saying “yes” to your architect’s lawyer.

Construction Business Owner, August 2006