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Copyright in the Real Estate World - Real Estate and Land Use News

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Real Estate and Land Use News


Posted on: Jun 26, 2017

Most lawyers in the Real Estate and Land Use Section commonly deal with purchases, acquisition, approvals, and development of real estate. What sometimes falls outside the scope of a real estate attorney’s work is the design and construction after everything has been approved. Most likely, the last thing on a real estate lawyer’s mind is The U.S. Copyright Act.

Most real estate lawyers probably know a little about federal copyright law and would refer the work elsewhere if a copyright issue arose. We know people can’t copy another person’s artwork, drawings, photos, and literature, but we probably don’t think much about how it can apply to site plans, floor plans, and construction. In fact, copyright protection extends to “architectural works,” defined as building designs “embodied in any tangible medium of expression, including a building, architectural plans, or drawings.” 17 U.S.C. §101.

If a builder went out and designed an exact replica of the Scottish Rite Cathedral or the J.W. Marriott, our limited knowledge and common sense would probably raise some red flags that it’s a copyright infringement. But, what happens when it comes to the floor plans and construction of more common structures, e.g. fast food restaurants, convenience stores, apartment buildings, or single-family homes? A designer of each would have their own unique interest in protecting their design, but questions arise as to what extent that protection extends.

Logically, there are some features that will be common to all new construction, but where is the line drawn between creativity and standard features? According to the Copyright Act, certain features cannot be registered, “Standard features. Standard configurations of spaces, and individual standard features, such as windows, doors, and other staple building components.” Once a developer includes the necessary standard features, it has to factor in the requirements of the municipality, like: parking, setbacks, spacing, traffic, drainage, emergency services, etc. At that point, the builder’s freedom for artistic expression is not exactly a blank canvas.

Take the single-family homebuilding industry as an example. If the zoning commitments require a builder to build a 1,500 square foot home on lot, and the house is required to have three bedrooms and two bathrooms, how many different designs are possible?  There are obviously several ways to slice it up, but what happens when you consider economical and customer demands. For example: open concept floor plans, bedroom location, closet space, and a master bathrooms. Most people don’t want their front door coming into a bedroom. The possible designs become more and more limited as we consider the available space and what homeowners desire.    

So what happens when two builders have similar floor plans? Is similarity between plans sufficient for a copyright infringement? Fortunately, the 7th Circuit recently decided a case indicating that there are limitations for copyright protection of a fundamental design. In Design Basics, et. al., v. Lexington Homes, Inc., et. al. No. 16-3817 (7th Cir., June 6, 2017), the court sided with the defendant homebuilder, granting its summary judgment and awarding attorney’s fees after Design Basics filed a copyright claim against Lexington Homes. While the plaintiff found the defendants plans to be similar, there was no evidence that the Defendant copied, or even had access to the plan at issue. The similarities between the homes were not sufficient enough to determine it was an infringement.

The plaintiff, Design Basics, has been “in the business of producing market-ready designs for modest single-family homes for several decades.” With over 2,700 home designs, Design Basics traditionally distributed its floor plans in brochures and online with the expectation that builders would pay them a licensing fee to build from their plans. More recently, its business model evolved and it began pursuing copyright infringements of its plans. If a builder is held to have infringed on Design Basics plans, it could potentially be liable for every home it built using that plan.

With so many plans copyrighted, by searching images on the internet, it was not difficult for Design Basics to find builders building designs similar to their floor plans. The court noted that Design Basics has been a party to over 100 federal lawsuits. The court went into an explanation of copyright “trolls”, without expressly accusing Design Basics of being troll. The court defined copyright trolls as “opportunistic holders of copyrights” that “bring[] strategic infringement claims of dubious merit in the hope of arranging prompt settlements with defendants who would prefer to pay modes or nuisance settlements rather than be tied up in expensive litigation.”

The court ruled in favor of the builder, and its holding is interesting for several reasons. On technical grounds, it found that the allegedly infringing plans were not “substantially similar” to those of Design Basics and that, even if they were, there was not sufficient evidence to show defendants “had a reasonable possibility of access to the plans at issue.” Merely posting plans on the internet was not sufficient to show that defendants had access to the plans.

More relevant to our real estate analysis, the court stated that “substantial similarity is heightened where the field is crowded or where aesthetic choices may be secondary to consumer demands or functional requirements.” In essence, the court ruled that the functional attributes of standard house design cannot be the basis of a copyright claim, and designers can “get no credit for putting a closet in every bedroom, a fireplace in the middle of an exterior wall, [or] kitchen counters against the kitchen walls.”

While this decision applies to the facts of the case and more broadly, to the homebuilding industry, its application most likely reaches further. Developers of multi-family and commercial structures might take some relief in knowing there is protection from copyright trolls, but also might take a fresh look at their design practices. Most new homes are going to have certain attributes that are not susceptible to copyright infringement, just like most cars are going to have four wheels and a steering wheel in the front left. It’s never acceptable to steal or infringe upon the work of another, but the 7th Circuit recognizes that there are certain standard features that cannot be copyrighted. 

This article was written by Jack Donaldson, Westport Homes. If you would like to write or submit content for the Real Estate & Land Use Section, please contact Kim Ferguson at kferguson@indybar.org

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