Copyright Infringement of Design Documents
November 2002
Using a recent case as an example, Kent Holland
discusses the importance of preserving the copyright interest of the architect’s
design documents.
by J.
Kent Holland Jr.
Arch Insurance
Group Inc.
Using a recent case as an example, Kent Holland discusses the importance
of preserving the copyright interest of the architect’s design documents.
Instruments of service produced by the design professional, including plans,
specifications, drawings, opinions, reports, and calculations have historically
been treated as intellectual property belonging to the design firm that created
it. This has been plainly stated in standard form contracts such as those published
by the American Institute of Architects (AIA), in Document B141, and the Engineers
Joint Contract Documents Committee (EJCDC) in EJCDC Document 1910-1. This article
examines the ownership of such documents and examines a recent copyright case
over an architect’s drawings.
Ownership of Documents
A sample contract clause protecting the design firm’s ownership rights is
as follows:
Drawings, specifications and other documents, prepared by the Design
Professional (DP) and the DP’s consultants are Instruments of Service for
use solely with respect to this Project. This includes documents in electronic
form. The DP and the DP’s consultants shall be deemed the authors and owners
of their respective Instruments of Service and shall retain all common law,
statutory and other reserved rights, including copyrights. The Instruments
of Service shall not be used by the owner for future additions or alterations
to this Project or for other projects, without the prior written agreement
of the DP. Any unauthorized use of the Instruments of Service shall be at
the Owner’s sole risk and without liability to the DP and the DP’s consultants.
The ownership clause like the above-quoted one sets forth clearly the rights
of the design professional and protects against the risk of liability that might
otherwise arise out of reuse of the documents by an unauthorized person, including
the project owner. The protection afforded by this clause is appropriate because
if the documents are used on other projects without the design firms knowledge
and input, the designer will be unable to assess and revise the design for the
new circumstances or new project on which they are being utilized. This means
he or she will not be able to manage the risks that will naturally arise when
design documents are used on a project.
In contrast to the reasonableness of the AIA and EJCDC clauses, the provisions
of the Construction Owners Association of America (COAA) contract form state
the following:
The Construction Documents and any other documents or electronic media
prepared by or on behalf of the Professional for the Project are the sole
property of the Owner free of any retention rights of the Professional.
The Professional hereby unconditionally transfers and assigns to the Owner
all copyright claims, trade secrets or other proprietary rights with respect
to such documents, and agrees, upon request of the Owner, to turn over to
the Owner the originals and all copies of such documents and materials as
of the date of such request.
Indemnity Clause
If an owner is insistent that it be given ownership rights to the design
documents, and you decide as a matter of business judgment that you are willing
to grant such rights, you should seek to add an indemnity clause to protect
you against claims that might arise out of the reuse of the documents. For example,
you might include language like the following.
The Owner agrees to hold harmless, indemnify, and defend the design professional
against all damages, claims, and losses of any kind (including defense costs),
arising out of any use of the plans and specifications on any other project,
for additions to his project, or for completion of this project.
You should also be careful not to give away your own right to reuse the documents
in the course of your future services for other clients. The EJCDC Document
1910-1 (clause 6.04) handles this by stating:
Engineer shall retain an ownership and property interest therein (including
the right to reuse at the discretion of the Engineer) whether or not the
Project is completed.
Potential Liability Exposures
The problem with allowing the owner to reuse your documents, besides the
obvious fact that you are giving your work away for free, is that you lose control
over how the documents are interpreted and used. This puts you at significant
risk since you will not be able to make necessary revisions and changes to the
documents that may be necessary before the can be used successfully on the new
project. The liability exposure from such reuse should be carefully considered
before you agree to permit it, and before agreeing to permit such reuse, it
is advisable to negotiate specific disclaimers on the reuse and indemnification
from the owner.
Recent Case
There have been a number of cases in which an architect’s drawings were used
to complete a project by a different architect when the original project developer
transferred the project to a new developer or design-builder. In several of
these situations, the original architect successfully sued the new developer
for the unauthorized use of his design documents. A recent example is the case
of Nelson-Salabes v Morningside Development,
284 F3d 505 (4th Cir 2002). In that case, the original architect (“NSI”) performed
professional services for the original developer (“Strutt”) in three separate
phases. In the first phase, NSI delivered to Strutt a proposed letter agreement
under which NSI agreed to develop a schematic building footprint for an assisted
living center called Satyr Hill. Although Strutt never executed the agreement,
both Strutt and NSI fully performed according to its terms.
Next, NSI submitted a proposed letter agreement to provide additional architectural
services to develop the exterior elevations for the project and attend a zoning
exception hearing. Again, all terms of this proposed agreement were performed
by Strutt and NSI although Strutt never actually signed the agreement. After
this, NSI created four architectural drawings depicting the building footprint,
the floor plans, and the exterior elevations. These were incorporated by Strutt’s
civil engineer into the development plan for the project and submitted to the
zoning board which granted the request for a zoning exception.
While the zoning application was pending, NSI submitted a third proposed
letter agreement to Strutt offering to create the design and working drawings
for the remaining development of the project. This proposal stated, “If the
above is acceptable, we will prepare a Standard AIA Agreement.” Consistent with
its record, Strutt did not execute the letter agreement. Several months later,
NSI submitted a revision to this proposed agreement along with a “revised AIA
Contract for Satyr Hill Catered Living per our recent discussions.” The AIA
Contract provided in relevant part that “[t]he Architect’s Drawings, Specifications
or other documents shall not be used by the Owner or others on other projects,
for additions to this Project, or for completion of this Project by others unless
the Architect is adjudged to be in default under this Agreement, except by agreement
in writing and with appropriate compensation to the Architect.” Once again,
Strutt failed to sign this agreement. One month later, Strutt advised NSI to
cease performing services because Strutt’s potential business partner had backed
out of the project, and Strutt lacked sufficient expertise to go forward with
the project alone.
In an interesting twist, Strutt asked NSI if it might know of any potential
buyers of the project that could complete it. NSI then successfully solicited
buyers on behalf of Strutt and as a result a group called “Morningside Development”
took over. Ironically, however, Morningside decided to consider different architects
to complete the project. NSI advised Morningside that if it did so it had no
authority to use the NSI drawings without its express written consent. Morningside
thereafter entered into a design-build contract for construction of the project
and provided the design-builder (“Hamil Commercial”) with a copy of the NSI
drawings. The design-builder in turn gave the drawings to its subcontracted
architect (“EDG Architects”). Morningside then met with EDG and instructed it
to avoid any modifications to the original plans and drawings that would necessitate
obtaining a new zoning exception. After the project was completed, NSI Architects
filed suit against Morningside alleging copyright infringement for unauthorized
use of NSI’s design documents.
In their defense, the defendants argued that they could not be held liable
because they had an “implied nonexclusive license” to use the NSI drawings.
They argued that the totality of NSI’s conduct implied the existence of such
a license. In analyzing whether such an implied license had been created, the
court concluded that an implied license is created when three conditions are
met, including “(1) a person (licensee) requests the creation of a work, (2)
the creator (licensor) makes that particular work and delivers it to the licensee
who requested it, and (3) the licensor intended that the licensee copy and distribute
the work.”
The third element of this test was not met in this case, said the court,
because NSI did not intend that its copyrighted drawings be used on the project
for which they were created independent of NSI’s continued involvement. Nothing
about NSI’s representations or conduct suggested that it intended either the
original developer or Morningside to use its plans without NSI’s future involvement
or express consent. In fact, NSI specifically advised Strutt to the contrary.
The court made particular note of the fact that NSI submitted an AIA agreement
to Strutt that stated NSI’s intention that its drawings not be further used
without its express consent. For these reasons, the court held that NSI did
not grant a implied license to the defendants to use its drawings.
Risk Management Lessons
Several lessons are learned from this case. It demonstrates the importance
of using agreement forms, such as those of the Design-Build Institute of America
(DBIA) or the American Institute of Architects (AIA), that preserve the copyright
interest of the architect. It demonstrates the importance of getting things
in writing but shows that even when written agreements are not signed, the actions
of the parties in performing in a manner consistent with the terms and conditions
of the unsigned contract may be evidence of the contractual intent of the parties.
Another issue is the importance of 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. Finally, it is somewhat surprising that the architect here apparently
did not obtain any written assurances from Strutt before it assisted Strutt
in finding another developer to buy the project, and that it likewise did not
obtain any written assurances of the new developer, Morningside, before introducing
it to the project.
Opinions expressed in Expert Commentary articles are those of the author and are
not necessarily held by the author’s employer or IRMI. This article does not purport
to provide legal, accounting, or other professional advice or opinion. If such advice
is needed, consult with your attorney, accountant, or other qualified adviser.