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July 15, 2008

Construction Contracts Should Address Copyright Ownership

July 15, 2008


You’re fired!

This exclamation, made famous by Donald Trump, may have serious ramifications when it’s uttered by an owner to an architect. A recent case out of Florida involving a Trump twin high-rise luxury condominium in Sunny Isles Beach known as the Trump International Sonesta Resort brought to light issues that owners and architects alike fail to negotiate or give little attention to when engaging architectural services.

The importance of this question isn’t realized until an owner fires its architect (or vice versa) or an architect, for whatever reason, refuses to fulfill its obligations through completion of a project. Owners argue they own the drawings and designs simply because they pay an architect firm to produce them. Architects, on the other hand, argue they own them because such work contains their creative and artistic work product. If the issue isn’t addressed in the architect/owner agreement, there’s a chance an architect can bring a project to a halt by prohibiting an owner from using the drawings or building design.

Copyright law governs

Copyright laws dictate who owns the copyright in the architectural plans and the copyright to a building design. It’s important to note that the copyright laws make two distinctions pertaining to architectural plans. The first distinction is that architectural plans, three dimensional models, drawings, and other works "related to" architecture are protected as "pictorial, graphic, or sculptural works" under the copyright laws. This means the physical paper or electronic files themselves are protected under the copyright. What about the actual idea expressed in those plans—the building itself? This is where the second distinction comes in. Since 1990, building designs are protected under the copyright laws. This is different to say that the plans are protected. An architect’s remedies against someone infringing their copyright depend on whether the architect registered his or her copyright claim and the manner in which he or she registered the claim.

The Trump case highlighted one manner in which an architect would seek to prevent an owner from infringing his or her copyright. In 1996 a freelance architect developed a design for a high rise building containing unique design features. The freelancer registered the design with the U.S. Copyright Office. Hoping to market the design, he mailed the design to several developers in Florida. In 2003, he saw a newspaper advertisement for the Trump buildings featuring a photograph of the model buildings. Believing that the design resembled his own, the freelance architect sued the developers and the project architect for copyright infringement. The court focused on whether a reasonable jury could find the competing designs substantially similar. The court noted that Congress was aware that "creativity in architecture frequently takes the form of a selection, coordination, or arrangement of unprotectible (sic) elements into an original, protectible (sic) whole." With this in mind, the court examined 10 alleged unique feature of the freelancer’s design and compared them to the Trump condos. The court concluded that the freelancer’s design and the Trump condo buildings have a number of features in common, those elements are similar only at the broadest level of generality. At the level of protected expression, the differences between the designs are so significant that no reasonable jury could find the works substantially similar. You be the judge:

Oravec v. Sunny Isle Luxory Ventures, LLC, et al., No. 06-14495 (11th Cir., May 14, 2008)
How contract documents address drawing/design ownership

Copyright laws obviously permit an author to transfer ownership of the copyright so long as such transfer is in writing. As stated earlier, owners and architects usually do not pay attention to clauses dealing with document and design ownership, and instead they rely on standardized forms containing these clauses. The standardized forms established by the American Institute of Architects (AIA) and the Associated General Contractors of America’s (AGC) ConsensusDOCS™ provide clauses with such transfers or use, but each imposing very different obligations.

Under the AIA’s 2007 version of the agreement, the architect grants the owner a nonexclusive license to use and make copies of the drawings and other documents depicting the design for the sole purpose of the constructison project. An owner’s failure to pay the architect or the architect’s right to terminate the agreement "for cause" revokes the license. Beware. The 1997 version of the same agreement does not require termination "for cause."

Under the AGC’s version, there is no express verbiage granting a license. But this is likely implied since an architect will not object to the use of the drawings and specifications during the course of the project. If the agreement is terminated and the owner has paid amounts due to the architect, the owner maintains property rights to the documents (but not the copyright) so the owner can create new drawings with the help of a new architect based on the previous drawing. Care should be taken when drafting and relying on such a clause because a copyright holder can prevent the creation of what is known as "derivative works" based on copyrighted documents.

To throw another layer of issues, what happens if the architect violates a copyright belonging to a contributing design professional like a structural engineer? First of all, there’s a possibility that the product of multiple design professionals compiled into one final set of drawing may be considered a "joint work" under the copyright laws where each design professional owns a percentage of the copyright—similar to the concept of tenants-in-common in the real estate industry. If not a joint work and the architect infringes another design professional’s copyright, an owner or contractor may arguably be liable for contributory infringement. The owner will want verbiage in the owner/architect agreement indemnifying the owner for the architect’s copyright infringement. The AIA forms provide an architect indemnity for the owner’s infringement, but not the other way around. The AGC form does not contain any indemnity clauses for copyright infringement.

As more and more projects involve electronic design documents that are easily distributed among project participants through email or through a shared secured website, architects are mindful of how such information is relayed among participants. Copyright issues thus will grow in importance. Timely completion of sophisticated projects like the one involving Donald Trump’s buildings can hang in the balance if an architect seeks remedies against an owner for infringement. The uncertainty under this situation may be avoided if owners and architects simply address them properly in their engagement contracts.

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