Copyright Infringement of Design Documents

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.