Opinion
Civil No. 03-6102-TC.
September 14, 2004
ORDER
This is an action for copyright infringement. Presently before the court is defendant Shepherd's motion (#25) for summary judgment.
STANDARDS
Summary judgment is appropriate where "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The initial burden is on the moving party to point out the absence of any genuine issue of material fact. Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Rule 56(c) mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is "entitled to a judgment as a matter of law" because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof. Id. at 32. There is also no genuine issue of fact if, on the record taken as a whole, a rational trier of fact could not find in favor of the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355 (1986);Taylor v. List, 880 F.2d 1040 (9th Cir. 1989).
On a motion for summary judgment, all reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir. 1976). The inferences drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Valadingham v. Bojorquez, 866 F.2d 1135, 1137 (9th Cir. 1989). Where different ultimate inferences may be drawn, summary judgment is inappropriate. Sankovich v. Insurance Co. of North America, 638 F.2d 136, 140 (9th Cir. 1981).
FACTUAL BACKGROUND
Plaintiff Lindal Cedar Homes owns copyrights on home designs. It sells home packages, a combination of the home design and the building materials, through a network of independent dealers. Umpqua Cedar Homes is an independent dealer for Lindal Cedar Homes.
Umpqua's claim in this action has been dismissed.
Defendant Jon Shepherd, dba Shepherd Construction, designs and builds homes and competes with Umpqua for customers.
Ireland was a prospective customer of Umpqua and had obtained a copy of Lindal's plan book of home designs, Originals, from Umpqua. Ireland gave Shepherd a copy of a page from Originals. Shepherd denies that Ireland showed him a copy of Originals. P. 22 of Shepherd Deposition attached to Batson Affidavit (#26).
Shepherd prepared construction plans and built a custom home for Ireland. Plaintiff Lindal alleges that the home is substantially similar to a Lindal design and infringes upon a design copyright owned by Lindal. Neither Ireland nor Shepherd purchased a Lindal home package from Umpqua.
DISCUSSION
As discussed below, defendant Shepherd has filed several motions for summary judgment. Many of the motions overlap.1. The 1/8" Drawings
This action is based on the alleged infringement of the Parkside architectural design. Such is shown in multiple places, including abbreviated drawings in Originals and in 1/8" inch drawings.
These are the same drawings defendant refers to as 1/4" drawings.
Defendant Shepherd has moved for partial summary judgment on the part of the copyright action based on the 1/8" drawings by asserting that Shepherd never saw the 1/8" drawings. However, there are factual issues on this matter and even if there were not manifest factual disputes present, it would be better to proceed to trial on the claim because in the circumstances of this case a fuller record will afford a more substantial basis for decision. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
2. Architectural Works Copyright Protection Act (AWCPA)
Shepherd's second motion for summary judgment is that plaintiff has no copyright claim under the AWCPA adopted in 1990. Plaintiff concedes that since the Parkside was designed and substantially constructed before December, 1990, pre-AWCPA caselaw applies to this case. However, "nothing in . . . the AWCPA . . . affects protection for `architectural plans, drawings and models as pictorial, graphic, or sculptural works." 1 Nimmer on Copyright § 2.08 [D][2][a], n. 163.4.
Summary Judgment is appropriate to the extent any claim is made under the AWCPA.
3. Motions Regarding Standard Features, Mere Ideas and Implied Licenses
A. Motion Regarding Standard Features
Defendant Shepherd argues that the Parkside design is not entitled to copyright protection as it is merely a compilation of standard features in the public domain. Such motion fails.
Defendant focuses on the separate unprotectable elements of the Parkside design, e.g., the fact that the home has bedrooms and other standard features, and leaps to the conclusion that the design is not protected. However, the originality of the design is in the selection of its elements and in the coordination and arrangement of those elements into a design. Although the underlying unoriginal component parts of a creation are not subject to protection, a creator's selection and arrangement of these parts, where independently made, is original and therefore copyrightable. M. Kramer Mfg. Co., Inc. v. Andrews, 783 F.2d 421, 438 (4th Cir. 1986); Apple Computer Inc. v. Microsoft Corp., 35 F.3d 1435, 1446 (9th Cir. 1994).
Though modern mass produced homes are comprised of standard features, the way these features are arranged and proportioned is what distinguishes one house from another. It is common for mass produced floor plans to be protected. See, e.g., Robert R. Jones Assoc., Inc. v. Nino Homes, 686 F. Supp. 160 (E.D. Mich. 1987), modified on other grounds, 858 F.2d 274 (8th Cir. 1988) (infringement of house floor plans); The Value Group, Inc. v. Mendham Lake Estates, L.P., 800 F. Supp. 1228, 1232 (D.N.J. 1992) (floor plans and general external appearance of house may be infringed). The layout and sizing of home features is enough to gain copyright protection. Eales v. Environmental Lifestyles, Inc., 958 F.2d 876, 880 (9th Cir. 1992), abrogated on other grounds, Hunt v. Pasternack, 192 F.3d 877 (9th Cir. 1999). In so holding, the Eales Court noted the difference between ideas and the expression of ideas, which, as noted throughout this opinion, is applicable to the present action. The Court stated:
Defendants next argue that Eales' plans do not qualify for copyright protection because they are an unprotectible idea. This argument is also meritless. While the copyright statutes do not allow an author to obtain a monopoly on an idea itself, an expression of an idea can be protected. Eales' plans laid out the location and sizes of numerous features of model home #3, and thus her ideas were "fixed" in tangible form. That is all the copyright code requires.Eales, 958 at 880.
Defendant's citation to Apple Computer, Inc. v. Microsoft, 35 F.3d 1435 (9th Cir. 1994) does not change the outcome of the present action. Such case did not address copyright protection for home plans. It addressed computer software and its outcome was fundamentally affected by the existence of extensive licenses. The case was careful to recognize the protectability of the expression of ideas and was particularly concerned about distinguishing expression from ideas in the new medium of graphical interfaces. As such, defendant's reliance on this case does not change the outcome here. Also see p.p. 10-11 of Plaintiff's Surreply (#54).
Also see Modtech Inc. v. Designed Facilities Construction Inc., 48 U.S.P.Q. 2nd 1209, 1212 (D. Cal. 1998) (discussingApple in the context of architectural plans).
The mere existence of the master bedroom and other common features in the Parkside design do not make such design unprotectable. The original and creative expression of the idea of the location and size of the master bedroom and other features in a plan make the Parkside design protectable.
Plaintiff's citation to Lamps Plus v. Seattle Lighting Fixture Co., 345 F.3d 1140 (9th Cir. 2003) does not change the outcome of the present action for the reasons stated above and those stated at p.p. 9-10 of Plaintiff's Surreply (#54).
B. Motion Regarding Unprotected Ideas
Defendant argues that ideas in the coffee table book Originals are not protected by copyright law and since plaintiff asserts, in part, that the alleged copying of the Parkside design arose from a page in Originals, plaintiff has no copyright claim. Defendant also argues that it should not be liable as plaintiff benefitted and profited from the sale of Originals, called it an idea book, and invited the public to be inspired by the ideas in it.
Defendant is correct that ideas cannot be copyrighted. However, as discussed in more detail in the previous section, the expression of ideas is applicable in this action and that is copyrightable.
Moreover, as to all of defendant's arguments, when a defendant uses a plaintiff's abbreviated drawings from promotional literature to prepare derivative works, i.e., more detailed plans, and to construct a home from those plans, it can constitute infringement. See Eales, 958 F.2d at 880; Nino Homes, 858 F.2d 274 (6th Cir. 1988); Imperial Homes Corp. v. Lamont, 458 F.2d 895 (5th Cir. 1972) ("No one can defend the appropriation of portions of an original copyrighted work by arguing that the author published such extracts to promote the value and desirability of his copyrighted product and that only these extracts have been pirated"); Herman Frankel Organization v. Tegman, 367 F. Supp. 1051 (E.D. Mich. 1973).
Although defendant attempts to refute this by relying onScholz Homes v. Maddox, 379 F.2d 84 (6th Cir. 1967), Baker v. Selden, 101 U.S. 99 (1879) and Demetriades v. Kaufman, 680 F. Supp. 658 (S.D.N.Y. 1988), plaintiff correctly notes that the holdings of such cases are not applicable to the circumstances of this case. See p.p. 3-6 of Plaintiff's Surreply (#54).
Defendant relies heavily on American Iinstitute of Architects v. Fenichel, 41 F.Supp. 146 (1941) [AIA] for its arguments. As discussed below, such reliance fails.
Defendant's arguments regarding the Originals book andAIA were made in several places throughout defendant's motions for summary judgment, e.g., such arguments were made in defendant's motion based on fair use. The analysis of such arguments here applies to wherever defendant has made the arguments in his briefs and the arguments do not change the outcome of defendant's other motions for summary judgment.
The plaintiff in AIA had compiled a booklet of forms of agreements or contracts setting forth the understanding and obligations of the owner, contractor, subcontractor and architect in prospective operations. Defendant made and used six copies of one form. The form booklet expressly stated that the forms were intended for use in actual practice" and that "they may be drawn upon by architects in improving their own forms." Id. at 147. The court found this to be an invitation to use the forms in just the way defendant did and held that the defendant's use was not the kind of use forbidden by the statute. In conclusory terms, the court found plaintiff implied the right to private use, invited use and thought that the entire situation came under the heading of fair use. Id. at 147-148.
It should also be noted that the case is from another District Court, is over 50 years old, consists of two paragraphs of analysis and beyond all that is somewhat confusing.
Unlike the defendant in AIA, defendant Shepherd did not rely on an invitation from Originals to allegedly copy the Parkside design. Unlike the plaintiff in AIA, defendant Shepherd never saw the publication from which he allegedly copied, except for a copy of p. 190 taken from the Originals book, and Shepherd points to no language on p. 190 that invited his alleged copying. Moreover, even if Shepherd had seen Originals or its advertising inviting the public to be inspired by the ideas in Originals, the book and advertising did not contain an invitation to use the expression of ideas by copying plans. In addition, defendant states that Originals was advertised as the "perfect gift for anyone who dreams of building a home of theirown design." P. 2 of Reply (#48) (emphasis added).
C. Motion Regarding Implied License
Defendant's argument that there was an implied license for use fails for all the reasons stated above. Moreover, Originals allegedly invited people to be inspired by the ideas in it. The book of forms in AIA did not state its purpose was to inspire with ideas, it stated it was "intended for use in actual practice". See also Effects Assocs. Inc., v. Cohen, 908 F.2d 555, 558-559 (9th Cir. 1990); Smithkline Beecham Consumer Healthcare v. Watson Paharmacueticals, 211 F.3d 21, 25 (2d Cir. 2000).
4. Motion Asserting Fair Use
Defendant Shepherd also argues that he is not liable by asserting the doctrine of fair use. The fair use of a copyrighted work is not an infringement of a copyright. 17 U.S.C. § 107.
Fair use is an affirmative defense. Defendant bears the burden of proof with respect to all issues in dispute concerning whether a particular use of a copyrighted work is a "fair use." See American Geophysical Union v. Texaco Inc., 60 F.3d 913, 918 (2d Cir. 1994). Fair use determinations call for case by case analysis and involve mixed questions of law and fact. Because the fair use question is so highly dependent on the particular facts of each case, courts have usually found it appropriate to allow the matter to go to trial, although the matter can be determined at the summary judgment stage when no material issues of fact remain to be tried. Sandoval v. New Line Cinema Corp., 973 F.Supp. 409 (S.D.N.Y. 1997). Defendant Shepherd has not demonstrated that he is entitled to summary judgment on this matter.
"The four factors identified by Congress as especially relevant in determining whether the use was fair are: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect on the potential market for or value of the copyrighted work. Harper Row Publishers, Inc. v. Nation Enterprises, Inc., 471 U.S. 539, 561 (1985). Purpose of the Use
Defendant cites to Campbell v. Acuft-Rose Music, Inc., 510 U.S. 569 (1994), but such case does not change the outcome of the above. Among other reasons, Campbell discusses fair use in the context of the parody of another's work, and that context is not present in this case.
From the record currently before the court, it appears that this factor favors plaintiff and does not support the fair use defense. Defendant's alleged use was not for something like educational purposes, but was to directly compete with Lindal in the commercial market. Defendant Shepherd stood to profit from the exploitation of the copyrighted material without paying the customary price. See Harper, 471 U.S. at 562.
Nature of Copyrighted Work
From the record currently before the court, it appears that this factor does not weigh heavily in the analysis one way or another. At issue is an architectural plan, and copyright law ultimately allows for protection of architectural plans. The courts in many fair use cases have noted that the unpublished nature of a copyrighted work works against a finding of fair, but that concept does not have much persuasive effect one way or another in the present case.
Amount and Substantiality of Portion Used
From the record currently before the court, it appears that the amount and substantiality of the portion used in relation to the copyrighted work as a whole favors plaintiff and does not support the fair use defense.
Defendant focuses on the entirety of the Originals book, but plaintiff Lindal alleges infringement upon the copyright in the Parkside design. It appears from the current record that Shepherd's construction plans for the Ireland home potentially involve much of the Parkside design.
Effect on the Market
This factor is arguably the most important of the four enumerated factors of the fair use analysis. See Harper, 471 U.S. at 566 (this factor is "undoubtedly the single most important element of fair use"); accord 4 NIMMER ON COPYRIGHT § 13.05 [a][4], 13-186 to 187 ("this [factor] emerges as the most important, and indeed, central fair use factor"); but see American Geophysical Union, 37 F.3d at 889 (noting that the Supreme Court's discussion of the fourth factor in its more recent decision Campbell, supra, omits that this factor is the most important element).
This factor requires courts to consider not only the extent of market harm caused by the specific use in question, but the effect that would occur if that type of use became widespread.See Harper, 471 U.S. at 568
From the record currently before the court, it appears that this factor favors plaintiff and does not support the fair use defense.
The effect of the Shepherd's design on the market was negative. Shepherd directly competed with plaintiff Lindal to supply the design and materials for the Ireland home. He could favorably compete with Lindal because he allegedly appropriated the protected design without paying for it. Shepherd was more competitive than Lindal because Shepherd acquired part of what he offered Ireland without paying for it. If that type of use became widespread, the effect could be devastating for plaintiff Lindal.
5. Motion Regarding Measure of Damages
Defendant Shepherd also moves for summary judgment on the measure of actual damages if the copyright case is not dismissed.
Plaintiff is not seeking statutory damages or attorney fees.
17 U.S.C. § 504 imposes two categories of compensatory damages: the copyright owner's actual damages and any additional profits of the infringer, the latter limited in some circumstances. These two categories have different justifications and are based on different financial data. The award of the copyright owner's actual damages looks at the facts from the point of view of the copyright owner; it undertakes to compensate the owner for any harm he suffered by reason of the infringer's illegal act. The award of the infringer's profits examines the facts only from the infringer's point of view. If the infringer has earned a profit, this award makes him disgorge the profit to insure he not benefit from his wrongdoing. Davis v. The Gap, Inc., 246 F. 3d 152, 159 (9th Cir. 2001).
Defendant Shepherd has moved for summary judgment with regard to the measure of damages for actual damages. Defendant states that he has not moved for summary judgment with respect to infringer's profits.
Defendant argues that the measure of actual damages should be the design fees involved. However, Lindal notes that it is not an architect. Lindal sells home packages, a combination of the home design and the building materials. Lindal only sells packaged homes; it does not sell designs alone and had Ireland and Shepherd wished to obtain a Parkside design, they would have had to purchase a Parkside home package. Plaintiff notes that the measure of actual damages for the infringement of protected architectural drawings owned by a builder and infringed by a competing builder is the lost profit suffered by the plaintiff. While acknowledging that it is not a builder, Lindal reiterates that it sells home packages and home packages only and persuasively argues that lost profit can be the measure of damages applicable to Lindal in the circumstances of this action. See p.p. 23-30 of Plaintiff's Oppostion (#45).
Defendant makes an alternative argument that, if profits are involved, the measure of the profits should be net profits and not incremental profits. Net profits consist of the profit on the would-be sale of the Parkside home package in this case with a deduction for all expenses including a full allocation of overhead expenses. Incremental profits consist of the same except the deduction for expenses would only include those expenses directly linked to the sale, e.g., the cost of materials. A full allocation of fixed overhead items, e.g., insurance expense, would not be made and deducted from profits, resulting in higher damages to plaintiff.
Net profits are the proper measure of Lindal's actual damages in the circumstances of this case. Looking from the point of view of the copyright owner, plaintiff's ability to sell home packages arises from the existence of their entity. Such entity exists due to the payment of overhead expense. Had plaintiff sold the package to Ireland and Shepherd, it appears from the existing record that plaintiff would have made a full allocation of all overhead costs to such sale. Moreover, in addition to pursuing these actual damages, plaintiff will have, if appropriate, the opportunity to pursue infringer's profits.
As stated previously, defendant states that he has not moved for summary judgment with respect to infringer's profits. Such is important to note here as the Ninth Circuit stated that the two categories of the copyright owner's actual damages and the infringer's profits have different justifications, are based on different financial data and are viewed from different vantage points. Davis, 246 F.3d at 159.
Whether plaintiff is entitled to any damages and the actual amount of any such damages will be determined at trial.
All other arguments made by defendant throughout his motions have been considered and rejected.
CONCLUSION
Defendant Shepherd's motion (#25) for summary judgment should be allowed in part and denied in part as set forth above.