Copyright Issues for the Unsuspecting Real Estate Developer

Real estate lawyers take head. Waiting in the tall grass of your client’s real estate development project can be a thorny copyright issue that could cost your client all the profits they made on the project, and likely buy you a gross negligence lawsuit.

In the course of developing a real estate project, whether it is a residential community or a commercial project, a central component of the project is the architectural plan. Unless the developer (and the developer’s attorney) are aware of how copyright law affects what the developer can (and more importantly, cannot) do with the plan, the developer may find yourself on the receiving end of a copyright infringement lawsuit. Because? Because an architectural plan, like other architectural works, is protected by copyright laws, and copyright laws govern who owns the plans and what can and cannot be done with the plan.

Scope of Protection Granted Architectural Works

In 1990, Congress enacted the Architectural Copyright Protection Act (the “Act”). The Act increased the scope of protection to which works of architecture are entitled under United States copyright law. The Act was passed in an effort to make United States copyright laws more compatible with the Berne Convention for the Protection of Literary and Artistic Works.

According to a report prepared by the then Copyright Registry, copyright laws prior to the Act provided adequate protection for architectural blueprints, plans, drawings, and models. However, the adequacy of protection under the Berne Convention standards for the built design of architectural structures was in question. Although the Act, when in bill form, was intended to address this perceived gap, legislative history gives us some insight into the intended scope of protection afforded to works of architecture, including blueprints and blueprints.

The Act amended the definition section of the Copyright Act (17 USC 101) by adding the following definition of “architectural works”:

An “architectural work” is the design of a building embodied in any tangible means of expression, including a building, architectural plans, or drawings. The work includes the general form, as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features.

The House Report on the Copyright Amendments Act of 1990 (which includes the Act) (the “Report”) provides a section-by-section analysis and discussion of the Act. In discussing the definition of works of architecture, the Report identifies the elements of a protected architectural work. The Report states that “protection does not extend to individual standard features such as windows, doors, and other common stable building components.” However, the Report makes it clear that the provision is not intended to “exclude from copyright protection any individual feature that reflects the creativity of the architect.”

Commenting on the meaning of “arrangement and composition of spaces and elements in design”, the Report noted that this phrase recognizes that creativity in architecture frequently takes the form of selecting, coordinating or arranging unprotected elements in an original whole. and protectable, and that an architect can incorporate new and protectable elements into otherwise unprotectable standard features and create a unique and protectable whole.

The Report establishes a two-step analysis to determine the scope of protection of an architectural work.

First, an architectural work must be examined to determine if there are any original design elements, including the general form and interior architecture. If such design elements are present, a second step is reached to examine whether the design elements are functionally necessary. If the design elements are not functionally required, the work is protectable without regard to physical or conceptual separability.

Protection would be denied for functionally determined items, but would be available for non-functional items. The Report states that courts should be free to decide the level and scope of protection, and evidence that there is more than one method to obtain a given functional result may be considered when assessing the scope of protection. The Report indicates that the Law incorporates the general norms of originality applicable to all other materials subject to copyright, and the determination of the infringement will be carried out in accordance with the same norms applicable to all other forms of protected material.

How infringement issues can arise and how to avoid them

Poor planning and a lack of understanding can land a developer in trouble regarding architectural plans. Just because a developer paid an architect to do the drawings doesn’t mean the developer can do whatever he wants with the drawings. Of course, case law has held that, in certain circumstances, the promoter may have an implied license to perform the acts that are the subject of the infringement claim. However, defending an infringement claim can be quite expensive. Preventing the situation from arising will be much easier on the pocket.

Any time your client is working with an architect, make sure there is a letter of engagement and that it is clear exactly what can and cannot be done with plans or other drawings created by the architect. Also, make sure the commitment letter is very clear about who exactly owns the plans. I have seen letters of commitment from architects stating that the architect is the copyright owner of the plan and that any developer contribution to the plan is a work done for commission and on behalf of the architect. As long as the developer understands the implications of these provisions, major problems can be avoided. On behalf of the developers, I would prefer that my client own the rights to his contributions. I can imagine the horror a developer would experience to find out that the architect they worked with on developing a completely unique floor plan is now selling the plans to every other major builder in the area.

Developers can face copyright infringement issues if they change architects mid-project and continue to use drawings created by the first architect. To preserve the right to do this, the developer must ensure that this right is specifically reserved in the commitment letter. Generally, the most reasonable architects will grant the developer this right in exchange for being compensated for any claims related to the work done by the new architect.

Some letters of commitment I’ve seen from architects allow a developer to freely reuse a plan or other drawing without paying a reuse fee, as long as it’s used for the same development. If a developer wishes to reuse a drawing for multiple developments, they should mention this as soon as possible and make sure it is included in the engagement letter.

The real estate developer and their attorney should seriously consider how to incorporate copyright law requirements into business best practices. While handshake deals are still common in the real estate and construction industries, they just aren’t going to slow down when it comes to copyright laws.