United States Court of Appeals Reverses Lower Court’s Dismissal of Copyright Infringement Action on Grounds of Timeliness. Parker Scheer Senior Associate, Garrett J. Lee Successfully Argues Appeal.

Boston, MA - June 20, 2008

BOSTON. By written decision dated June 20th 2008, The United States Court of Appeals for the First Circuit reversed the earlier decision of a United States District Court Judge, which dismissed an architectural firm’s claims for copyright infringement on the basis of timeliness. Garrett J. Lee, a Senior Associate with Parker Scheer LLP’s Boston office, representing the architectural firm, successfully argued the appeal before the three judge panel in Boston. The panel included former United States Supreme Court Justice Sandra Day O’Connor.

The case involved a dispute over the ownership of architectural plans. In 1998, the plaintiff, a Boston architectural firm, prepared plans for a new veterinary hospital to be constructed in central Massachusetts. After the plaintiff created plans for the project, the plaintiff and the hospital had a falling out. In the summer of 1999, the parties terminated their relationship. During this period, the plaintiff warned the hospital in writing that it was prohibited from using the plaintiff’s drawings to complete the project. An American Institute of Architects (“AIA”) Agreement executed by the parties provided that the plaintiff would be “deemed the author” of all plans and drawings for the project and would “retain all common law, statutory, and other reserved rights [therein], including the copyright.” When the plaintiff requested the return of the drawings, a representative of the hospital responded in writing that the hospital found the plans to be “useless” and had “discarded them”. The letter also indicated that the hospital intended to hire a “new architect” to complete the project at a cost in the “tens of thousands of dollars.”

In September of 1999, the parties entered into a written Termination Agreement, which specifically provided that the hospital was prohibited from using any drawings created by the plaintiff to complete the project. The agreement further stipulated that the provision in AIA Agreement governing the ownership of the plans would remain in full force effect. The hospital subsequently retained another architectural firm to complete the project. The local municipality issued a building permit for the project in October of 1999 and construction proceeded. The new building opened to the public in June of 2000.

In November of 2004, the plaintiff discovered a floor plan of the completed hospital facility in a national and international veterinary medicine trade publication. The article noted that the facility had received a design merit award, and credited the hospital’s second architect with the design. On July 26, 2005, the plaintiff filed a copyright infringement suit against the hospital and several other defendants in the U.S. District Court for the District of Massachusetts.

In response to the suit, the defendants filed motions to dismiss the copyright infringement claim on statute of limitations grounds. Applying the discovery rule applicable to copyright infringement cases, the defendants argued that a reasonably diligent person in the plaintiff’s position would have been on inquiry notice of the infringement no later than June of 2000 when the new facility opened its doors to the public. The District Court agreed, dismissing the plaintiff’s copyright infringement claims on timeliness grounds. The District Court concluded that the evidence was “overwhelming” in the Complaint that “any reasonably diligent person” in the plaintiff’s position would have been on inquiry notice of the alleged infringement no later than the day when the building opened its doors.

The District Court found that there was sufficient evidence to conclude that the plaintiff knew or reasonably should have known that the Hospital intended to complete the project. In support of this finding, the Court pointed out that the plans were on file with local authorities and had become public record as of the fall of 1999 when a building permit had been issued by the local municipality; the project was constructed using the same facade and in the same location as the plaintiff’ plans, and that after the new facility opened, it was available for viewing. The District Court found that since the plaintiff did not file his Complaint until 2005, the claim was time-barred by the applicable three (3) year statute of limitations. Thereafter, Parker Scheer appealed the District Court’s decision on behalf of the architects to the United States Court of Appeals for the First Circuit.

On appeal, the First Circuit concluded that the District Court “incorrectly charged the plaintiff with inquiry notice of the alleged infringement.” The First Circuit essentially found that there was no event or series of events which would have triggered any reasonable person to investigate whether or not the defendants were committing copyright infringement. The First Circuit was unpersuaded by the argument presented by the defendants that the availability of the plan and the opening of the hospital facility in June of 2000 combined to put the plaintiff on inquiry notice of the infringement. The First Circuit stated:

The district court's conclusion is plausible, but it is not compelled. A searching examination of the complaint and the documents annexed thereto reveals no facts, prior to [the plaintiff’s] chance encounter with a trade publication in 2004, sufficient to mandate a conclusion that a reasonable person would have suspected that the copyrighted material had been used in an unauthorized manner. In the absence of some triggering event — some sign of storm clouds gathering on the horizon —[the plaintiff] cannot be charged as a matter of law with inquiry notice.

he First Circuit also found that there was no independent duty on the part of an architect to scour the local planning board records or visit the project site to determine whether or not its intellectual property is being infringed upon. The First Circuit stated:

This brings us to the defendants' notion that two related facts — the availability of the as-built plans and the opening of the hospital on or about June 9, 2000 — somehow combined to put the plaintiff on inquiry notice. This notion is unfounded. There is nothing in the record that suggests that the plaintiff either reviewed the filed plans or toured the facility at any time before 2004. Nor is there any evidence of a triggering event that might have prompted a reasonable architect to do so. Architects have no general, free-standing duty to comb through public records or to visit project sites in order to police their copyrights.

The First Circuit’s decision provides some clarity to the often misunderstood discovery rule in copyright infringement cases. The First Circuit basically stated that in order to put the copyright holder on “inquiry notice” of the alleged infringement, there must be some “triggering event” or “series of events” brought to the attention of the aggrieved party. As the Court eloquently stated “[t]he familiar aphorism teaches that where there is smoke there is fire; but smoke, or something tantamount to it, is necessary to put a person on inquiry notice that a fire has started.”
The full text of the First Circuit Court of Appeals’ written decision is available at the United States Court of Appeals Website.

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