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November 6, 2008 How much of your design do you really own?By JOAQUIN HERNANDEZ
Schwabe, Williamson & Wyatt
The exclamation “You’re fired!” — made famous by Donald Trump — may have serious consequences. This is especially true when it’s uttered by a developer to an architect or even if an architect walks away from a developer. The reason is design ownership. Suppose a building owner fires an architect. There are serious questions about who owns the design created by the architect. Can that owner still use the drawings or even utilize the architect’s building design? In addition, what happens when a third party having no affiliation to the project team seeks to halt a project by claiming copyright infringement of its design or drawings? These are challenging questions when money and creative rights are on the line. As use of building modeling continues to grow and as digital designs are becoming more sophisticated and easier to distribute on the Web or via e-mail, players in the construction industry must give more attention to design ownership than ever before. In fact, architectural and construction trade industry groups have made design ownership and use a core focus when developing their latest forms. The American Institute of Architects and the Associated General Contractors updated their respective standardized agreements in 2007 and 2008 for owners and architects that address how information is shared among the project team. These agreements also address design ownership. Both the AIA and AGC suggest that the project team establish procedures for sharing drawings and plans as a way of controlling how designs and plans are accessed. The latest form from the AGC provides a checklist for establishing a protocol for sharing digital information among project participants. For example, the AGC’s version offers a more comprehensive checklist with regard to sharing building information modeling data. In contracts, the AIA’s version offers more generalized terms for creating procedures. While these forms may not address every issue concerning design ownership and use, they definitely provide a starting point for consideration.
The Trump case A recent case out of Florida involving Trump’s multi-million-dollar luxury condominium, Trump International Sonesta Resort, has brought to light just one of the series of issues that owners and architects often fail to give much attention when contracting for design services: Who owns the drawings, plans and building design? The Trump case involved an architect who sought to prevent an owner from infringing on a copyright for a building design. In 1996, a freelance architect developed a design for a high-rise building containing unique features. Hoping to market the design, he mailed the design, unsolicited, to several developers in Florida. In 2003, he saw a newspaper advertisement for the Trump buildings featuring a photograph of the project’s model. Believing that the design resembled his own, he sued the developers, general contractor and the project architect for copyright infringement. He asked the court to stop the project until the copyright issue was resolved. The court eventually found that there was no infringement because there were no essential unique features making the design protectable under the copyright law. The case highlights a real risk that few project team members ever consider. Copyright laws generally protect two types of works created by design professionals: the physical project drawings, plans, models and other works related to architecture; and the actual idea or appearance of the building expressed in those drawings. The first protected works are known as “graphic, pictorial or sculptural works” while the second are “architectural works.” Most everyone in the construction industry understands that the physical paper or digital file depicting the drawings and plans for a building may be protected by a copyright, but less are aware that the way a building looks like may also be a protected by a copyright.
Are you covered? Owners and architects often fail to adequately negotiate important aspects of their agreements compared to agreements between an owner and a contractor. Instead, they rely on forms without critically evaluating the provisions. The AIA and AGC standardized form agreements address design copyright issues, but each approaches the issues in very different ways. In fact, both could be seen as failing to completely address certain copyright claims and issues. For instance, the hold-harmless provisions addressing infringement may not fully cover important risks to every project participant. Under the AIA form, the architect grants the owner a nonexclusive license to use and make copies of the drawings and other documents depicting the design unless the contract is terminated for cause. Under such termination, the license is revoked. By comparison, the 1997 version of the AIA agreement does not require termination “for cause” before revoking the license. Under the AGC’s version of the owner/architect agreement, the owner maintains a property right to the documents (but not the copyright) for its use to complete the project so long as the owner has paid the architect all amounts due for its services at the time of termination. Interestingly, both versions are vague about addressing obligations in the event a third party attempts to halt a project like what occurred in the Trump case.
Design professionals and owners should make sure they understand and address the following copyright issues in their agreements: • Copyright ownership and use of the drawings and building design in the event the parties terminate their relationship before project completion. Will the owner need to start over? Can the substitute architect rely on them and use the design and drawings? • Copyright ownership and use of the drawings at the completion of the project. Can the owner use them on other projects? • Warranties and representations assuring copyright ownership. Does that drawing or design really belong to the architect? Does the architect have permission to use the drawings and design? Has the architect secured similar representations from its consultants? • Hold harmless provisions for the other party’s infringement of a copyright belonging to other architects or consultants. What happens when that freelance architect sues you for infringement like in Trump’s case? Who is going to pay for defending that lawsuit?
If a contract cannot answer these and other similar questions, or if it fails to address an owner’s or architect’s intentions, then it’s time to reassess your risk management and administration practices. Otherwise, you may run the risk of explaining your failure in your boardroom and hearing Trump’s famous phrase: “You’re fired!”
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