Copyright Trolls… But For Houses

from the knock-knock dept

The copyright trolling business is getting weirder and weirder. Brad Heath directs our attention to a ruling in a bizarre case in the 7th circuit appeals court, in which we discover the existence of housing copyright trolls, who drive around looking for houses just a tad too similar to their copyright-covered designs. Really.

Let’s start with a little history, though. We discussed some of this a month ago, in our post about how copyright was getting in the way of a guy who wanted to rebuild his home that had burnt down, and the developer arguing that this was infringement (that situation was eventually settled with the developer backing down). As we noted in that story, back in 1990, Congress passed the Architectural Works Copyright Protection Act of 1990, or AWCPA. This was done to (sort of) bring the US into compliance with the (silly) Berne Convention on copyrights. While the 1976 Copyright Act had (for the first time) included protections for an architect’s plans and drawings, this was rather limited in practice. AWCPA greatly expanded this to cover (among other things) the design of buildings. Pretty much since it passed, people have questioned why this was even needed. The US had a long history of extremely creative and innovative architecture long before 1990 (indeed, long before 1976). There was no indication that there was a need for copyright protection here. But copyright protection is what we got.

A few years back, there was a nice detailed analysis of AWCPA, which noted that while many had expected cases to focus on big standout pieces of architecture, instead, many of the cases involved things like competing model home builders. And, for the most part, the courts had (thankfully!) interpreted the law pretty narrowly, noting that because much of a house is utilitarian, rather than decorative, for houses to violate AWCPA, they need to be basically identical and there needs to be some serious evidence to support copying.

Apparently, this did not deter the plaintiffs in the case we’re talking about today. Patrick Carmichael and Myles Sherman purchased a long-standing home developer, Design Basics, in 2009, with the express plans of using AWCPA to go after others with similar houses. And they did exactly that:

In 2009, Patrick Carmichael and Myles Sherman purchased Design Basics as an investment opportunity. Carmichael acknowledged in his deposition that “potential copyright infringement cases influence[d his] decision to become an owner of Design Basics.” He testified that proceeds from litigation have become a principal revenue stream for Design Basics.

A search of the Public Access to Court Electronic Records (PACER) system reveals that Design Basics has been party to over 100 federal lawsuits, the vast majority of which have been filed since the 2009 change in ownership. Nearly all involve copyright claims asserted by Design Basics.

And then we have the kicker:

Design Basics offers its employees incentives to scout out potential copyright infringement cases, paying its employees a finder’s fee in the form of a percentage of the net recovery relating to any home plans that they located.

There you have it. Copyright trolling… with houses. They would literally tell employees to drive around looking for houses they could sue over, promising a cut of any proceeds.

Indeed, the 7th Circuit seems well aware of the comparison:

Design Basics’ business model of trawling the Internet for intellectual property treasures is not unique. In recent years, opportunistic holders of copyrights, patents, and other intellectual property have developed unsavory reputations for “trolling,” bringing strategic infringement claims of dubious merit in the hope of arranging prompt settlements with defendants who would prefer to pay modest or nuisance settlements rather than be tied up in expensive litigation. Like the proverbial troll under the bridge, these firms try to extract rents from market participants who must choose between the cost of settlement and the costs and risks of litigation.

Thankfully, the judges also recognize why this is a problem. Indeed, they even cite Matthew Sag’s excellent research on copyright trolling and (later) they mention the great This American Life episode on patent trolls:

This business strategy is far removed from the goals of the Constitution’s intellectual property clause to “promote the Progress of Science and useful Arts.” U.S. Const. art. I, § 8, cl. 8. Intellectual property trolls have attracted much attention and derision in scholarly literature and the mainstream media. See, e.g., Matthew Sag, Copyright Trolling, An Empirical Study, 100 Iowa L. Rev. 1105, 1108 (2015) (“The essence of trolling is that the plaintiff is more focused on the business of litigation than on selling a product or service or licensing their IP to third parties to sell a product or a service. The paradigmatic troll plays a numbers game in which it targets hundreds or thousands of defendants, seeking quick settlements priced just low enough that it is less expensive for the defendant to pay the troll rather than defend the claim.”);

In the particular case at hand, Design Basics found houses by a competing developer, Lexington, that they argued were too similar. They presented little evidence as to why they were similar, while Lexington made it pretty clear they’d never seen the plans of the Design Basics house. Also, Design Basics waited until literally the day before the statute of limitations would hit to file suit. The lower court ruled in favor of Lexington and against Design Basics, and the appeals court rightfully upholds this ruling.

The court notes that while there are copyright cases where “substantial similarity” is enough to show infringement, the bar is higher with houses.

The market for affordable home designs is crowded because opportunities for originality are tightly constrained by functional requirements, consumer demands, and the vast body of similar designs already available. In this field, the substantial similarity requirement is particularly hard to satisfy.

And, indeed, the court also notes (quoting itself from an earlier case) that “two works may be strikingly similar—may in fact be identical—not because one is copied from the other but because both are copies of the same thing in the public domain. … A similarity may be striking without being suspicious.” Along those lines, the court references one of my favorite (but tragically rarely used) concepts: scènes à faire. That is, the idea that certain things can only be done in a few specific ways, and it’s not copying that multiple people do them the same way. This is normally applied to things like plot points in certain genres, but here, the court notes it can apply to architecture as well:

Zalewski recognized that there are scènes à faire in architecture just as in literature or music. Colonial?style homes—or, as relevant here, a wider variety of suburban homes—share many design elements and characteristics to which no individual designer can lay claim. Design Basics’ designs also share many attributes driven by “consumer expectations and standard house design generally,” and designers can “get no credit for putting a closet in every bedroom, a fireplace in the middle of an exterior wall, [or] kitchen counters against the kitchen walls.”

As the court further notes, building homes that are seen as conventional limits any copyright claim, and keeps it “thin” applying merely to the truly different and creative elements.

Design Basics’ infringement claim fails for essentially the same reason that the plaintiff’s claim failed in Zalewski. Lexington’s accused plans resemble Design Basics’ plans, but only because both sets resemble common home designs one might observe throughout the suburbs of Milwaukee, Chicago, Indianapolis, or many other communities. There are only so many ways to arrange a few bedrooms, a kitchen, some common areas, and an attached garage, so “not every nook and cranny of an architectural floor plan enjoys copyright protection.”

And further, the court notes that since Design Basics offers thousands of different home designs, ruling otherwise might effectively allow the company to troll almost every suburban home:

Design Basics advertises over 2700 home plans at We wonder whether there is any blueprint for a single?family home anywhere in the country that Design Basics could not match to one of its own designs by applying the loose standard of similarity it relies upon here. An infringement doctrine that would enable an aggressive designer to sue all of its competitors and bring those claims before a jury would turn the law of copyright on its head. Far from promoting the “Progress of Science and useful Arts,” U.S. Const. art. I, § 8, cl. 8, such a doctrine would chill the market.

The court then essentially mocks the fact that Design Basics relies on its own draftsman to make the expert case for substantial similarity, but that he fails to say much more than that:

Design Basics relied on a conclusory six?page declaration by its draftsman, Carl Cuozzo, that does not reflect any effort at side?by?side comparison of the plans. Cuozzo said only generally that the accused plans are “substantially similar to Plaintiffs’ Copyrighted Works in too many ways to have been the product of independent creation” and that it was “obvious” to him that the accused plans were copies of Design Basics’ plans.

Furthermore, the ruling notes that Cuozzo has delivered similarly weak entries (the court calls them “remarkably similar opinions”) in a whole bunch of Design Basics other cases. The defendant, Lexington, on the other hand, brought in an actual expert who gave a detailed report detailing the many differences in the designs. In response, the court points out: “Design Basics offered essentially nothing.” Ouch.

Separately, the court highlights the near total lack of evidence that Lexington even had access to Design Basic’s plans. It probably didn’t help Design Basic’s case that it made arguments as easily disputed as the following:

Patrick Carmichael’s declaration that Design Basics “regularly and systematically” mailed publications to members of the Brown County Homebuilders Association in Wisconsin. Lexington was a member of that association from 2004 until around 2012 or 2013. But Design Basics’ own records show that it last shipped an order to the association in 1994— a decade before Lexington joined the association and years before three of Design Basics’ plans at issue were even created. The association’s executive officer swore in an affidavit that (1) the association does not disseminate plans or plan books to its members; and (2) if the association had received any plan materials from Design Basics, it would have discarded those materials at the time of receipt.

And thus, Design Basic’s big housing copyright trolling scheme gets slapped down. Whether or not this will end the company’s litigation strategy elsewhere remains to be seen, but it is quite incredible how widely copyright trolling is happening. At some point, people are going to need to wake up to the fact that laws that can be abused this way repeatedly with threats of lawsuits (and some actual lawsuits) represent a real problem.

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Companies: design basics, lexington homes

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Comments on “Copyright Trolls… But For Houses”

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DannyB (profile) says:

Re: scènes à faire a la code

I have a patented way to check if X < Y.

My technique is to test of X is NOT greater than or equal to Y.

! ( X >= Y )

So that’s two ways. As you say, there are probably dozens more ways. You could remove the NOT operator and reverse the order of the THEN / ELSE clauses. Even if the THEN clause is empty, modern compilers will optimize it away during flow control analysis.

Maybe I just described all of the obvious ways.

Bergman (profile) says:

Re: Re:

Something I’ve never understood — Congress is the elected representatives of the people of the United States, employed to act on the larger body of people’s behalf. Just like every other elected official is.

This effectively makes any elected official the employee of the people as a whole. So how is it that an employee can have sovereign immunity against claims of misconduct made by their boss?

ohboyohboy (profile) says:

An architect who didn't sue....

When we were looking to build a home a few years back, my wife and I went around our neighborhood looking for new homes we liked. (This was not in a planned development community, but in an established 50 year old neighborhood.) When we found one, we would ring the doorbell, talk to the owners, and try to find out who the architect was.

It turned out many of the homes were all done by the same firm, except for the one we liked the most, which was done by a design/builder. We contacted the builder because we wanted something similar. He gave us a copy of the plans used for that house, which had his copyright all over the plans.

We also met with the architect who had done so many of the other houses we liked. We mentioned the design/builder and it turns out that the architect had done some plans for that company in the past. He asked if he could see the plans we had from them. I got them from my car and after a quick look he immediately said they were his plans.

To clarify, these were not plans in a work-for-hire situation. He retained copyright on the plans and gave the builder permission to use them for 1 property. He was shocked when he saw the builder’s copyright on them.

Long story short, he commented that there wasn’t really anything he would do about it, since the builder often purchased plans from him and he wanted to keep their business. But he was glad to have learned what they were up to.

We too were glad to learn about the builder’s ethics. We ended up hiring a general contractor who built us a wonderful home with plans from the real architect. Oh, and on our second meeting with the architect when we began the design process, we started by looking over a copy of the original plans for the house we liked so much. Needless to say, there were similarities between our new house and the one from the design/builder since they were both designed by the same person.

Avatar28 (profile) says:

Next up: realtor and owners

Next up, I expect them to start suing realtors who sell an infringing house and anyone who owns one and is trying to sell it. “Your house infringes on our copyrights. You are liable up to $150,000. But tell you what. It’s a lot of trouble for both of us having to go to court and deal with all that mess. Tell you what. Tell you what. Give us 2% of the selling price and we will drop the matter.”

Rapnel (profile) says:

Re: Techdirt Pirates

Riight, because architecture is brewed from the cauldron of something from nothing. You know, like most of the other near-zero effort to create new works from the “rights holders”.

Literally building on the shoulders of the ingenuity of mankind. Being claimed. Absolutely and positively fucking ridiculous in each and every way.

Anonymous Coward says:

Winning a copyright infringment lawsuit

Doesn’t that entitle Lexington to collect on legal fees?

Now that would be interesting to watch.
… and also, as with file sharing, there will be a grassroots industry of anti-troll networking among lawyers.
Given the precedent the appeal sets, the appeal may have hurt Design Basics more than simply ponying up for the loss in the first place.

You can bet that other lawsuits defending against housing trolls will be informed by this decision.

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