Demetriades v. Kaufmann

• Decision Date: 08 March 1988
• Docket Number: No. 88 Civ. 0848 (GLG).,88 Civ. 0848 (GLG).
• Citation: 680 F. Supp. 658
• Parties: Chris DEMETRIADES and Demetriades Developers, Inc., Plaintiffs, v. Nicholas KAUFMANN, Cheryl Kaufmann, Judy Koch, Dudley D. Doernberg Company, Inc., Gino Gallo and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers, Defendants.
• Court: U.S. District Court — Southern District of New York

680 F. Supp. 658

Chris DEMETRIADES and Demetriades Developers, Inc., Plaintiffs, v. Nicholas KAUFMANN, Cheryl Kaufmann, Judy Koch, Dudley D. Doernberg Company, Inc., Gino Gallo and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers, Defendants.

No. 88 Civ. 0848 (GLG).

United States District Court, S.D. New York.

March 8, 1988.

Milgrim Thomajan & Lee, P.C., New York City (Steven M. Hartman and William M. Hart, of counsel), and Shuman & Wood-Smith, White Plains, N.Y. (Jeffrey A. Shuman and Lelia M. Wood-Smith, of counsel), for plaintiffs.

McAulay, Fields, Fisher, Goldstein & Nissen, New York City (Martin E. Goldstein, of counsel), for defendants Nicholas and Cheryl Kaufmann, Gino and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers.

Brumbaugh, Graves, Donohue & Raymond, New York City (Brendan J. O'Rourke, of counsel), for defendants Judy Koch and Dudley D. Doernberg Co., Inc.

OPINION

GOETTEL, District Judge:

Certain of the defendants in this case have admitted to the unauthorized copying of plaintiffs' architectural plans, which have been granted a Federal copyright. There is little doubt that such acts constitute copyright infringement. The more difficult and novel inquiry presented by this case is whether construction of a residential home, designed primarily from the infringing copies of plaintiffs' plans, also violates either Federal copyright law or Federal or State law against unfair competition. These questions appear to be matters of first impression for this circuit, and their answers turn on subtle but important distinctions in the laws protecting creative ideas and their expression. It may appear to the casual observer that those distinctions operate arbitrarily in the case at bar; but our decision today is guided by application of legal doctrine that, for good reason, has remained virtually unchanged for well over a century.

We have before us plaintiffs' motion for preliminary injunctive relief. For the reasons that follow, we grant certain of the relief requested, but deny the gravamen of plaintiffs' motion — preliminary relief enjoining the further construction of the allegedly infringing home.

I. FACTS

The following constitutes the court's findings of fact for purposes of the instant motion.

Plaintiff Chris Demetriades is president of Demetriades Developers Inc. ("DDI"), the corporate plaintiff in this action. DDI is a real estate developer engaged in the building of luxury homes selling in excess of $1 million. Plaintiffs contend that each home built by DDI is distinct and unique, and that DDI's reputation and ability to sell such high-priced homes is predicated in part on this ability to deliver a unique product to wealthy, prospective homeowners. As proof of that assertion, plaintiffs note that DDI has built approximately forty homes over the last three years, and that no two homes it has constructed are the same.

In 1985, DDI retained Nadler Philopena and Associates to design plans for construction of a home on a lot at 12A Cooper Road in Scarsdale, New York (the "Demetriades house"). Those plans were approved by the Scarsdale Architectural Review Board, and eventually were filed with the Scarsdale Building Department as required by law. Construction on the home was completed in late 1986; the home was shown to the public at an open house in January of 1987; and DDI accepted a bid of over $2 million for the home one week after the showing.¹

We note at the outset that the court has viewed pictures of the Demetriades house. We draw no conclusions as to the quality of the structure, but the visual appearance of the home is hardly remarkable, as plaintiffs intimate. Although the particular combination of certain features may arguably be unique, the home's design does not appear to be radically innovative or anything akin to a signal breakthrough in residential design.

At some point in 1987, defendants Nicholas and Cheryl Kaufmann learned that defendant Gallo Brothers, a Scarsdale real estate developer, owned a lot at 24 Cooper Road in Scarsdale. The Kaufmanns, who had earlier seen and expressed interest in the Demetriades house, contracted with Gallo Brothers in October of 1987 for construction of a home at the lot on 24 Cooper Road (the "Kaufmann house"). Their agreement provided that the Kaufmann house was to be of "substantially identical design" to the Demetriades house at 12A Cooper Road.²

The defendants concede that they came into unauthorized possession of the plans used by DDI for construction of the Demetriades house. It also appears that defendant MCR Consulting Engineers, retained by Gallo Brothers to prepare the design plans for the Kaufmann house, simply traced the copy of the DDI plans it was provided. The copies (with certain modifications) were ultimately filed by Gallo Brothers with the Scarsdale Building Department. It is further conceded that the DDI plans bore a designation which may qualify as notice of common-law copyright. Despite this, at no time did defendants seek plaintiffs' authorization to use or copy the DDI plans which served as the basis for the Demetriades house.

At some point in late 1987, plaintiff Demetriades became aware that the frame of the Kaufmann house suggested a design strikingly similar to the house DDI had built at 12A Cooper Road. That realization set in motion a chain of events. First, by agreement dated January 21, 1988, Nadler Philopena and Associates assigned to plaintiffs all right, title, and interest it had in the architectural drawings used for construction of the Demetriades house at 12A Cooper Road. Second, and now armed with that assignment, plaintiffs mailed to the Federal Copyright Office on February 2 an application for copyright registration of the plans in question. Third, and after making that mailing, plaintiffs initiated this action on February 8 seeking, inter alia, preliminary and permanent injunctive relief enjoining the defendants from further relying on copies of the Demetriades plans and from further construction of the Kaufmann house. At this point in time, the foundation and frame of the Kaufmann house are completed.

Federal jurisdiction is premised on alleged violations of 17 U.S.C. § 501(a) (1982) (copyright infringement) and section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1982) (unfair competition for trade dress infringement). The trade dress claim is realleged as pendent state claims in the form of common law causes of action for unfair competition and tortious misappropriation, as well as under N.Y. Gen. Bus. Law §§ 349-50 (McKinney 1968 & Supp. 1988) (prohibiting deceptive commercial practices and advertising) and N.Y. Gen. Bus. Law § 368-d (McKinney 1984) (protecting dilution of trademark). On February 8, we denied plaintiffs' request for a temporary restraining order (in part because copying was at that time denied), and we now have before us plaintiffs' motion for a preliminary injunction. For the reasons that follow, that provisional remedy is granted in part and denied in part.

II. DISCUSSION

The standard for granting preliminary injunctive relief in this circuit is well settled. Plaintiffs must show "(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979) (per curiam). Guided by the Jackson Dairy standard, we consider the individual claims.

(a) The Federal Copyright Claim

An action for Federal copyright infringement does not lie "until registration of the copyright claim has been made in accordance with Federal copyright law ... or registration has been refused...." 17 U.S.C. § 411(a) (1982). Receipt of an actual certificate of registration or denial of same is a jurisdictional requirement, and this court cannot prejudge the determination to be made by the Copyright Office. Wales Indus. Inc. v. Hasbro Bradley, Inc., 612 F.Supp. 510, 515 (S.D.N.Y.1985) (Weinfeld, J.); International Trade Management, Inc. v. United States, 553 F.Supp. 402, 403, 1 Cl.Ct. 39 (1982). The rationale for this requirement is consistent with the obligations of the Copyright Office to determine in the first instance the validity of a copyright request.

In the case at bar, plaintiffs only mailed their application for copyright protection to the Copyright Office on February 2. When this action was instituted (February 8), a certificate of registration had not yet issued. Consequently, this court had no jurisdiction over the copyright claim. A valid certificate, however, has since been issued (No. VA 290-080, effective February 2, 1988).³ On March 1 (after this motion was noticed), an amended complaint was filed properly setting forth this court's jurisdiction based on the issuance of the certificate. Accordingly, and in the interests of substantial justice, we treat this motion as deriving from a proper jurisdictional base.

To satisfy the elements of an infringement case, plaintiffs must prove (1) that they are the owners of a valid copyright and (2) that defendants engaged in the unauthorized reproduction of the copyrighted work. Warner Bros., Inc. v. American Broadcasting Co., 654 F.2d 204, 207 (2d Cir.1981). As to the first prong, a certificate of registration generally serves as prima facie evidence of a valid Federal copyright. 17 U.S.C. § 410(c) (1982). This principle adheres even though, as in the case at bar, an assignee is the first to register the claim. Sygma Photo News, Inc. v. High Society Magazine, Inc., 778 F.2d 89, 90 (2d Cir.1985). As to the second prong, this is the rare case of admitted copying (albeit an admission of innocent copying only). Although certain modifications were made to the copied plans, there is no argument with the conclusion that the allegedly infringing...