Design Basics, L.L.C. v. Deshano Cos.
| Decision Date | 21 September 2012 |
| Docket Number | Case No.: 10-14419 |
| Parties | DESIGN BASICS, L.L.C., Plaintiff, v. DESHANO COMPANIES, INC.; DESHANO HOMES, INC.; DESHANO LUMBER COMKPANY; DESHANO CONSTRUCTION COMPANY; COUNTY-WIDE BUILDERS, INC.; and MICHIGAN CUSTOM HOMES Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Thomas L. Ludington
This is a copyright infringement case brought against Defendants DeShano Companies, Inc., DeShano Homes, Inc., DeShano Lumber Company, DeShano Construction Company, County-Wide Builders, and Michigan Custom Homes by Plaintiff Design Basics, LLC. Plaintiff is engaged in the business of creating, publishing, and licensing architectural designs. Plaintiff alleges that Defendants, without authorization, created derivatives of many of its copyrighted designs; advertised those designs over the internet; and used the designs, or their derivatives, to construct and sell homes. Now before the Court are Defendants' Motion to Dismiss Plaintiff's second amended complaint, Defendants' Motion for Summary Judgment, and Plaintiff's Motion for Partial Summary Judgment. For the reasons that follow, Defendants' Motions will be denied, and Plaintiff's motion will be granted.
Plaintiff began its existence as Design Basics, Inc. in 1984. It is engaged in the business of creating, publishing, and licensing architectural designs. Plaintiff operates out of Omaha, Nebraska, and licenses its designs to home-builders across the country. Plaintiff sells books that contain its copyrighted architectural plans, and its website offers well over two-thousand designs to choose from. Plaintiff also frequently distributes advertising materials that include its architectural plans to builders in areas where it has seen success.
Gary DeShano has been building homes in Michigan since 1966, and created and operates Defendants DeShano Construction Company and Michigan Custom Homes. Defendant County-Wide Builders was created and is operated by Neil DeShano, Gary's brother. Gary's son, Chad DeShano, created and operates Defendants DeShano Companies, Inc., DeShano Lumber Company, and DeShano Homes, Inc. Defendant DeShano Lumber furnishes lumber and other construction materials, while the other Defendants work together to construct residential houses in Michigan.
In April 2010, Plaintiff realized that Defendants may have infringed on its copyrighted materials. The Architectural Works Copyright Registration Numbers, Blueprint Copyright Registration Numbers, and Houseplan Copyright Registration Numbers at issue are provided in paragraphs 15-17 of Plaintiff's second amended complaint. Pl.'s Sec. Am. Compl. (hereinafter "Pl.'s Compl.")-, ECF No. 71. Although Plaintiff provides numerous Copyright Registration Numbers, not all are relevant to this case. Instead, only seven are truly at issue — the seven plans that Plaintiff claims Defendants copied and used to produce derivatives: Patterson - 1380, VA#314-024; Arbor - 2526, VA#524-184; Kirby Farm - 8093, VA#729-227; Angel Cove - 8094, VA#726-351; Wind River - 8033, VA#726-344; Comstock - 2778, VA#1-295-836; andCrimson Creek - VA#736-681. Plaintiff sent a cease and desist letter in June 2010 to all Defendants except DeShano Lumber and DeShano Homes. Although mailed to four different companies, each letter bore the same address — 325 Commerce Ct, Gladwin, Michigan. Plaintiff received no response.
Defendants had purchased a book of architectural plans from Plaintiff in January 1993, but none of the contested plans were included. However, Plaintiff does display its architectural plans on its website after they are copyrighted. It also sends unsolicited materials to builders that include those plans. Plaintiff's database lists forty-one publications that were distributed to builders like Defendants at various times since 1991. These publications, taken together, include all of the plans at issue. According to Plaintiff's records, every plan had been published and distributed by January 1996; some much earlier. Joan David, Defendants' employee for many years, was asked if she had ever heard of Plaintiff.
Joan David Dep., 27, Pl.'s Mot. Ex. 4, ECF No. 55. An inter-office memo, written by Ms. David and dated June 1998, was found in Defendants' records attached to Plaintiff's Kirby Farm plan. Pl.'s Compl., Ex 7. Ms. David wrote, Id. The Kirby Farm plan had been published and distributed by Plaintiff only two months earlier. Pl.'s Compl., Ex. 6. Despite receiving these plans at various times over the years, Defendants never purchased licenses for the plans' authorized use.
Plaintiff filed a complaint against DeShano Companies, Inc. on November 4, 2010. Plaintiff was subsequently granted leave to file an amended complaint to include affiliatedenterprises DeShano Homes, Inc., DeShano Lumber Company, DeShano Construction Company, County-Wide Builders, and Michigan Custom Homes.
In April 2012, Defendants filed a motion to dismiss Plaintiff's amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants claimed Plaintiff had failed to plead sufficient facts to indicate where original, protectable material was contained in its copyrighted works, and where any such original material appeared in Defendants' homes. Defendants' motion was granted, but Plaintiff was permitted to file another amended complaint.
Five days later Plaintiff returned with a strapping fifty-six-page complaint, braced with nearly three-hundred pages of exhibits. That second amended complaint alleges that Defendants copied Plaintiff's original architectural plans and used the derivatives to build and sell homes in Michigan. Over twenty-nine pages, Plaintiff painstakingly identifies forty-one homes completed by Defendants using plans derived from six of Plaintiff's designs. In each of those counts, Plaintiff alleges the underlying plan was a copyrighted, original architectural work it created, which Defendants imitated or transcribed in whole or substantial part. Plaintiff has stressed that each architectural plan, in its entirety, constitutes an original work under 17 U.S.C. 101 et seq. Pl.'s Compl. 47. Included with Plaintiff's complaint are documents showing valid copyrights for each of the plans. Additionally, Plaintiff included side-by-side drawings and overlays to depict the similarity between seven of its original plans, and the plans it alleges Defendants created by copying them.
Defendants filed a Motion for Summary Judgment on May 29, 2012. The motion asserts eight grounds for judgment as a matter of law: (1) whether plaintiff owns the copyrights in question; (2) whether Plaintiff's action is barred in part by the Copyright Act's statute of limitations; (3) whether Defendants had access to Plaintiff's copyrighted plans; (4) the number ofcopyrights at issue; (5) whether Plaintiff's house plan copyrights concern compilations entitled to "thin" copyright protection; (6) whether Plaintiff's plans constitute original work; (7) whether Defendants infringed on Plaintiff's copyrighted works; and finally, (8) whether, as a matter of law, Defendants' house plans are substantially similar to Plaintiff's copyrighted plans. Plaintiff responded with a motion of its own, moving for partial summary judgment on the copyright ownership and access issues.
Then on July 30, 2012, Defendants again moved to dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). The essence of Defendants' argument is that Plaintiff has failed to explain what part of its architectural drawings are protectable material, and where such material is contained in Defendants' designs.
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and plain statement showing that the pleader is entitled to relief." This standard does not require "detailed factual allegations," but it demands more than an "unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Id.
To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570) (internal quotation marks omitted). A claim is plausible when the plaintiff pleads factual content sufficient to draw the reasonable inference that the defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678. When determining whether a plaintiff has stated a claim uponwhich relief can be granted, the court must construe the complaint in the light most favorable to the plaintiff, and accept all factual allegations as true. Twombly, 550 U.S. at 570.
In the context of copyright infringement, the Sixth Circuit has established that a greater particularity in pleading is required. Nat'l Bus. Dev. Servs., Inc. v. Am. Credit. Educ. And Consulting, Inc., 299 F. App'x 509, 512 (6th Cir. 2008). This heightened standard is necessary because copyright cases are conducive to "abusive litigation." Id. Therefore, a showing of plausible grounds for relief is required. Id. Plausible grounds calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of unlawful conduct. Id.
Summary judgment is proper when there are no genuine issues of material fact and the moving party...
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