Robert R. Jones Associates, Inc. v. Nino Homes

• Decision Date: 07 November 1988
• Docket Number: No. 87-1494,87-1494
• Citation: 858 F.2d 274
• Parties: , 1988 Copr.L.Dec. P 26,326, 8 U.S.P.Q.2d 1224, 26 Fed. R. Evid. Serv. 1245 ROBERT R. JONES ASSOCIATES, INC., Plaintiff-Appellee, v. NINO HOMES, Michele Lochirco, Defendants-Appellants, Diebele-Ginter, Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 274

858 F.2d 274

100 A.L.R.Fed. 241, 1988 Copr.L.Dec. P 26,326,

8 U.S.P.Q.2d 1224, 26 Fed. R. Evid. Serv. 1245

ROBERT R. JONES ASSOCIATES, INC., Plaintiff-Appellee, v. NINO HOMES, Michele Lochirco, Defendants-Appellants Diebele-Ginter, Defendant.

No. 87-1494.

United States Court of Appeals Sixth Circuit.

Argued June 10, 1988.

Decided Sept. 20, 1988.

Rehearing Denied Nov. 7, 1988.

Arnold Weintraub, Troy, Mich., Lisa M. DuRoss (argued), Birmingham, Mich., for defendants-appellants.

Jerold I. Schneider (argued), Spencer & Frank, Washington, D.C., for plaintiff-appellee.

Before MARTIN, JONES and MILBURN, Circuit Judges.

BOYCE F. MARTIN, Jr., Circuit Judge.

Nino Homes and Michele Lochirco appeal the judgment entered by the district court in favor of Robert R. Jones Associates, Inc. The district court held that Nino Homes and Lochirco had violated the Copyright Act of 1976, 17 U.S.C. Sec. 101 et seq., by copying Jones Associates' registered architectural drawings and by using those unauthorized copies to construct several houses, and the district court awarded Jones Associates actual damages, attorneys' fees, and prejudgment interest, 686 F.Supp. 160. This appeal presents a rather unusual question: whether the damages recoverable because of the infringement of copyrighted architectural drawings include, not only the losses attributable to the infringer's unauthorized reproduction of the copyrighted article, but also the losses suffered as a result of the infringer's subsequent use of the infringing copies. We affirm the finding of unlawful copying and subsequent use, but we reverse as to attorneys' fees and prejudgment interest.

Robert R. Jones Associates, Inc. designs, builds, and sells custom-made houses. Nino Homes also constructs and sells new houses. Michele Lochirco is the principal shareholder and president of Nino Homes, and he is also the company's chief executive and operating officer.

In 1980, Jones Associates hired an architect to prepare a complete set of architectural drawings, including floor plans and elevations, for a house which was eventually called the "Aspen". These plans were based on design concepts generated by Robert R. Jones, the sole shareholder of Jones Associates. After receiving the completed plans from the architect, Jones Associates constructed two model houses in accordance with the Aspen plans, one in the Grosse Pines subdivision in Rochester, Michigan, the other in the Maplewood North subdivision in West Bloomfield, Michigan. In order to promote sales of its houses in those two subdivisions, Jones Associates distributed to potential buyers brochures which contained abridged floor plans of the Aspen.

In June 1983, one of those potential customers informed Robert Jones that a competing developer was constructing houses that were very similar to the Aspen. Jones subsequently investigated this tip, and, while driving through Nino Homes' Clinton River Valley subdivision, a development less than three miles from Jones Associates' Grosse Pines subdivision, he recognized one of the houses as being nearly identical to his design. Jones then checked the building permit at the construction site, and from the information contained on the permit, Jones was able to locate the building plans filed by Nino Homes with the Rochester Hills Township. After examining these plans, Jones concluded that his Aspen plans had been copied, so he promptly registered the complete architectural drawings and the abridged floor plans. Immediately thereafter, Jones sent a letter to Nino Homes demanding that construction of the allegedly identical house cease. When Nino Homes denied that its house, which it called the "Riverside", was a copy of the Aspen, Jones Associates commenced this action.

During the trial which followed, Jones Associates offered evidence that Nino Homes had unlawfully copied its Aspen plans. The record shows that Nino Homes had hired an architectural firm called Diebele-Ginter to design a house. Before construction of the house initially designed by Diebele-Ginter had begun, however, Lochirco apparently gave Clifford Ginter, one of the two partners in the architectural firm, a photocopy of the Aspen abridged floor plans contained in the promotional brochure. According to the testimony of Richard J. Deibele, Ginter's partner, Lochirco instructed Ginter to copy these plans for use by Nino Homes. The photocopy allegedly given by Lochirco to Ginter, who died before the case went to trial, was subsequently discovered in Diebele-Ginter's files and introduced into evidence by Jones Associates.

On the basis of this evidence, and other documents which showed that the Riverside design was virtually identical to the Aspen design, the district court concluded that Nino Homes and Diebele-Ginter had infringed upon Jones Associates' copyright. The court then found that, had Nino Homes not sold seven houses which were built according to the infringing copies, Jones Associates would have sold seven additional houses. Therefore, the court awarded actual damages in the amount of $298,870: $212,550 for presumed profits not earned by Jones Associates because of Nino Homes' infringement, and $86,320 for the profits earned by Nino Homes from the sale of the houses built pursuant to the infringing plans. The district court also awarded attorneys' fees to Jones Associates, but the court limited this award to 5/7ths of the fees incurred because two of the seven houses were completed before Jones Associates' copyrights were registered. The district court subsequently amended its judgment to include prejudgment interest. Lochirco and Nino Homes now appeal, challenging the district court's decision in several respects. ¹

At the outset, Lochirco and Nino Homes contest the court's liability finding. They contend that the district court erred in admitting Diebele's testimony concerning what he was told by his partner about the photocopy which was found in Diebele-Ginter's files. Lochirco and Nino Homes argue that this inadmissible hearsay testimony is the only evidence of their access to the copyrighted work. Therefore, they maintain, they cannot be held liable for copyright infringement. This argument is unavailing for two reasons.

First, we believe Diebele's testimony was properly admitted. The district court held that the challenged testimony, that Ginter told Diebele that Lochirco had given him the photocopy of the Aspen floor plans and had instructed him to duplicate them, was admissible under Fed.R.Evid. 801(d)(2)(D). This subsection provides that a statement is not hearsay if it is offered against a party and is "a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship." Without question, the statement is being offered against a party; both Lochirco and Nino Homes were named as defendants. And it was made by their "agent"; Ginter was hired by Lochirco to design a house for his company, Nino Homes. Finally, Ginter's statement to Diebele about the origin of the photocopy concerns the very essence of his employment relationship with Lochirco and Nino Homes, and the statement was made during the existence of that relationship. Therefore, the court properly admitted the testimony.

Lochirco and Nino Homes' liability argument also fails for a second reason. They maintain that proof of their access to the copyrighted material is a prerequisite to finding them liable for copyright infringement, and they claim that the arguably inadmissible testimony is the only evidence of such access. Therefore, they continue, the court erred in finding them liable. This argument is fundamentally flawed.

In order to establish copyright infringement, the owner of a valid copyright must prove that the defendant or the person who composed the allegedly-infringing work copied the copyrighted material. Ferguson v. National Broadcasting Co., Inc., 584 F.2d 111, 113 (5th Cir.1978). Because rarely is there direct evidence of unauthorized duplication, the copyright holder frequently proves copying by showing that the defendant or the person who composed the defendant's work had access to the copyrighted material and that the defendant's work is substantially similar to the protected work. Id. In short, in order to prove copying indirectly, the copyright holder need not necessarily prove access on the part of the alleged infringer, so long as there is proof that the person who composed the allegedly-infrining work had access to the copyrighted material.

Here, Jones Associates has clearly proven that Diebele-Ginter, the architectural firm that designed Nino Homes' allegedly infringing plans, had access to the copyrighted work. Access merely means an opportunity to view the protected material. 3 M. Nimmer on Copyright Sec. 13.02[A] (1988). The photocopy found in the firm's files clearly shows that the architects had an opportunity to view Jones Associates' design. Diebele's challenged testimony, which shows how the architects obtained that access, was not vital to the success of Jones Associates' claim. This testimony, which we believe was properly admitted, merely helped the court to apportion relative responsibility for the unlawful conduct. ² Because Jones Associates has proven that the drafter of the allegedly infringing plans had access to its copyrighted work, because Lochirco admitted during the trial that he made several copies of Diebele-Ginter's infringing plans, and because Lochirco and Nino Homes in this appeal have not challenged the court's finding that their Riverside plans are substantially similar to the Aspen plans, we affirm the court's conclusion that Lochirco and Nino Homes have infringed upon Jones Associates' copyright.

With respect to the amount of actual damages awarded to Jones Associates, however, we must modify the district court's decision. While we do not adopt the position advanced by Nino...