Avoid Copyright Infringement on Construction Projects; Protect Your Valuable Trade Secrets

Intellectual property (“IP”) sounds like a contemporary term that was invented during the dot-com bubble. IP however dates back to the signing of the Constitution in September 1787. Article I, Section 8, Clause 8 of the Constitution states, “Congress shall have the Power . . . To promote the Progress of Science and useful arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; . . .” This Clause is known as the Patent and Copyright Clause. As Las Vegas residents we are all familiar the ubiquitous lawsuits filed by Righthaven, LLC against persons or companies it believes impermissibly copied content published by the Las Vegas Review Journal. Righthaven has shown how the inadvertent, impermissible use of pictures or news articles can lead to a potentially lengthy court battles. Most recently, Station Casinos sued a photographer claiming that he fraudulently obtained the copyright to use a photo of a woman holding a bottle of ketchup and a hotdog. The picture is located at the following link:http://www.stationcasinos.com/sports/hotdog.php. The fight over who owns the copyright to this photo could last for years, and cost millions in attorneys fees.

IP pervades every aspect of society: news, internet, television, movies, articles, books, songs, photographs, architectural and engineering drawings, and buildings. Architects and engineers use patented and copyrighted software to create architectural, structural, civil and electrical drawings. Builders then use the drawings which are or can be subject to a copyright to build airports, offices and houses. Patents protect inventions or discoveries of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, . . .” 35 U.S.C. § 101. Conversely, copyrights protect “original works of authorship fixed in any tangible medium of expression, . . .” 17 U.S.C. § 102(a).

A copyright confers on its owner an exclusive right to reproduce the original work. Robert R. Jones Associates, Inc. v. Nino Homes, 858 F.2d 274, 278 (6th Cir. 1988). A patent on the other hand gives its owner the right to exclude others from making, using, or selling the invention for a specific period of time. Id. For example, the claw hammer was patented in 1930. The patent gives the owner the right to exclude others from making, using or selling the invention throughout the United States for a limited time. The owner of the claw hammer patent gave permission to others to use the invention through manufacturing and sales agreements. Conversely, a standard home drawing is only given copyright protection because it does not rise to the level of a novel invention or unique design. The holder of a patent or copyright is entitled to damages, attorney’s fees and injunctive relief in the event of infringement. 35 U.S.C. § 271(e)(4)(b) and (c ) and 17 U.S.C. §§ 502, 504.

Copyrights, trademarks and patents are issues on every construction project. With the proliferation of intellectual property lawsuits, it is wise for contractors, subcontractors and material suppliers to make sure they do not infringe on another’s copyright or trademark (I’ll leave the lengthy patent discussion for another blog post).

Potential Construction Copyright Infringement

Unless there is a full time enforcement mechanism, like Righthaven, LLC, infringement generally goes undetected. In the area of construction, infringement generally occurs when a contractor knowingly or inadvertently uses copyrighted plans or drawings. For instance, in Robert R. Jones Associates, Inc. v. Nino Homes, 858 F.2d 274 (6th Cir. 1988), Jones, an architect, created plans for a house known as the “Aspen.” To promote sales Jones distributed brochures that contained floor plans of the Aspen to potential buyers. Jones discovered that a competing developer, Nino Homes, had built several houses very similar to the Aspen. After the discovery, Jones registered the Aspen drawings and obtained a copyright. Jones then sued Nino Homes claiming the developer had unlawfully copied the Aspen plans. The court agreed with Jones and awarded him damages in the amount of $212,550 for lost profits he would have earned had Nino Homes not built the homes. Id. at 281.

A copyright does not have to be in existence at the time the infringement occurs. Thus, contractors should be wary of copying existing plans for use on construction projects. To avoid infringement, contractors should obtain the exclusive rights to the drawings through a written agreement. However, when a designer creates plans specifically for the contractor, and there is no written agreement transferring the exclusive rights in the plans, the architect has probably given the contractor an implied nonexclusive license to use the plans for their intended purpose, i.e., to complete the construction project. I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir. 1996). An implied non-exclusive license is a defense to an infringement action.

Because contractors are ingenious by nature and develop inventions and methods to build projects, they might be sitting on ideas or materials that can be patented or copyrighted. Patents and copyrights protect innovative ideas and original materials, and allow the inventor or creator to receive profits to which they are entitled.

Protecting Contractor Trade Secrets

While not in the purview of intellectual property, Nevada state law protects contractors’ trade secrets. For instance, if a contractor creates a unique asphalt mix design, Nevada law protects the mix design from disclosure and use by others. NRS Chapter 600A. A trade secret is “information, including, without limitation, a formula, pattern, compilation, program, device, method, technique, product, system, process, design, prototype, procedure, computer programming instruction or code that derives independent economic value from not being generally known.” NRS 600A.030(5). The contractor only needs to take reasonable efforts to maintain its secrecy. Id. The remedies for misappropriation (unauthorized use) of a trade secret are damages and injunctive relief. Additionally, trade secrets are generally immune from disclosure through public records requests. NRS 239.0113. Protecting trade secrets serves important functions such as increasing contractor profits and productivity.

In these times of decreased profit margins and increased competition, maintaining your company’s trade secrets is paramount. Taking a few proactive steps before submitting a bid on a public works project to designate documents, information, formulas, or programs as “Confidential” or “Private” will cloak them with the presumption of secrecy, and help to ensure that your company’s confidential and propriety information remains a secret.

Conclusion

In our litigious world, contractors should be aware of all aspects of potential legal exposure, including the often overlooked exposure of patent and copyright infringement. Additionally, patents, copyrights and trade secrets protect contractors’ ideas, ingenuity and possibly their bottom-line. At Shan Davis & Associates, our attorneys can help you obtain copyrights and trademarks to protect your business’ original materials and identity. We can also represent your business against those who have infringed on your copyright(s) or trademark(s), or those who have misappropriated your trade secrets. If you have any questions, please contact us.

Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the state of Nevada.

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