USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 1 of 19
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF INDIANA
`FORT WAYNE DIVISION
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`DESIGN BASICS, LLC, and,
`W.L. MARTIN HOME DESIGNS, LLC,
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`Plaintiffs,
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`v.
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`HELLER & SONS, INCORPORATED,
`d/b/a/ Heller Homes, and HELLER
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`DEVELOPMENT CORPORATION
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`Defendants.
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`CAUSE NO.: 1:16-CV-175-TLS
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`OPINION AND ORDER
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`This matter comes before the Court on Plaintiffs Design Basics, LLC, and W.L. Martin
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`Home Designs, LLC’s (WLM), Motion for Partial Summary Judgment [ECF No. 45] and
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`Defendants Heller & Sons, Inc., d/b/a. Heller Homes, and Heller Development Corp.’s Motion
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`for Partial Summary Judgment [ECF No. 42], both filed on January 26, 2018. The parties both
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`filed Responses on February 16, 2018, followed by Replies on March 2, 2018. This matter is
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`now fully briefed and ripe for review.
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`FACTUAL BACKGROUND
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`Design Basics owns copyrighted home plans, including some registered by its affiliate
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`WLM. In 2010, Design Basics filed suit in Colorado against ProBuild Company LLC, ProBuild
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`North, LLC, and Lanoga Corporation (collectively “ProBuild”), alleging copyright infringement
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`of Design Basics’ home plans. ProBuild owns and operates a chain of lumber yards and building
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`supply centers and was accused of selling Design Basics’ copyrighted home plans to ProBuild’s
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 2 of 19
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`customers without paying Design Basics’ licensing fees. In 2011, Design Basics and ProBuild
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`entered into a settlement agreement (PSA), which had several key provisions, including: (1)
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`Design Basics agreed to release claims related to infringement of Design Basics’ copyrighted
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`home plans against any customer of ProBuild or ProBuild’s predecessors; (2) Design Basics
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`agreed to grant a retroactive license both to ProBuild and ProBuild’s predecessors and to any of
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`their customers regarding these plans; and (3) such license would not be applicable if, within 60
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`days following a written inquiry by Design Basics, ProBuild or the accused customer failed to
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`submit sufficient evidence to show that ProBuild or one of its predecessors created a home plan
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`for that customer that was copied or derived from one of Design Basics’ home plans prior to the
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`effective date of the PSA. Such written inquiry was subject to certain requirements, such as,
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`Design Basics had to forward the notice to certain identified people, and the notice had to
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`include certain information regarding the alleged infringement, including identifying a particular
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`home plan, the alleged infringer, and contact information for the alleged infringer. The PSA
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`became effective on September 12, 2011.
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`On April 4, 2016, Design Basics sent a letter to ProBuild, stating that Design Basics
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`believed that some of Heller Homes’ home plans infringed Design Basics’ home plans. This
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`letter was not sent to ProBuild’s counsel, Timothy M. Reynolds, which was one of the
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`procedural requirements for Design Basics’ written inquiry under the PSA. ProBuild asserts that
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`it did not receive the letter until April 8, 2016.
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`On June 3, 2016, ProBuild responded to Design Basics’ inquiry and indicated that
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`Wickes Lumber, a claimed predecessor of ProBuild, had designed three of the accused home
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`plans prior to the effective date of the PSA. ProBuild attached drawings of the plans, affidavits
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`by Mark Heller (principal of Heller Homes) and Dennis Hakes (salesman for Wickes and
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 3 of 19
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`ProBuild). On June 7, 2016, ProBuild served Design Basics’ counsel with an amended Affidavit
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`by Mark Heller, which indicated that the same three accused designs were acquired from Wickes
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`prior to the year 2000. On July 7, 2016, Design Basics notified ProBuild that the evidence that
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`ProBuild submitted regarding the origin of the accused plans was insufficient under the PSA.
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`Accordingly, Design Basics refused to grant a retroactive license to Heller Homes or to release
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`Heller Homes from any claims associated with the accused plans.
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`On July 12, 2016, ProBuild sent a letter to Design Basics arguing that the evidence
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`ProBuild had submitted was sufficient under the PSA and requested proof as to whether WLM
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`was controlled by Design Basics and therefore bound by the PSA. On August 10, 2016, ProBuild
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`submitted further evidence in support of retroactive licensing and release to Heller Homes, and
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`Mark Heller appeared for a deposition on August 16, 2017, regarding his affidavits pursuant to
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`provisions of the PSA.
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`On May 22, 2016, Design Basics and WLM sued the Defendants, alleging that the
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`Defendants had infringed Design Basics’ copyrights in the following works:
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`Accused Heller Homes Design
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`Arthur Williams
`David Matthew II
`Greyson
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`David Matthew I
`Spencer 5
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`Design Basics’ Home Design
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`Plan 1032 (Monte Vista)
`Plan 1380 (Paterson)
`Plan 1748 (Sinclair)
`Plan 1742 (Lancaster)
`Plan 24077 (Baisden)
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`STANDARD OF REVIEW
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`Summary judgment is proper where the evidence of record shows that there is no genuine
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`issue of material fact and that the moving party is entitled to judgment as a matter of law.
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`Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). The moving party bears the initial burden
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 4 of 19
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`of informing the court of the basis for its motion and identifying those portions of the record it
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`believes demonstrate the absence of a genuine issue of material fact. Id. at 323. The burden then
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`shifts to the non-movant to “go beyond the pleadings” to cite evidence of a genuine factual
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`dispute precluding summary judgment. Id. at 324. “[A] court has one task and one task only: to
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`decide, based on the evidence of record, whether there is any material dispute of fact that
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`requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920 (7th Cir. 1994). If the non-
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`movant does not come forward with evidence that would reasonably permit the finder of fact to
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`find in its favor on a material issue, then the Court must enter summary judgment against it. Id.
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`As relevant to the instant Motions, the Parties dispute whether Wickes Lumber is a
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`ANALYSIS
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`predecessor of ProBuild, whether Design Basics is collaterally estopped from asserting that
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`Wickes Lumber is not a predecessor of ProBuild, whether ProBuild timely responded to Design
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`Basics’ written inquiry regarding the Heller Homes plans, whether Design Basics’ written
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`inquiry complied with the PSA, and whether the evidence submitted to Design Basics was
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`sufficient under the PSA.
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`A. Whether Wickes is a Predecessor of ProBuild
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`The first question the Court must consider is whether Wickes is a predecessor of
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`ProBuild. If Wickes is not a predecessor of ProBuild, then Heller Homes cannot be a third party
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`beneficiary to the PSA and will enjoy none of the PSA’s protections.
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 5 of 19
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`1.
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`Collateral Estoppel
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`The Defendants first argue that Design Basics is collaterally estopped from asserting that
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`Wickes is not a predecessor of ProBuild based on a prior litigation in the Eastern District of
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`Wisconsin. In that case, the court found that Wickes’ customers were protected under the PSA
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`based on the plain language of the PSA. See Design Basics, LLC v. Midwest Design Homes, Inc.,
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`No. 14-C-1033, 2016 WL 8117702, at *2 (E.D. Wis. Sept. 30, 2016). Design Basics argues that
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`the passage on which the Defendants rely is dicta in a partial summary judgment order, which
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`was decided in favor of Design Basics. Therefore, Design Basics contends that the issue was not
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`adjudicated in the manner contemplated by collateral estoppel.
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`Collateral estoppel precludes the re-litigation of an issue where (1) the pertinent issue
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`was identical to an issue involved in a prior action; (2) the issue was actually litigated in the prior
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`action; (3) determination of the issue was essential to the final judgment in the prior action; and
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`(4) the party being precluded from re-litigating the issue was represented in the prior action. See
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`Chi. Truck Drivers v. Century Motor Freight, Inc., 125 F.3d 526, 530 (7th Cir. 1997). The
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`Defendant argues that all of these requirements are met because (1) whether Wickes was a
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`ProBuild predecessor was at issue in Design Basics v. Midwest; (2) the issue was actually
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`litigated as shown by the partial summary judgment order; (3) determination that Wickes was a
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`ProBuild predecessor was essential to the judgment, which for the purposes of collateral estoppel
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`was a final order; and (4) as a party to the litigation, Design Basics was represented. The Parties
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`do not appear to dispute the first and fourth requirements.
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`Design Basics responds that in Design Basics v. Midwest, it never argued that Wickes
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`was not a predecessor of ProBuild and instead focused on whether the conditions of the PSA
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`were satisfied. Further, Design Basics contends, the court denied Midwest’s motion, and the
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 6 of 19
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`interlocutory order adjudicated nothing more than that Midwest was not entitled to summary
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`judgment. Design Basics first argues that because finding that Wickes was a predecessor of
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`ProBuild was not necessary to support a denial of summary judgment, the issue cannot have been
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`a “critical and necessary part” of the judgment. Second, because the partial summary judgment
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`order was interlocutory, it was not subject to appeal and therefore was not “sufficiently reliable”
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`so as to collaterally estop a litigant. Moreover, as the prevailing party in that judgment, Design
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`Basics lacked standing to appeal and did not have an opportunity to contest the finding.
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`The Defendants respond that the determination that Wickes was a predecessor of
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`ProBuild was a “critical and necessary part” of the Design Basics v. Midwest judgment because it
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`was necessary in order to determine that Midwest had standing under the PSA. The Defendants
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`also argue that the ability to appeal the ruling at issue is not necessary for collateral estoppel,
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`and, in any event, Design Basics waived its right to appeal by failing to contest Midwest’s
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`assertion that Wickes was a predecessor of ProBuild.
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`The Court finds that the Design Basics v. Midwest court’s apparent conclusion that
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`Wickes was a predecessor of ProBuild was not a “critical and necessary part” of the judgment.
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`The partial summary judgment order found that Midwest was a third party beneficiary to the
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`PSA because the language of the PSA “is clear and because it is undisputed that Defendants were
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`customers of ProBuild and of ProBuild predecessor Wickes Lumber . . . .” Midwest, 2016 WL
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`8117702, at *2. The court made no findings as to what, if any, of the accused plans were drawn
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`for Midwest by Wickes, and in fact, Design Basics disputed that any of the accused home plans
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`were drawn by Wickes. The issue before the court was whether Midwest had standing to assert
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`defenses based on the PSA. Midwest was also a customer of ProBuild, so the court could have
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`concluded that Midwest had standing—based on its business relationship with ProBuild—
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 7 of 19
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`without considering whether Wickes was a predecessor of ProBuild. Therefore, the Court cannot
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`find that Design Basics is collaterally estopped from asserting that Wickes is not a predecessor
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`ProBuild within the meaning of the PSA.
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`2.
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`Admission in Previous Litigation
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`The Defendants also argue that the Court may take judicial notice of Design Basics’
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`failure to dispute Midwest’s assertion that Wickes was a predecessor of ProBuild during
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`summary judgment in the prior litigation. The Defendants claim that this failure has the effect of
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`an admission in the instant litigation. It is true that the Court may take judicial notice of court
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`documents from another case and that such documents “may be used to show that the document
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`was filed, that [the] party took [a] certain position, and that certain judicial findings, allegations
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`or admissions were made.” In re FedEx Ground Package Sys., Inc., Employment Practices Litig.,
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`No. 3:05-MD-527, 2010 WL 1253891, at *4 (N.D. Ind. Mar. 29, 2010) (citing Gen. Elec. Capital
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`v. Lease Resolution, 128 F.3d 1074, 1081 (7th Cir. 1997)). In response to Midwest’s statement of
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`facts in its motion for summary judgment that “Wickes Lumber is a predecessor of ProBuild,”
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`Design Basics stated that it “lack[ed] the knowledge to dispute this claim.”
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`The Court is not inclined to hold that a failure to dispute a fact during summary judgment
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`proceedings in one litigation gives rise to an admission in a separate litigation. Nothing in
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`Federal Rule of Civil Procedure 56 provides that where a party states that it lacks knowledge
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`regarding the material fact at issue, a court must treat such a failure to dispute as an admission.
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`Nor do the Local Rules for the Northern District of Indiana provide that a fact that a party fails to
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`admit or dispute due to its lack of knowledge is deemed admitted. Cf. Universal Calvary Church
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`v. City of N.Y., No. 96 Civ. 4606, 2000 WL 1745048, at *2 n.5 (S.D.N.Y. Nov. 28, 2000) (noting
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 8 of 19
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`that under the local rules, the answer “Plaintiff can neither admit nor deny this statement based
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`upon the factual record” was insufficient to establish a dispute because the local rules expressly
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`provided that the moving party’s statements of fact would be “deemed to be admitted unless
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`controverted”). At best, Rule 56 provides that, in the event the responding party fails to
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`adequately support its denials of the moving party’s asserted facts, a court may “consider the fact
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`undisputed for purposes of the motion.” Fed. R. Civ. Pro. 56(e)(2). Rule 56(e) does not require a
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`court to consider the fact undisputed, nor does Rule 56(e) contemplate such use of the fact
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`outside the scope of the summary judgment motion in which it was asserted. Therefore, the
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`Court does not find that Design Basics admitted that Wickes is a predecessor of ProBuild.
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`3.
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`ProBuild’s Acquisition of Wickes
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`The Court now turns to the merits of whether Wickes is a predecessor of ProBuild. The
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`dispute centers on how broadly or narrowly the term “predecessor” is defined. After filing for
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`bankruptcy, Wickes’ assets were purchased by Lanoga, which was a predecessor of ProBuild.
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`Design Basics argues that because it was only an asset, as opposed to a stock, sale and because
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`Lanoga did not assume Wickes’ legal liabilities, Wickes was not a predecessor of Lanoga and
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`therefore not a predecessor of ProBuild. “Interpretation of a written contract and the
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`determination of whether a provision in the contract is ambiguous are questions of law.”
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`Fibreglas Fabricators, Inc. v. Kylberg, 799 P.2d 371, 374 (Colo. 1990).1 “In determining
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`1 Design Basics asserts that Section 13 of the PSA provides that it will be interpreted under Colorado law;
`however, Section 13 is redacted in the copy of the PSA filed with the Court. The parties have not briefed
`any potential choice of law issues as they pertain to this, or any other, affirmative defense. Because the
`Defendants do not dispute this assertion, the Court will analyze the interpretation of the PSA under
`Colorado law and will not undertake a choice of law analysis as to the PSA. The Court also will not pass
`on any other potential choice of law issues that may arise in this case.
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 9 of 19
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`whether a contractual provision is ambiguous, the instrument’s language must be examined and
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`construed in harmony with the plain and generally accepted meaning of the words used, with
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`reference to all of the agreement’s provisions, and a provision is ambiguous if it is fairly
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`susceptible to more than one interpretation.” Dorman v. Petrol Aspen, Inc., 914 P.2d 909, 912
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`(Colo. 1996) (internal quotations omitted). If a court determines that a contract is ambiguous,
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`“the meaning of its terms is generally an issue of fact to be determined in the same manner as
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`other disputed factual issues.” Id. (quoting Union Rural Elec. Ass’n v. Pub. Utils. Comm’n, 661
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`P.2d 247, 251 n.5 (Colo. 1983)).
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` “The overriding rules of contract interpretation require a court to apply the plain
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`meaning of the words used, subject to interpretation from the context and circumstances of the
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`transactions.” First Christian Assembly of God, Montbello v. City & Cty. Of Denver, 122 P.3d
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`1089, 1092 (Colo. App. Ct. 2005) (internal citations omitted). The parties failed to define
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`“predecessor” in the PSA, so the Court must turn to the common meaning of the term.
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`According to Black’s Law Dictionary (10th ed. 2014), a predecessor is defined in
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`relevant part as “[s]omeone who precedes another, esp. in an office or position.” The tenth
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`edition of Black’s Law Dictionary defines the related term “successor”2 as it pertains to
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`corporations as “[a] corporation that, through amalgamation, consolidation, or other assumption
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`of interests, is vested with the rights and duties of an earlier corporation.”3 However, the
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`2 The term “successor” is not used in the PSA, and therefore its definition is helpful only to the extent it
`contrasts with the term “predecessor.”
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`3 The Court notes that Design Basics’ argument rests on the definition of predecessor from the fifth
`edition but uses the tenth edition for its definition of successor. The fifth edition of Black’s Law
`Dictionary defined predecessor as “the correlative of successor.” See Zenith Radio Corp. v. Matsushita
`Elec. Indus. Co., 505 F. Supp. 1190, 1253 n.79 (E.D. Pa. 1980) (citing the Black’s Law Dictionary (5th
`ed. 1979)). The fifth edition defines “successor in interest” as it pertains to corporations as “ordinarily
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 10 of 19
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`definition of predecessor “does not express or require any relation of legal privity.” CBS
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`Outdoor, Inc. v. 800 Lincoln LLC, No. 11-cv-2233, 2012 WL 4356241, at *11 (D. Colo. Sept.
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`24, 2012). And, courts have held that successor “does not and cannot have a ‘formal definition’
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`because its definition depends on the facts . . . at issue.” Id. at *12 (citing N.R.L.B. v. Jarm
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`Enters., Inc., 785 F.2d 195, 200 (7th Cir. 1986)). “[T]he more usual definition of successor
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`includes a business that succeeds to the whole or part of the business of another company.”
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`Phoenix Capital, Inc. v. Dowell, 176 P.3d 835, 845 (Colo. Ct. App. 2007) (finding trial court had
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`not abused its discretion in concluding company was a successor). “The term successor has
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`[also] been defined as one that succeeds or follows: one who takes the place which another has
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`left and sustains the like part or character.” White v. Short, 794 P.2d 1110, 1111 (Colo. Ct. App.
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`1990). Given the broad and varied meanings of these terms, the language of the PSA is fairly
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`susceptible to more than one interpretation. Thus, the Court finds that the term “predecessor” is
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`ambiguous as used in the PSA.
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`Both parties present speculative arguments as to what the parties to the PSA meant when
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`they entered into the agreement regarding what entities would constitute “predecessors” of
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`ProBuild. The Defendants argue that it would be manifestly unfair for them to be unable to assert
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`defenses based on the PSA, and Design Basics argues that extending this common term to
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`include the transaction between Lanoga and Wickes would set an undesirable precedent. The
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`intent of the parties entering the contract, and whether an entity is a third party beneficiary, is a
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`question of fact, and it is for the jury to decide whether the parties intended to include entities
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`such as Wickes that were subject to an asset sale rather than a stock sale within the meaning of
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`indicat[ing] statutory succession as, for instance, when corporation changes its name but retains same
`property,” which is notably different from Design Basics’ proposed definition of successor. Id.
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 11 of 19
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`the term “predecessor.” See Dorman, 914 P.2d at 912 (quoting Union Rural Elec. Ass’n, 661
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`P.2d at 251 n.5); East Meadows Co., LLC v. Greeley Irrigation Co., 66 P.3d 214, 217 (Colo.
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`App. Ct. 2003). Therefore, the Court will not grant summary judgment to either party on the
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`issue of whether Wickes is a predecessor of ProBuild.
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`B.
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`Sufficiency of Written Inquiry and Response
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`As part of the PSA, Design Basics granted a retroactive license to ProBuild and
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`ProBuild’s predecessors for copyrighted works owned or controlled by Design Basics. Design
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`Basics also granted a retroactive license to ProBuild’s and its predecessors’ customers for whom
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`ProBuild or its predecessors drew home plans, prior to the Effective Date of the PSA. However,
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`the PSA provided for an exception to this licensing requirement:
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`[W]ithin 60 days after receipt of written inquiry by Design basics . . . delivered to
`ProBuild, attn.: Mark Butterman, Senior Vice President & General Counsel, 7595
`Technology Way, Suite 500, Denver Colorado, 890237, with a copy to Timothy M.
`Reynolds, Holme Roberts & Owen LLP, 1801 13th Street, Suite 300, Boulder,
`Colorado, 80302, identifying a particular home plan, the alleged infringer, and
`contact information for the alleged infringer, ProBuild or the alleged infringer must
`show by contemporaneous invoice or other documentation that ProBuild or one of
`ProBuild’s predecessors copied or created a derivative of the home plan for the
`alleged infringer prior to the Effective date of this Agreement. Sufficient evidence
`shall include a contemporaneous home plan in ProBuild’s files (i) that is
`substantially similar to the home plan at issue; (ii) that was prepared for the alleged
`infringer by ProBuild or its predecessor prior to the Effective Date as shown by
`documentation or sworn statement by a person with personal knowledge. In the
`event that ProBuild or the alleged infringer provide only a contemporaneous home
`plan from ProBuild’s files and a sworn statement, then Design Basics . . . shall be
`entitled, if they so request, to interview the affiant under oath for no more than one
`hour concerning the contents of the sworn statement. Design Basics shall be entitled
`to challenge the sufficiency of such evidence, with any dispute regarding whether
`ProBuild or one of its predecessors in fact created the plan in question for the
`alleged infringer prior to the Effective Date to be treated as a dispute relating to this
`Agreement. The failure of ProBuild or the alleged infringer to provide such
`evidence within the time specified shall prohibit such alleged infringer from
`claiming any rights to the license grated herein concerning that particular home
`plan.”
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 12 of 19
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`(PSA 5, ECF No. 46-3.)
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`On April 4, 2016, Design Basics sent a letter to Mark Butterman, alleging that certain of
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`the Defendants’ home plans infringed Design Basics’ copyrights. The Defendants argue that
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`Design Basics’ April 4, 2016, letter was deficient as a written inquiry because Design Basics
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`failed to send a copy to ProBuild’s outside counsel, Timothy M. Reynolds, as explicitly required,
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`and therefore, the inquiry was not operative to begin the sixty-day time period in which the
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`Defendants had to submit evidence regarding the creation and sale of the accused home plans.
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`Regardless, the Defendants argue that the June 3 and June 7, 2016, responses were timely
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`because ProBuild did not receive Design Basics’ letter until April 8, 2016. Design Basics
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`disagrees that the June 7, 2016, submission was within the sixty-day period. The Court assumes
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`that this disagreement is premised on the fact that Design Basics sent the letter on April 4, 2016,
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`and the sixty-day period therefore extended only until June 3, 2016. But, the PSA clearly states
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`that the Defendants needed to respond within sixty days after receipt of written inquiry, not
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`within sixty days of the date of the inquiry. Design Basics has produced no evidence tending to
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`show that ProBuild in fact received the April 4, 2016, letter prior to April 8, 2016. Thus, the
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`Court agrees with the Defendants that the materials submitted to Design Basics on both June 3
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`and June 7, 2016, were timely.
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`The next question the Court must address is whether the supplemental evidence that the
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`Defendants submitted after the sixty-day period was timely. The Defendants submitted additional
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`evidence to Design Basics on August 10, 2016, and Design Basics deposed Mark Heller on
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`August 17, 2017. The Defendants submitted to the Court a copy of an email conversation from
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`December 2016, between counsel for the parties, in which they stipulated that Design Basics
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`would defer sending the sixty-day notice letter as contemplated by the PSA “until the parties
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 13 of 19
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`conclude[d] settlement negotiations and/or mediation that fail to result in a settlement.” (See
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`Defs. Br. in Supp. of Sum. J. Ex K 25–26, ECF No. 44-2.) The Defendants argue that because no
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`mediation has occurred yet, and because Design Basics has yet to send the contemplated notice
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`letter, any evidence that the Defendants submit remains timely. Design Basics does not address
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`this assertion in its briefing. The Court finds the Defendants’ argument persuasive, and agrees
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`that the supplemental evidence submitted after June 7, 2016, was timely.
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`C.
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`1.
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`Sufficiency of the Evidence Submitted to Design Basics
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`The Defendants’ Spencer 5 Plan
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`The accused Spencer 5 plan correlates to Design Basics’ Baisden plan, which was created
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`by WLM, not Design Basics. The Defendants’ contention regarding the Spencer 5 Plan is that it
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`predates the Baisden plan and therefore cannot be a copy or derivative of the Basiden plan. In
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`support, the Defendants offer United States Copyright Office records, which show that the
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`Baisden plan was not published until August 18, 2000. This is significant because a home based
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`off of the Spencer 5 plan was fully constructed by July 18, 2000. Design Basics argues that the
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`publication date listed on the Copyright Office Registration Certificate is incorrect, as evidenced
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`by a sworn declaration by Pat Carmichael and a supplemental registration application filed with
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`the Copyright Office on October 4, 2017. Thus, Design Basics asserts that there is at least a
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`genuine issue of material fact that precludes summary judgment on this point.
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`In reply, the Defendants argue that they and the Court are entitled to rely on the
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`information stated in the Registration Certificate. Registered copyrights are granted a
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`presumption of validity if they are registered “before or within five years after first publication of
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`the work.” 17 U.S.C. § 410(c). Registration certificates constitute both prima facie evidence of
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 14 of 19
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`the validity of the copyright and “of the facts stated in the certificate.” The Court agrees that the
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`Registration Certificate pertaining to the Baisden plan constitutes prima facie evidence of the
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`publication date, and it is Design Basics’ burden to rebut that evidence.
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`Design Basics has produced rebuttal evidence, mostly by way of the Carmichael
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`declaration, that tends to show an earlier date of publication. The Carmichael declaration states
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`that the actual first date of publication for the Baisden plan was September 1999, when the
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`Baisden plan was uploaded to Design Basics’ website. (See Pl. Br. in Resp. to Defs. Mot. for
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`Sum. J. Ex. 1, Carmichael Decl. ¶¶ 7–8, ECF No. 50-1.) The declaration states that the
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`publication date was listed incorrectly on the initial application for copyright registration
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`because, at the time, Design Basics was unaware that uploading the plan to its website as a “New
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`Product Promotion” constituted publication. (Id. at ¶ 9.)
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`The Defendants argue that the statements in Carmichael’s declaration are “demonstrably
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`false.” The Defendants make arguments regarding several of Carmichael’s statements, including
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`that it was W.L. Martin that signed the copyright application rather than Design Basics, that the
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`declaration contains multiple levels of hearsay that do not fit into one of the exceptions in
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`Federal Rule of Evidence 803, that merely posting the Baisden plan on its website did not
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`constitute publication, and that no registration has issued as a result of the supplemental
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`application.
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`The Court agrees that Carmichael’s declaration does not appear to be based on personal
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`knowledge. Under Rule 56(c)(4), any affidavit or declaration “used to support or oppose a
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`motion [for summary judgment] must be made on personal knowledge, set out facts that would
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`be admissible in evidence, and show that the affiant or declarant is competent to testify on the
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`matters stated.” On a motion for summary judgment, a court must disregard parts of an affidavit
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 15 of 19
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`that fail to comply with this rule. Cooper-Schut v. Visteon Auto. Sys., 361 F.3d 421, 429 (7th Cir.
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`2004); Friedel v. City of Madison, 832 F.2d 965, 970 (7th Cir. 1987). Carmichael’s declaration
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`states, in relation to the Baisden plan’s registration, that his assertions are based “[u]pon review
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`of Design Basics’ business records,” which does not demonstrate personal knowledge of the
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`events surrounding the registration. (Carmichael Decl. ¶ 7.) Moreover, Carmichael states that it
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`was Design Basics that made the discovery regarding the publication date, not his personal
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`discovery. (Id.)
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`Although the Carmichael Declaration references business records, it does not attach the
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`relevant business records, but instead provides only a chart that is purportedly an excerpt from
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`those business records. However, there is no explanation as to how these business records were
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`kept, nor even an assertion regarding the date of the record’s creation. “Business records are
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`reliable to the extent they are compiled consistently and conscientiously.” United States v.
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`Ramsey, 785 F.2d 184, 192 (7th Cir. 1990). But, the party offering the evidence must lay a
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`proper foundation as to the reliability of the records, as shown by the testimony of the custodian
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`or other qualified witness. United States v. Briscoe, 896 F.2d 1476, 1494 (7th Cir. 1990).
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`Carmichael makes no assertion that he is a custodian of these records or otherwise has personal
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`knowledge of the procedure under which these documents were created. See Collins v. Kibort,
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`143 F.2d 331, 337 (7th Cir. 1998) (finding district court abused its discretion by admitting
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`evidence under the business records exception because the exception “does require that the
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`witness have knowledge of the procedure under which the records were created”). Design Basics
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`has not demonstrated that this chart otherwise meets any of the hearsay exceptions. Because his
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`declaration demonstrates no personal knowledge of the original registration or publication of the
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`Baisden plan at all, the Court must disregard his statements relating to the publication date of the
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`USDC IN/ND case 1:16-cv-00175-TLS-SLC document 54 filed 05/03/18 page 16 of 19
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`Baisden plan. Without Carmichael’s Declaration, Design Basics has not produced evidence from
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`which a reasonable trier of fact could conclude that Design Basics can overcome the presumption
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`of validity and demonstrate an