Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 1 of 20
`United States District Court
`Southern District of Texas
`ENTERED
`June 06, 2018
`David J. Bradley, Clerk
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`CIVIL ACTION NO. H-16-1427
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`§
`§
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`§§
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`§
`§
`§
`§
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`PRESTON WOOD & ASSOCIATES,
`LLC,
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`Plaintiff,
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`v.
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`RZ ENTERPRISES USA, INC., et al.,
`Defendants.
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`MEMORANDUM AND ORDER
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`This architectural copyright case is before the Court on the Motion for Partial
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`Summary Judgment (“Motion”) [Doc. # 109] filed by Plaintiff Preston Wood &
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`Associates, LLC (“Preston Wood”). Defendants UL, Inc. d/b/a Urban Living (“Urban
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`Living”) and Vinod Ramani filed a Response [Doc. # 117], and Plaintiff filed a Reply
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`[Doc. # 120].1 Having reviewed the record and the applicable legal authorities, the
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`Motion is granted in part and denied in part.
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`I.
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`BACKGROUND
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`Preston Wood is an architectural design firm. Urban Living is a real estate
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`development firm, and Ramani is its Chief Executive Officer (“CEO”). Preston Wood
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`alleges that it owns valid copyrights in architectural works and technical drawings.
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`1
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`Plaintiff also filed Objections to portions of Defendants’ Summary Judgment
`Evidence [Doc. # 118]. Defendants filed a Response [Doc. # 124], and Plaintiff
`filed a Reply [Doc. # 125].
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`Preston Wood and Urban Living entered into a “Design Only/Stock Plan
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`License Agreement” (the “Agreement”) in January 2014. The Agreement had a one-
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`year term, with a provision for renewal for an additional year if requested in writing
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`by Urban Living at least thirty days prior to the scheduled termination date. See
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`Agreement, Exh. 14 to Motion, ¶ 1.b. The parties did not renew the Agreement for
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`the second year.
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`Plaintiff alleges that Urban Living and Cameron Architects, Inc. (“Cameron”)
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`entered into a partnership in February 2014. Plaintiff alleges that beginning in
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`March 2014, the Urban Living/Cameron partnership was entering into contracts with
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`customers under which Cameron would create derivatives of Preston Wood’s
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`architectural works.
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`Preston Wood alleges that Urban Living failed to comply with certain
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`conditions precedent and, therefore, Urban Living’s use of Preston Wood’s
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`copyrighted works constitutes copyright infringement. Defendants dispute that the
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`Agreement terms at issue were conditions precedent, and they have asserted the
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`affirmative defenses of (1) implied license and (2) innocent infringement.
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`Plaintiff moves for summary judgment on Defendants’ affirmative defenses and
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`various legal or factual issues in the case, but does not seek summary judgment on any
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`of its claims entirely. The Motion has been fully briefed and is now ripe for decision.
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`II.
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`STANDARD FOR SUMMARY JUDGMENT
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`Rule 56 of the Federal Rules of Civil Procedure provides for the entry of
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`summary judgment against a party who fails to make a sufficient showing of the
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`existence of an element essential to his case and on which he will bear the burden of
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`proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Curtis v.
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`Anthony, 710 F.3d 587, 594 (5th Cir. 2013); Little v. Liquid Air Corp., 37 F.3d 1069,
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`1075 (5th Cir. 1994) (en banc). Summary judgment “should be rendered if the
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`pleadings, the discovery and disclosure materials on file, and any affidavits show that
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`there is no genuine issue as to any material fact and that the movant is entitled to
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`judgment as a matter of law.” FED. R. CIV. P. 56(a); Celotex, 477 U.S. at 322-23;
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`Curtis, 710 F.3d at 594.
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`For summary judgment, the initial burden falls on the movant to identify areas
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`in which there is an “absence of a genuine issue of material fact.” ACE Am. Ins. Co.
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`v. Freeport Welding & Fabricating, Inc., 699 F.3d 832, 839 (5th Cir. 2012). The
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`moving party may meet its burden by pointing out “the absence of evidence
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`supporting the nonmoving party’s case.” Malacara v. Garber, 353 F.3d 393, 404 (5th
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`Cir. 2003) (citing Celotex, 477 U.S. at 323; Stults v. Conoco, Inc., 76 F.3d 651, 656
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`(5th Cir. 1996)).
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`If the moving party meets its initial burden, the non-movant must go beyond the
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`pleadings and designate specific facts showing that there is a genuine issue of material
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`fact for trial. See Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th Cir. 2004);
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`Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001) (internal
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`citation omitted). “An issue is material if its resolution could affect the outcome of
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`the action.” Spring Street Partners-IV, L.P. v. Lam, 730 F.3d 427, 435 (5th Cir.
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`2013). “A dispute as to a material fact is genuine if the evidence is such that a
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`reasonable jury could return a verdict for the nonmoving party.” DIRECT TV Inc. v.
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`Robson, 420 F.3d 532, 536 (5th Cir. 2006) (internal citations omitted).
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`In deciding whether a genuine and material fact issue has been created, the
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`court reviews the facts and inferences to be drawn from them in the light most
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`favorable to the nonmoving party. See Reaves Brokerage Co. v. Sunbelt Fruit &
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`Vegetable Co., 336 F.3d 410, 412 (5th Cir. 2003). “‘Conclusional allegations and
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`denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic
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`argumentation do not adequately substitute for specific facts showing a genuine issue
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`for trial.’” Pioneer Exploration, L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th
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`Cir. 2014) (quoting Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002)); accord Delta
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`& Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 399 (5th Cir.
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`2008). In the absence of any proof, the court will not assume that the non-movant
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`could or would prove the necessary facts. Little, 37 F.3d at 1075 (citing Lujan v. Nat’l
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`Wildlife Fed’n, 497 U.S. 871, 888 (1990)).
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`The Court may make no credibility determinations or weigh any evidence. See
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`Chaney v. Dreyfus Serv. Corp., 595 F.3d 219, 229 (5th Cir. 2010) (citing Reaves
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`Brokerage, 336 F.3d at 412-13). The Court is not required to accept the nonmovant’s
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`conclusory allegations, speculation, and unsubstantiated assertions which are either
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`entirely unsupported, or supported by a mere scintilla of evidence. Id. (citing Reaves
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`Brokerage, 336 F.3d at 413); accord, Little, 37 F.3d at 1075. Affidavits cannot
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`preclude summary judgment unless they contain competent and otherwise admissible
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`evidence. See FED. R. CIV. P. 56(c)(4); Love v. Nat’l Med. Enters., 230 F.3d 765, 776
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`(5th Cir. 2000).
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`III. COPYRIGHT INFRINGEMENT CLAIM
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`To prevail on a claim of copyright infringement, “a party must show that (1) he
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`owns a valid copyright and (2) the defendant copied constituent elements of the
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`plaintiff’s work that are original.” Baisden v. I’m Ready Productions, Inc., 693 F.3d
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`491, 499 (5th Cir. 2012) (internal quotations and citation omitted). Plaintiff seeks
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`summary judgment only on the first element – that it owns valid copyrights in its
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`architectural works and technical drawings.
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`“To qualify for copyright protection, a work must be original to the author.”
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`Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 345 (1991). Defendants
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`argue that Plaintiff’s architectural works and technical drawings lack adequate
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`originality for copyright protection.
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`As an initial matter, Defendants acknowledged and agreed in the Agreement
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`that Plaintiff owns valid copyrights in the subject works. See Agreement, ¶ 3. Having
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`contractually admitted that Plaintiff’s copyrights are valid, Defendants cannot now
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`challenge their validity. See Tacori Enters. v. Nerces Fine Jewelry, 2013 WL
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`12113229, *5 n.6 (C.D. Cal. Sept. 20, 2013).
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`Moreover, a certificate of registration from the Copyright Office gives rise to
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`a rebuttable presumption that the copyright is valid. See 17 U.S.C. § 410(c)
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`(certificates of registration “constitute prima facie evidence of the validity of the
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`copyright[s]”); Norma Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 47 (5th Cir.
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`1995). Plaintiff has presented uncontested evidence that it has Certificates of
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`Registration for each of the architectural works and technical drawings at issue. See
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`Certificates of Registration, Exhs. 3-13 to Motion. Therefore, Defendants must
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`present evidence that raises a genuine issue of material fact regarding “originality”
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`sufficient to overcome the presumption. Defendants do not present evidence
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`Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 7 of 20
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`regarding the lack of originality in the technical drawings. As a result, Plaintiff is
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`entitled to summary judgment that it owns valid copyrights in those drawings.
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`Defendants have challenged the originality of Plaintiff’s architectural works.
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`A defendant who challenges the originality of copyrighted material has the burden to
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`overcome the presumption of validity by presenting either (1) proof that the product
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`was copied from other works, or (2) similarly probative evidence regarding the lack
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`of originality. See Lennar Homes of Texas Sales & Mktg., Ltd. v. Perry Homes, LLC,
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`117 F. Supp. 3d 913, 930 (S.D. Tex. 2015) (citing Masquerade Novelty, Inc. v. Unique
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`Indus., Inc., 912 F.2d 663, 668-69 (3d Cir. 1990)). Defendants have presented no
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`evidence that Plaintiff’s architectural works were copied from others’ works.
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`“The originality of an architectural work is determined by examining ‘the
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`overall form [of the work] as well as the arrangement and composition of spaces and
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`elements in the design.’” Danze & Davis Architects, Inc. v. Legend Classic Homes,
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`Ltd., 2011 WL 2940671, *3 (S.D. Tex. July 19, 2011) (quoting 17 U.S.C. § 101). For
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`architectural works, “the overall work can be original even if it is made up of
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`individual elements that are not protected.” Id. (citing Oravec v. Sunny Isles Luxury
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`Ventures, L.C., 527 F.3d 1218, 1225 (11th Cir. 2008); T–Peg, Inc. v. Vermont Timber
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`Works, Inc., 459 F.3d 97, 110 (6th Cir. 2006); Sturdza v. United Arab Emirates, 281
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`F.3d 1287, 1297 (D.C. Cir. 2002); Interplan Architects, Inc. v. C.L. Thomas, Inc.,
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`2010 WL 4366990, *33 (S.D. Tex. Oct. 27, 2010)).
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`Defendants have presented the Affidavit of Vinod Ramani, who opined that
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`factors such as “market demand, development criteria, regulations and other external
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`factors” dictate the “eventual design of the properties at issue rather than creative
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`output by [Preston Wood].” See Ramani Aff., Exh. 1 to Response, ¶ 13. Defendants
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`also present the Affidavit of their expert, Leonard Bachman, Exh. 7 to Response. In
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`his Affidavit, Bachman conflates originality and creativity. See Bachman Aff., ¶ 4.
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`He states that Plaintiff’s works are at the “most extreme low point . . . on the
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`normative-to-critical scale of creativity and originality.” Id. He states that Plaintiff’s
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`works lack evidence of “an effort to transcend” the practical parameters dictated by
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`the townhouse market and such factors as regulations, the economy and conventional
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`approaches. See id., ¶ 5. He states that the designer displayed “ambivalence toward
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`any specific look and feel.” Id. Bachman expands on these opinions in his Letter
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`Report, Exh. 8 to Response. He spends multiple pages of the nine-page Report
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`discussing creativity in architecture and the importance of “critical design” by
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`architect’s such as Frank Lloyd Wright. See Letter Report, pp. 2-4. He recognizes
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`originality only if it is “critically worthy” and expresses a meaningful idea. See id. at
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`pp. 3-4. He concedes that Plaintiff’s architectural works contain design elements, but
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`complains that they are “merely decorative and arbitrary.” See id. at p. 5.
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`Defendants’ evidence, while interesting reading, does not address the issue of
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`originality for purposes of copyright law.2 Originality for copyright purposes does not
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`require that the work be novel or express a meaningful underlying idea, only “that the
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`work was independently created by the author (as opposed to copied from other
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`works), and that it possesses at least some minimal degree of creativity.” See Feist,
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`499 U.S. at 345. “[T]he requisite level of creativity is extremely low; even a slight
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`amount will suffice.” Id. Indeed, the originality requirement amounts to “little more
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`than a prohibition of actual copying.” Lennar Homes, 117 F. Supp. 3d at 930 (quoting
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`Alfred Bell & Co. v. Catalda Fine Arts, 191 F.2d 99, 103 (2d Cir. 1951)). Bachman
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`does not opine that Preston Wood’s architectural works were copied, and he concedes
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`that they have some minimal creativity. His opinion, as well as that of Ramani, that
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`Plaintiff’s architectural works lack creativity because they consist of features that are
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`necessitated by industry standards or market demands does not create a fact dispute
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`2
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`In his Affidavit, Bachman states that he is “confident that the average layperson,
`informed consumer, knowledgeable homebuilder, or qualified design professional
`would not identify the [Preston Wood] design as an original product if any of those
`people were choosing from a representative sample of speculative market townhouse
`designs of this type.” Bachman Aff., ¶ 6. In his Report, he states that he believes “a
`survey of comparable townhouse projects in Houston or other urban markets would
`surely conclude that the [Preston Wood body of work] is merely derivative of the
`collective body of speculative market townhouse design in the U.S. today.” Report,
`p. 4. There is no evidence, however, that Bachman has conducted any relevant
`surveys. Therefore, his beliefs regarding what relevant surveys would reveal should
`he conduct them is improper summary judgment evidence and is not considered by
`the Court.
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`regarding whether the works are original for purposes of copyright validity. See
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`Danze & Davis, 2011 WL 2940671 at *5 (citing Interplan Architects, 2010 WL
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`4366990 at *33). As a result, Defendants have failed to present evidence regarding
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`originality sufficient to rebut the presumption of copyright validity. The Court grants
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`Plaintiff’s request for summary judgment that it has a valid copyright in the
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`architectural works and technical drawings at issue in this case.
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`IV. REQUESTS FOR DECLARATIONS REGARDING AGREEMENT
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`Plaintiff seeks summary judgment on its request for declaratory judgment on
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`the following statements: (1) Urban Living never complied with the conditions
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`precedent to sublicense; (2) construction of homes by purported Urban Living
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`sublicensees was not authorized under the Agreement; (3) Urban Living did not
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`comply with the conditions precedent to engage outside design professionals to
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`modify [Preston Wood’s] works; (4) Urban Living’s purported sublicensees did not
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`have any right to modify or engage outside design professionals to modify [Preston
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`Wood’s] works; (5) Urban Living’s engagement of outside design professionals to
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`modify [Preston Wood’s] works caused the automatic termination of the Agreement;
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`(6) other than completing the construction of houses properly licensed as of the date
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`of termination, no other use of [Preston Wood’s] works was authorized by the
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`Agreement. Plaintiff’s request for summary judgment on each of these statements is
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`based, at least in part, on Urban Living’s failure to comply with purported “conditions
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`precedent” in the Agreement. Whether the relevant Agreement provisions are
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`conditions precedent is a matter that is contested by Defendants and that has not been
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`decided in this case. For that reason, the Court denies the Motion for Summary
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`Judgment on these six statements.
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`As an additional basis for denying the Motion regarding these statements, the
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`Court finds a genuine issue of material fact regarding whether most of the relevant
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`terms of the Agreement are conditions precedent. “A condition precedent is either an
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`act of a party that must be performed or a certain event that must happen before a
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`contractual right accrues or a contractual duty arises.” In re Deepwater Horizon, 786
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`F.3d 344, 361 (5th Cir. 2015); see also Solar Applications Eng’g, Inc. v. T.A.
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`Operating Corp., 327 S.W.3d 104, 108 (Tex. 2010). To determine whether a
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`provision in a contract is a condition precedent, rather than simply a contractual
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`promise or “covenant,” a court examines the parties’ intent as manifested in the
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`contract. See Interstate Contracting Corp. v. City of Dallas, Tex., 407 F.3d 708, 727
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`(5th Cir. 2005) (citing Criswell v. European Crossroads Shopping Ctr., Ltd., 792
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`S.W.2d 945, 948 (Tex. 1990)). Conditions precedent are disfavored, and “when the
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`parties’ intent is ambiguous the terms will be construed as covenants.” Id.
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`There are undertakings in the Agreement that are clearly and unequivocally
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`identified as “a strict condition precedent” to certain terms of the license granted by
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`the Agreement. For example, the requirement that Urban Living notify Preston Wood
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`in writing of the address of intended construction using the copyrighted architectural
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`works and technical drawings, and pay an appropriate fee, is clearly identified as “a
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`strict condition precedent” to Preston Wood’s license for Urban Living to construct
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`and sell the building. See Agreement, ¶ 1.a. Similarly, the requirements regarding
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`copyright management information is clearly identified as a “strict condition
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`precedent” to the licensing of reproductions and derivative works. See Agreement,
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`¶ 4. Each of these two provisions is clearly identified in the Agreement as a “strict
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`condition precedent” and, therefore, each is construed as such.
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`None of the other provisions in the Agreement, however, uses this same clear
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`language. For example, Plaintiff alleges that Defendants failed to comply with terms
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`in the Agreement relating to sublicenses and engaging outside professionals to modify
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`Preston Wood’s works. See, e.g., First Amended Complaint [Doc. # 39], ¶¶ 49-50.
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`The provisions in the Agreement requiring certain conduct in connection with
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`sublicenses and modification of Preston Wood’s works, however, do not include the
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`language identifying them as “a strict condition precedent.” See Agreement, ¶¶ 1.c;
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`2. Because these terms, while using “conditioned on” language, do not use the clear
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`and unambiguous term “a strict condition precedent” used elsewhere in the
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`Agreement, evidence of the parties’ intent is relevant.
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`Defendants have presented evidence regarding the parties’ intent at the time
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`they entered into the Agreement. Specifically, Defendants have presented evidence
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`of the parties’ course of dealing for several years and their intent to continue
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`conducting business in the same manner.3 This evidence is sufficient to raise a
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`genuine issue of material fact regarding whether the terms of the Agreement, other
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`than the two that are clearly identified as “a strict condition precedent,” were intended
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`by the parties to be covenants or conditions precedent. As a result, on this basis also,
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`Plaintiff’s motion for summary judgment on its request for declaratory judgment is
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`denied as to all six identified statements.
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`V.
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`AFFIRMATIVE DEFENSES
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`Plaintiff seeks summary judgment on Defendants’ affirmative defenses of
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`implied license and innocent infringement.
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`3
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`To the extent the evidence is offered to prove intent that the Agreement terms were
`covenants rather than conditions precedent, the Court accepts Defendants’ evidence.
`To the extent the evidence is offered to prove waiver or some form of estoppel, the
`evidence is not relevant because waiver and estoppel are affirmative defenses. See
`FED. R. CIV. P. 8(c). “Failure to timely plead an affirmative defense may result in
`waiver and the exclusion of the defense from the case.” LSREF2 Baron, L.L.C. v.
`Tauch, 751 F.3d 394, 398 (5th Cir. 2014) (citing Morris v. Homco Int’l, Inc., 853 F.2d
`337, 342-43 (5th Cir.1988)). Defendants have not asserted waiver or estoppel as
`affirmative defenses in this case.
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`A.
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`Implied License
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`Defendants assert the affirmative defense of implied license. See Second
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`Amended Answer and Affirmative Defenses [Doc. # 97], ¶ 123. Because the
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`existence of an implied license authorizing the use of copyrighted material is an
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`affirmative defense to an allegation of infringement, Defendants bear the burden of
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`proving that an implied license exists. See Carson v. Dynegy, Inc., 344 F.3d 446, 451
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`(5th Cir. 2003). An implied, nonexclusive license may arise when the totality of the
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`parties’ conduct indicates an intent to grant such a license.4 See Baisden v. I’m Ready
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`Prods., Inc., 693 F.3d 491, 501 (5th Cir. 2012); Lulirama Ltd., Inc. v. Axcess
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`Broadcast Services. Inc., 128 F.3d 872, 879 (5th Cir. 1997); Energy Intelligence Grp.,
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`Inc. v. Kayne Anderson Cap. Advisors, LP, 2017 WL 363004, *6 (S.D. Tex. Jan. 24,
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`2017). Courts have examined three factors to determine whether an implied
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`nonexclusive license exists:
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`(1) whether the parties were engaged in a short-term discrete transaction
`as opposed to an ongoing relationship; (2) whether the creator utilized
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`4
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`In 1997, the Fifth Circuit held that an implied nonexclusive license arises when “(1) a
`person (the licensee) requests the creation of a work, (2) the creator (the licensor)
`makes the particular work and delivers it to the licensee who requested it, and (3) the
`licensor intends that the licensee-requestor copy and distribute his work.” Lulirama
`Ltd., Inc. v. Axcess Broadcast Servs., Inc., 128 F.3d 872, 879 (5th Cir. 1997). In
`2012, the Fifth Circuit acknowledged the Lulirama three-part test, but held that an
`implied license could “arise in other circumstances where the totality of the parties’
`conduct supported such an outcome.” Baisden v. I’m Ready Prods., Inc., 693 F.3d
`491, 501 (5th Cir. 2012).
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`written contracts . . . providing that copyrighted materials could only be
`used with the creator’s future involvement or express permission; and (3)
`whether the creator’s conduct during the creation or delivery of the
`copyrighted material indicated that use of the material without the
`creator’s involvement or consent was permissible.
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`Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505, 514-16 (4th Cir. 2002);
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`Interplan Architects, Inc. v. C.L. Thomas, Inc., 2010 WL 4366990, *40 (S.D. Tex.
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`Oct. 27, 2010).
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`In this case, the evidence is undisputed that the parties were engaged in an
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`ongoing relationship rather than in a discrete transaction. As noted above, the
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`Agreement had a one-year term, with a provision for renewal for an additional year.5
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`See Agreement, ¶ 1.b. It was during the original one-year term of the Agreement that
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`the alleged copyright infringement occurred. Additionally, it is undisputed that the
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`parties “have done business together for years, going back until well before the events
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`at issue in this lawsuit.” See Ramani Aff., ¶ 3.
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`The second factor is whether there was a written contract providing that
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`copyrighted materials could only be used with the creator’s future involvement or
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`express permission.6 In this case, it is undisputed that the parties entered into the
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`5
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`6
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`As noted above, there is no evidence that Urban Living submitted a written request
`for renewal of the Agreement for the additional year.
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`Defendants argue that an express contract does not preclude recovery under an
`implied license, citing Fantastic Fakes, Inc. v. Pickwick Int’l, Inc., 661 F.2d 479 (5th
`(continued...)
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`Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 16 of 20
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`Agreement, which provided clearly and unequivocally that certain conduct by
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`Defendants, conduct in connection with the Agreement and the copyrighted
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`architectural works and technical drawings, required prior written approval by
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`Plaintiff. See Agreement, ¶¶ 1, 2. The existence of a written Agreement providing
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`an express nonexclusive license subject to the terms of the Agreement weighs heavily
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`against the existence of an implied license. See, e.g., Kirtsaeng v. John Wiley & Sons,
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`Inc., 568 U.S. 519, 584 (2013) (discussing an implied license only to the extent that
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`express licenses do not exist); Lulirama, 128 F.3d at 879 (finding implied license as
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`to jingles that were written after the original Jingle Writing Agreement expired).
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`Indeed, under Texas law, quasi-contractual claims are unavailable when a valid,
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`express contract exists that governs the subject matter of the dispute. See Johnson v.
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`6
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`(...continued)
`Cir. 1981). Defendants’ reliance on this case is troubling. Initially, and of least
`importance, Defendants cite to page 500 of the case, which ends at page 488. More
`importantly, the case was decided based on Georgia law and involved whether there
`was an implied condition in an express license. The Fifth Circuit held that there
`existed “an implied condition to the licensing agreement requiring the licensee to take
`actions to protect the rights retained by the licensor. Therefore, when the licensor has
`not manifested an intent to dedicate his copyright to the public domain, yet the
`licensee has failed to affix notice adequate to protect the licensor’s copyright, the
`courts have consistently found that the licensee was acting without authority of the
`licensor in distributing the copyrighted material.” Id. at 485-86. This case in no way
`supports Defendants’ argument that an express contract does not preclude the
`successful assertion of an implied license affirmative defense.
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`Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 17 of 20
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`Wells Fargo Bank, NA, 999 F. Supp. 2d 919, 929 (N.D. Tex. 2014); Quintel Tech.,
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`Ltd. v. Huawei Techs. USA, Inc., 2018 WL 446320, *7 (E.D. Tex. Jan. 17, 2018).
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`The third factor is whether the copyright holder’s conduct during the delivery
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`of the copyrighted material indicated that use of the material without the creator’s
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`consent was permissible. As noted above, the uncontested evidence in this case
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`establishes that Plaintiff delivered the copyrighted works to Defendants subject to the
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`Agreement, which provided that certain conduct by Defendants in connection with the
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`Agreement and the copyrighted architectural works and technical drawings required
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`prior written approval by Plaintiff. See Agreement, ¶¶ 1, 2. Cases that have found the
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`existence of an implied license usually involved delivery of the copyrighted work
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`without restrictions. See, e.g., Hunn v. Dan Wilson Homes, Inc., 789 F.3d 573, 587
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`(5th Cir. 2015) (an implied nonexclusive license was created when the copyright
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`holder delivered plans for custom homes without any restrictions on the recipient’s
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`ability to use the delivered drawings); Hunn v. Dan Wilson Homes, Inc., 2014 WL
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`12584308, *12 (N.D. Tex. Jan. 29, 2014), aff’d, 789 F.3d 573 (5th Cir. 2015) (noting
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`that the intent of the parties was to grant an implied license for the use of custom
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`home plans “unless the parties explicitly agreed otherwise”).
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`Consideration of the uncontested evidence in the case, and the three factors set
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`forth in Nelson-Salabes, demonstrates there is no genuine issue of material fact that
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`Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 18 of 20
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`Plaintiff did not intend to grant Defendants an implied license with terms different
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`from those set forth in the express license granted by the Agreement. Plaintiff is
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`entitled to summary judgment on Defendants’ implied license affirmative defense.
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`B.
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`Innocent Infringement
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`Defendants assert the affirmative defense of innocent infringement under 17
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`U.S.C. § 504(c)(2). See Second Amended Answer and Affirmative Defenses, ¶ 124.
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`The cited statute provides that “where the infringer sustains the burden of proving, and
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`the court finds, that such infringer was not aware and had no reason to believe that his
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`or her acts constituted an infringement of copyright, the court in its discretion may
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`reduce the award of statutory damages to a sum of not less than $200.”7 17 U.S.C.
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`§ 504(c)(2).
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`In this case, Plaintiff has presented uncontroverted evidence that Defendants
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`had possession of Plaintiff’s works that bore a copyright notice as required by 17
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`U.S.C. § 401(b).8 Where, as here, the published copy or copies of the copyrighted
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`works to which the defendant had access contain the § 401(b) copyright notice, then
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`Section 504(c)(2) does not provide a defense to the copyright infringement action but,
`instead, provides for a reduction in the minimum amount of statutory damages per act
`of infringement. 17 U.S.C. § 504(c)(2); Matthew Bender & Co. v. W. Pub. Co., 240
`F.3d 116, 123 (2d Cir. 2001).
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`7
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`8
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`The copyright notice must include (1) the copyright symbol or the word “Copyright,”
`(2) the year of first publication of the work, and (3) the name of the owner of the
`copyright in the work. See 17 U.S.C. § 401(b).
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`Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 19 of 20
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`“no weight shall be given to such a defendant’s interposition of a defense based on
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`innocent infringement” except as provided in the last sentence of section 504(c)(2),
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`which is inapplicable to the facts at bar.9 See Matthew Bender & Co. v. W. Pub. Co.,
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`240 F.3d 116, 123 (2d Cir. 2001); Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F.
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`Supp. 2d 737, 753 (D. Md. 2003). Therefore, Plaintiff is entitled to summary
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`judgment on the innocent infringement affirmative defense.
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`VI. CONCLUSION AND ORDER
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` Based on the foregoing, it is hereby
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`ORDERED that Plaintiff’s Motion for Partial Summary Judgment [Doc. # 109]
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`is GRANTED as to the validity of Plaintiff’s copyrights, GRANTED on the
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`affirmative defenses of implied license and innocent infringement, and DENIED on
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`the request for declaratory judgment on the six statements identified in the Motion.
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`9
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`The last sentence of § 504(c)(2) applies only if the infringer was:
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`(i) an employee or agent of a nonprofit educational institution, library,
`or archives acting within the scope of his or her employment who, or
`such institution, library, or archives itself, which infringed by
`reproducing the work in copies or phonorecords; or
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`(ii) a public broadcasting entity which or a person who, as a regular part
`of the nonprofit activities of a public broadcasting entity (as defined in
`section 118(f)) infringed by performing a published nondramatic
`literary work or by reproducing a transmission program embodying a
`performance of such a work.
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`Case 4:16-cv-01427 Document 130 Filed in TXSD on 06/06/18 Page 20 of 20
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`SIGNED at Houston, Texas, this 6th day of June, 2018.
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