United States Court of Appeals
` For the Eighth Circuit
`___________________________
`
`No. 22-1976
`___________________________
`
`Cornice & Rose International, LLC
`
`lllllllllllllllllllllPlaintiff - Appellant
`
`v.
`
`lllllllllllllllllllll Four Keys, LLC; First Security Bank & Trust Co.; Perry
`Novak Electric, Inc.; Kurt Herbrechtsmeyer; Dean Snyder
`Construction Co.; Mick Gage Plumbing & Heating, Inc.;
`Northern Cedar Service Co., Inc.; WWA Design, LLC,
`doing business as Atura Architecture
`
` Defendants - Appellees
`
`Marco Technologies, LLC; Young Construction, Ltd.;
`Kamm Excavating Corp.; Superior Lumber, Inc.; Brian Young
`
`lllllllllllllllllllllDefendants
` ____________
`
`Appeal from United States District Court
`for the Northern District of Iowa - Eastern
` ____________
`
`Submitted: April 12, 2023
`Filed: August 11, 2023
`[Published]
`____________
`
`
`

`

`Before LOKEN, SHEPHERD, and KELLY, Circuit Judges.
`____________
`
`PER CURIAM.
`
`The Architectural Works Copyright Protection Act of 1990 (AWCPA)1
`extended copyright protection to “architectural works,” 17 U.S.C. § 102(a)(8),
`defined in 17 U.S.C. § 101 as “the design of a building as embodied in any tangible
`medium of expression, including a building, architectural plans, or drawings.” The
`principal question raised by this appeal is whether First Security Bank & Trust
`Company (the “Bank”), which purchased an uncompleted building in a sale approved
`by the bankruptcy court in the property owner’s Chapter 7 liquidation proceeding,
`infringed the architect’s copyright in the building by completing the building without
`the permission of the building’s architect, Cornice & Rose (“C&R”). On this record,
`we agree with the district court there was no actionable infringement because C&R’s
`infringement claims are precluded by the bankruptcy court’s order approving the sale.
`
`I. Background
`
`McQuillen Place Company, LLC (“McQuillen”), retained C&R, an
`architectural firm, to design a building to be built in Charles City, Iowa (“the
`Building”). C&R obtained copyright protection under the AWCPA for its technical
`drawings and for the building itself, the tangible embodiment of its design work
`product. See 17 U.S.C. § 102(a)(5) & (8). The Bank was the primary construction
`lender to McQuillen and obtained a first mortgage on the Building. On April 25,
`2019, with the Building approximately ninety percent complete, McQuillen halted
`construction and filed for protection under Chapter 11 of the Bankruptcy Code.
`
`1Pub. L. No. 101-650, §§ 701-706, 104 Stat. 5133-34 (1990) (codified at
`scattered sections of 17 U.S.C.).
`
`-2-
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`

`

`The bankruptcy case was later converted to a Chapter 7 liquidation proceeding.
`In March 2020, the United States Trustee moved to sell the Building to the Bank as
`high bidder under 11 U.S.C. § 363(b) and also sought “to have the sale free and clear
`of liens which is authorized, under certain circumstances, by 11 U.S.C. § 363(f).”
`C&R entered an appearance and objected to the sale on various grounds, including
`violation of its intellectual property rights. In response, the Bank filed a pre-hearing
`brief suggesting the following language in the court’s approval order to address this
`objection:
`
`So long as the new owner or its architect or agents do not use the Plans
`or Drawings in which Cornice & Rose International, LLC claims a
`copyright, the new owner may use and occupy the Property, develop the
`Property, and complete the existing interior and exterior of the Property,
`free and clear of existing and future claims of C & R, including claims
`of copyright infringement. The new owner may not use C & R’s Plans
`or Drawings without first making arrangements satisfactory to C & R for
`their use. Nothing contained herein shall preclude future claims of
`copyright infringement resulting from the improper or unauthorized use
`of the Plans or Drawings by any new owner or third parties.
`
`At a hearing on the Trustee’s motion to sell attended by the Trustee and by counsel
`for C&R and the Bank, counsel for C&R argued that its copyright protection in the
`Building itself would be infringed by an order authorizing the proposed sale. C&R
`specifically addressed the Bank’s suggested language:
`
`“[T]hat language is just not sufficient in large part because it refers to
`plans and drawings. That language that’s being suggested contemplates
`incorrectly that the only copyright interest held by my client is simply
`in the plans and drawings, and it doesn’t take into consideration . . . the
`fact that the embodiment of the copyright is for the full structural
`portion of the building, configurations, components, and so forth.”
`
`-3-
`
`

`

`In response, Counsel for the Bank suggested that the order authorizing the sale say
`that the purchaser “may not use plans or drawings or anything else in which C & R
`has a valid copyright” (emphasis added). In hindsight, it seems apparent that counsel
`for the Bank did not sufficiently research the AWCPA, or he would have suggested
`language that defined the extent to which the purchaser could “use” the Building
`under § 120(b) and clarified that the owner’s “first sale” right to sell “a particular
`copy . . . lawfully made” permitted a subsequent sale. See 17 U.S.C. § 109(a).2
`
`On April 9, 2020, the bankruptcy court entered an order authorizing sale of the
`uncompleted Building to the Bank. Adopting the language suggested by the Bank’s
`counsel, Paragraph 19 of the Order provided:
`
`Copyright: So long as the Purchaser, or its assignee, or its architect or
`agents do not use the Plans or Drawings or any work in which Cornice
`& Rose International, LLC (“C & R”) holds a valid copyright (the C &
`R Intellectual Property), the Purchaser, or its assignee, may use and
`occupy the Property, develop the Property, and complete the existing
`interior and exterior of the Property, free and clear of existing and future
`claims of C & R, whether for copyright infringement or otherwise. The
`Purchaser, or its assignee, or its architect or agents may not use the C &
`R Intellectual Property without first making arrangements satisfactory
`to C & R for the use of the C & R Intellectual Property. Nothing
`contained herein shall preclude future claims of copyright infringement
`resulting from the improper or unauthorized use of the C & R
`Intellectual Property by the Purchaser, or its assignee, or any third
`parties.
`
`C&R promptly filed a motion to reconsider, arguing that the bankruptcy court could
`not authorize completion of the Building due to “C&R’s exclusive right of
`
`2See generally Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519, 535 (2013);
`Am. Int’l Pictures, Inc. v. Foreman, 576 F.2d 661, 664 (5th Cir. 1978) (“After the first
`sale of a copy the copyright holder has no control over the occurrence or conditions
`of further sales of it.”).
`
`-4-
`
`

`

`reproduction.” At a hearing on the motion to reconsider, citing the AWCPA, counsel
`for C&R explained its position:
`
`under the contract that it had with [McQuillen] the license for the use of [the
`Building] was conditioned on full, complete and timely payment. That has not
`occurred [as] laid out in our Proof of Claim. So for that reason there is no
`license for the construction of the building and, therefore, the building is,
`indeed, an infringing copy of the architectural work.
`
`The bankruptcy court then asked, “[s]o you’re saying any time there’s language in
`[the license] that says [it] is only effective upon payment in full . . . and a building is
`built [and] the architect is not paid in full, it can’t be sold without the architect’s
`permission period?” Counsel replied, “Correct. . . . I wouldn’t call it a security
`interest . . . it’s what it is, it’s a copyright.” The court commented, “So you’re telling
`me if you don’t sign off on it and everybody just walks away . . . [y]ou don’t have a
`security interest, you just have like a stopping measure . . . nobody can do anything
`until you’re paid in full? . . . I’ll just say I’ve never heard of that.” The following day,
`the bankruptcy court denied C&R’s motion to reconsider “for the reasons stated in
`the Resistances and Joinders thereto and at the hearings.”
`
`C&R timely appealed the bankruptcy court’s order; its motion for a stay
`pending appeal was denied. The Trustee then sold the Building to the Bank, and the
`Bank assigned its interest to Four Keys, LLC (“Four Keys”), which then hired
`multiple companies to finish the nearly-complete Building. On September 25, 2020,
`Judge Williams of the Northern District of Iowa dismissed the appeal as moot
`because a purchaser -- the Bank -- had bought the Building in good faith and the sale
`was not stayed pending appeal. See 11 U.S.C. § 363(m). On December 22, 2020, a
`panel of this Court granted Four Keys’s motion to dismiss C&R’s appeal because the
`case was statutorily moot. Cornice & Rose Int’l, LLC v. Smith, No. 20-3242, 2020
`WL 9349569 (8th Cir. Dec. 22, 2020).
`
`-5-
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`

`

`Before C&R fully exhausted its direct appeal of the bankruptcy court’s order,
`it filed this lawsuit against the Bank and its President, Four Keys, and other persons
`and companies that engaged in construction to complete the Building or observed
`C&R’s protected design work product and used it to engage in construction activities.
`C&R’s amended complaint alleges that all defendants infringed C&R’s architectural
`works copyright by finishing the Building because that is an infringing derivative
`work (Count I); seeks a declaratory judgment that any rental or sale of the Building
`without C&R’s express permission “will be a further act of copyright infringement”
`(Count II); and alleges copyright infringement of its technical drawings (Count III).
`
`On September 20, 2021, the district court3 dismissed Counts I and II because
`(i) C&R failed to allege any copying, (ii) the Building owner’s right to finish the
`Building is protected from a claim of copyright infringement by 17 U.S.C. § 120(b),
`and (iii) Counts I and II are barred by the doctrine of res judicata. Following
`discovery regarding Count III, Defendants moved for summary judgment. After
`initial briefing, C&R filed a “Notice of Intention to File a Response to Defendant’s
`Reply Brief,” arguing that two defendants had raised new arguments to which C&R
`did not have a chance to reply. The district court, finding that defendants simply
`responded to issues raised by C&R, construed the request as a motion to file a sur-
`reply and denied the motion. The court granted the Bank’s motion for summary
`judgment, concluding “C&R cannot demonstrate the . . . substantial similarity
`necessary for copyright infringement, and Defendants’ completion of the Building
`with or without using C&R’s copyrighted plans is not copyright infringement.” This
`appeal followed.
`
`C&R presents two issues on appeal: first, whether the district court erred in
`dismissing Count I, the architectural works copyright claim, and the Count II
`
`3The Honorable Linda R. Reade, United States District Judge for the Northern
`District of Iowa.
`
`-6-
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`

`

`declaratory judgment claim; and second, whether the court erred in granting summary
`judgment dismissing Count III “on the basis of arguments that [C&R] did not have
`an opportunity to respond to.” Thus, these are the only issues we will consider. See
`Hays v. Hoffman, 325 F.3d 982, 986 n.2 (8th Cir.), cert. denied, 540 U.S. 877 (2003).
`
`II. Discussion
`
`A. Dismissal of Counts I and II. The district court dismissed Counts I and II
`for multiple reasons, one of which was claim and issue preclusion. “Claim
`preclusion, or res judicata, provides that a final judgment on the merits of an action
`precludes the parties or their privies from relitigating issues that were or could have
`been raised in that action.” Plough By & Through Plough v. W. Des Moines Cmty.
`Sch. Dist., 70 F.3d 512, 515 (8th Cir. 1995) (quotation omitted). Issue preclusion
`“bars the relitigation of factual or legal issues that were determined in a prior . . .
`court action, and applies to bar relitigation in federal court of issues previously
`determined.” Banks v. Int’l Union Elec., 390 F.3d 1049, 1054 (8th Cir. 2004)
`(quotation omitted). Issue preclusion applies “if the party against whom it is used had
`a full and fair opportunity and incentive to litigate the issue in the prior action.” Id.
`“The preclusive effect of a federal-court judgment is determined by federal common
`law.” Taylor v. Sturgell, 553 U.S. 880, 891 (2008).
`
`
`The issue C&R seeks to relitigate is the scope of its intellectual property rights
`in the Building. That issue was actually litigated in the bankruptcy court. In
`opposing the bankruptcy sale, C&R argued that the AWCPA granted it copyright
`protection from the buyer finishing the Building. The bankruptcy court rejected that
`argument, authorized the sale, and in paragraph 19 of its approval order authorized
`the Building’s owner to complete the Building. C&R filed a motion for
`reconsideration; counsel argued that “any purchaser is not going to have the ability
`to effectively use the building because of . . . the copyright.” The bankruptcy court
`denied reconsideration. C&R appealed the approval order, but the appeal was
`
`-7-
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`

`

`dismissed under the Bankruptcy Code because the sale had been completed. See 11
`U.S.C. § 363(m). The judgment is therefore final.
`
`We reject C&R’s contention that the bankruptcy court’s order authorizing sale
`of the Building “is not a final judgment that has preclusive effects” because C&R’s
`appeal was dismissed based on “[Bankruptcy Code] policies limiting review of sales
`by a Trustee,” and our decision “was perfunctory and did not address the basis for
`affirmance.” In our view, relevant § 363(m) cases establish that the argument is
`without merit. See In re Veg Liquidation, Inc., 931 F.3d 730, 737-38 (8th Cir. 2019),
`cert. denied, 140 S. Ct. 904 (2020).
`
`C&R argues that the bankruptcy court’s order does not have preclusive effect
`because it “does not clearly authorize the use of the building” by the purchaser.
`However, Paragraph 19 explicitly authorizes the use C&R now disputes: “use and
`occupy the Property, develop the Property, and complete the existing interior and
`exterior of the Property.” C&R further argues that authorization of a sale by a
`Trustee “is not subject to effective review and, should be entitled to limited preclusive
`effect.” We disagree. Denying sale orders full preclusive effect would negate the
`purpose of § 363(m), to ensure the finality of bankruptcy sales. See, e.g., In re C.W.
`Mining Co., 574 B.R. 748, 767-70 (Bankr. D. Utah 2017); In re Veg Liquidation,
`Inc., 572 B.R. 725 (Bankr. W.D. Ark. 2017), aff’d, 583 B.R. 203 (B.A.P. 8th Cir.
`2018), aff’d, 931 F.3d 730 (8th Cir. 2019), cert. denied, 140 S. Ct. 904 (2020). Like
`the district court, we conclude the bankruptcy court’s order precludes Counts I & II.
`
`For the foregoing reasons, we conclude the district court properly granted
`Defendants’ motions to dismiss Counts I and II. We therefore need not address
`C&R’s additional arguments that the building owner’s AWCPA right to “alter or
`destroy” the building, 17 U.S.C. § 120(b), does not include the right to “complete”
`the building without the architect’s permission, and that completion of the building
`in this case created an infringing derivative work, see 17 U.S.C. § 106(2).
`
`-8-
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`B. District Court’s Denial of C&R’s Motion to File a Sur-reply. After the
`district court dismissed Counts I and II of the Amended Complaint, the parties
`engaged in discovery regarding Count III, the technical drawings infringement claim.
`Four Keys and the Bank then moved for summary judgment dismissing Count III,
`arguing that Defendants did not use or copy C&R’s technical drawings and they had
`a legal right to produce their own drawings to complete the Building. Four Keys and
`the Bank explained that, after DSC’s employee took measurements of the Building
`with a laser scanning device, WWA doing business as Atura Architecture generated
`plans to complete the Building. DSC and WWA joined in this motion. In its
`resistance, C&R argued it could conclusively show that DSC/Atura copied C&R’s
`plans and then did measurements that resulted in changing the final construction
`plans. After Four Keys and the Bank filed a reply memorandum, DSC and WWA
`filed a supplemental affidavit in support noting thirteen differences between the Atura
`Generated Plans and C&R’s plans, demonstrating that DSC in fact measured the
`Building and did not copy C&R’s plans.
`
`C&R then filed a “Notice of Intention to File a Response” stating that DSC and
`WWA had raised new fact-based arguments; asserting that it had the right to file as
`many reply briefs as it wanted, citing a Southern District of Georgia decision rather
`than contrary Northern District of Iowa precedent;4 and requesting an extension of
`time to file a reply addressing the new arguments. The district court ruled that its
`local rules provide no right to file a sur-reply, a pleading that is “generally
`disfavored.” The district court therefore treated C&R’s “Notice of Intention” as a
`motion for leave to file a sur-reply and denied the motion, finding that DSC and
`WWA had simply responded to issues raised by C&R’s resistance. The district court
`then granted the Bank’s motion for summary judgment. C&R appealed without filing
`
`4Compare Podger v. Gulfstream Aerospace Corp., 212 F.R.D. 609, 609 (S.D.
`Ga. 2003), with Fleshner v. Tiedt, No. 15-CV-2033-CJW, 2019 WL 271619, at *2
`(N.D. Ia. Jan. 18, 2019).
`
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`a motion for reconsideration. On appeal, C&R argues the court erred in granting
`summary judgment “on the basis of arguments that [C&R] did not have an
`opportunity to respond to.” We conclude the argument is frivolous, in part because
`it was not raised to the district court in a motion to reconsider.
`
`To succeed on its Count III claim of infringement, C&R had to prove that one
`or more Defendants copied original elements of the copyrighted technical drawings.
`Absent direct evidence of copying, this required evidence of substantial similarity of
`both ideas and expression in the infringing material. In granting summary judgment,
`the district court concluded: (i) it is undisputed that Four Keys owned the Building,
`contracted with DSC to complete the Building, and DSC had WWA generate plans
`to complete the Building; (ii) C&R does not claim WWA’s final plans used to
`complete the Building were infringing materials; (iii) the final plans corrected issues
`in WWA’s earlier plans; (iv) the one aspect of the earlier plans on which C&R based
`its claim of infringement “appears fairly minimal to meet the substantially similar
`standard” for infringement; (v) alternatively, even if the earlier plans were used to
`complete the Building, the purpose of the plans was to complete the Building, which
`§ 120(b) permitted Four Keys to do without C&R’s consent.
`
`We review the district court’s decision to deny C&R’s request to file a sur-
`reply for abuse of discretion. See, e.g., Graning v. Sherburne Cnty., 172 F.3d 611,
`614 n.2 (8th Cir. 1999). The district court ruled that C&R failed to prove its Count
`III claim of copying. Neither in the district court nor on appeal does C&R explain
`what it would have argued in a sur-reply brief. And C&R makes no showing on
`appeal that the district court would have reached a different result (i.e., denied
`summary judgment) had it been allowed to file a sur-reply. In other words, the
`argument is entirely procedural. Further, it ignores that sur-replies are viewed with
`disfavor and that a party appealing the denial of leave to file a discretionary pleading
`has a heavy burden to prove that the adverse procedural ruling mattered. Here, even
`if C&R’s contention that DSC and WWA raised new or additional arguments in the
`
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`supplemental affidavit is fairly debatable, we conclude that denial of permission to
`file the requested sur-reply in a thoroughly litigated case was a textbook example of
`harmless error. There certainly was no abuse of discretion.
`
`For the foregoing reasons, the judgments of the district court are affirmed.
`
`LOKEN, Circuit Judge, concurring.
`
`I join the Court’s per curiam opinion. In addition, I would affirm the district
`court’s rulings that the Building owner’s right to alter or destroy the building granted
`in the AWCPA includes a bona fide purchaser’s right to complete the unfinished
`Building, and that completion of the Building did not “copy” the Building by creating
`an unauthorized derivative work.
`
`The AWCPA in 1990 extended Copyright Act protection to “architectural
`works,” including in a protected design the building as well as its architectural plans
`and drawings. The scope of this new protection has a special limitation: “the owners
`of a building embodying an architectural work may, without the consent of the . . .
`copyright owner of the architectural work, make or authorize the making of
`alterations to such building, and destroy or authorize the destruction of such
`building.” 17 U.S.C. § 120(b). There is very little case law interpreting these
`provisions and none by this court.
`
`To establish copyright infringement, “two elements must be proven: (1)
`ownership of a valid copyright, and (2) copying of constituent elements of the work
`that are original.” Feist Publications, Inc. v. Rural Tel. Service Co., Inc., 499 U.S.
`340, 361 (1991); see Warner Bros. Ent., Inc. v. X One X Productions, 644 F.3d 584,
`595 (8th Cir. 2011). It is undisputed that C&R has a valid architectural works
`copyright in the Building as a tangible embodiment of C&R’s protected design. See
`17 U.S.C. § 101. But the district court concluded nothing was copied when
`
`-11-
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`

`Defendants completed the Building after the bankruptcy sale. I agree. Completing
`an unfinished building does not make a copy of the building, and here there is no
`second structure alleged to be a copy of the Building, either incomplete or completed.
`Copying is a necessary element of a derivative works copyright infringement claim.
`See Frye v. YMCA Camp Kitaki, 617 F.3d 1005, 1008 (8th Cir. 2010).
`
`McQuillen owned the Building when it halted construction and filed for
`Bankruptcy Code protection. C&R owned the copyright but the unfinished Building
`became part of McQuillen’s bankruptcy estate. The Bank lawfully acquired the
`Building in an approved bankruptcy sale and assigned its owner’s rights to Four
`Keys. That sale did not create a copy. See Christopher Phelps & Associates, LLC
`v. Galloway, 492 F.3d 532, 544 (4th Cir. 2007). C&R asserts that completion of the
`Building created an unauthorized “derivative work,” violating C&R’s exclusive right
`“to prepare derivative works based upon the copyrighted work.” 17 U.S.C. § 106(2);
`see Mulcahy v. Cheetah Learning LLC, 386 F.3d 849, 852 (8th Cir. 2004). Not
`surprisingly, C&R cites no authority for the illogical proposition that one who
`completes an unfinished building purchased from its owner’s bankruptcy estate
`“prepares a derivative work.”
`
`The AWCPA grants a building owner the right to alter or destroy the building
`without the consent of the author or copyright owner of the architectural work
`“[n]otwithstanding the provisions of § 106(2).” 17 U.S.C. § 120(b). When a
`purchaser lawfully acquires a building that is the embodiment of a copyrighted
`architectural works design, § 120(b) removes any limits on the means by which the
`new owner may alter the building without fear of copyright infringement. See Javelin
`Investments, LLC v. McGinnis, No. CIV A H-05-3379, 2007 WL 781190 (S.D. Tex.
`Jan. 23, 2007), report and recommendation adopted, No. CV H-05-3379, 2007 WL
`9753202 (S.D. Tex. Feb. 8, 2007); Ringdahl Architects, Inc. v. Swendsrud Constr.,
`Inc., No. CV 16-1060 (DWF/LIB), 2017 WL 5157605, at *4 n.4 (D. Minn. Nov. 6,
`2017).
`
`-12-
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`I find C&R’s argument that the building owner’s right to alter or destroy the
`building does not include the right to complete it to be without merit. Legislative
`history confirms the logically compelling inference that Congress in the AWCPA did
`not give copyright owners the power to enjoin completion of buildings that have
`already been substantially built. See H.R. Rep. 101-735 at 12-14 (1990), reprinted
`in 8 1990 U.S.C.C.A.N. 6935, 6943-45. “Congress correctly viewed alteration and
`destruction of a building by its owner to be practical necessities. . . . In order to
`perform its utilitarian functions, a building must be able to adapt and change.
`Conditioning changes on the approval of the original architect may lead to frustrating
`delays.” Raphael Winick, Note, Copyright Protection for Architecture After the
`Architectural Works Copyright Protection Act of 1990, 41 Duke L.J. 1598, 1622-23
`(1992). C&R urged the bankruptcy court to grant it just this kind of veto right. Like
`the district court, I agree that the bankruptcy court properly rejected the argument.
`______________________________
`
`-13-
`
`