Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 1 of 9
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`CASE NO. C05-251RSM
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` ORDER ON MOTION FOR
` SUMMARY JUDGMENT AND
` MOTION FOR LEAVE TO AMEND
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`CRANE DESIGN, INC., a Washington
`corporation,
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`Plaintiff,
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`v.
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`PACIFIC COAST CONSTRUCTION, LLC., a
`Washington limited liability company, et al.,
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`Defendants.
`________________________________________
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`PACIFIC COAST CONSTRUCTION, LLC, a
`Washington limited liability company, et al.,
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` Third Party Plaintiffs,
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` v.
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`CRAIG THOMPSON and JANE DOE
`THOMPSON, husband and wife,
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` Third Party Defendants.
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`This matter is before the Court for consideration of defendants’ motion for summary judgment,
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`and plaintiff’s motion for leave to file an amended complaint. Oral argument was heard on March 9,
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`2006, and the arguments, memoranda, and exhibits have been fully considered. For the reasons set forth
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` ORDER ON MOTION FOR SUMMARY
`JUDGMENT- 1
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 2 of 9
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`below, defendants’ motion shall be granted in part and denied in part. Plaintiff’s motion for leave to
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`amend the complaint to assert claims directly against third-party defendants Craig Thompson and Jane
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`Doe Thompson shall be denied.
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`FACTUAL BACKGROUND
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`Plaintiff Crane Designs, Inc., (“Crane”) is in the business of creating house plans and technical
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`drawings for use by builders. The designs, which are copyrighted, are licensed to homeowners or
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`contractors for either single or multiple use. In June, 2001, defendant Gary Cline and his brother-in-law
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`Craig Thompson, both contractors, met with Kim Williams of Crane to look over plans suitable for a
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`subdivision of “spec” homes they were building in Pierce County, called Summer Place. Craig
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`Thompson had worked with Crane designs previously and was known to Kim Williams. Mr. Thompson’s
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`construction company is Precision and Reliability (“PAR”). Gary Cline’s company was at that time called
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`Cascade Millwork. Mr. Cline later formed Pacific Coast Construction, incorporated in November, 2001.
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`The two of them had purchased a tract of land for the Summer Place subdivision and planned to build 43
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`homes there (21 or 22 each). They selected four of Crane’s copyrighted home plans and purchased the
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`“vellums”, which were authorized for multiple use, for $8,000. The check was written from the PAR
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`account and the licensing agreement was between PAR and Crane.
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`Mr. Cline asserts in his deposition that he clearly identified himself to Ms. Williams at the meeting
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`as “Gary Cline of Pacific Coast Construction.” However, Pacific Coast was not incorporated until five
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`months later, in November of that year. Ms. Williams states in a sworn declaration that Mr. Cline was
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`not introduced to her, and she did not ask who he was or why he was there. Defendants contend that the
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`Court should disregard this declaration because it contradicts statements made in her deposition, but have
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`pointed to no specific contradictory statements. Ms. Williams further states that while she did discuss the
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`plans with both men, neither of them informed her that the plans that were being purchased would be
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`used by both contractors. In follow-up conversations she dealt exclusively with Mr. Thompson of PAR.
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`Mr. Thompson has signed a declaration confirming Ms. Williams’ version of this meeting;
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`namely, that Mr. Cline did not identify himself as a separate contractor and did not state his intent to use
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` ORDER ON MOTION FOR SUMMARY
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 3 of 9
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`the plans to build homes. Mr. Thompson has since repudiated this declaration. This dispute regarding
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`whether Mr. Cline made his identity and intentions known to Ms. Williams is a material one, the
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`significance of which will be addressed below.
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`Construction started on the homes in Summer Place in late 2001, and continued into 2003.
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`Multiple homes were built from each design through the process called “base planning”. In this process,
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`the contractor submits one set of plans to the county for approval, and then supplements that plan with
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`site-specific engineering “spec” sheets for each individual lot on which the same plan is used. The
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`engineering spec sheets were prepared by an engineering firm, TSE, after authorization from Crane. Mr.
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`Thompson made all the contacts with Crane to obtain the spec sheets for the Summer Place homes. All
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`the spec sheets were issued in the name of PAR, even for the homes built by Mr. Cline and Pacific Coast.
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`In March, 2003, Pacific Coast Construction purchased two additional lots in the “Cobblestone”
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`subdivision. Mr. Cline wanted to use two of the same designs for building these homes, but needed to
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`obtain the site-specific engineering specs. Mr. Cline called Crane himself to ask for the engineering
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`sheets. When he called, on March 21, 2003, Ms. Williams did not know who he was, and did not know
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`that he had been using the house plans purchased by PAR. She informed Mr. Cline that he was using the
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`plans illegally, but told him that she would not hold up his new project. At deposition, she stated that she
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`agreed to authorize the engineering spec sheets on the two additional houses if Mr. Cline would “come in
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`and resolve the infringement that had already taken place.” In her later declaration, Ms. Williams
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`emphasized that she expressly conditioned authorization of the additional engineering plans upon Mr.
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`Cline’s agreement to resolve the prior infringement of the copyright on the plans by payment of a
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`licensing fee. When Mr. Cline later refused to comply, Crane initiated this lawsuit. Mr. Thompson was
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`subsequently brought in as a third-party defendant by Cline and Pacific Coast. During the course of
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`deposition, it was learned that one home in Summer Place was actually built by a different contractor,
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`who has not been named.
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`DISCUSSION
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`The complaint asserts two causes of action: copyright infringement and a claim under the
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 4 of 9
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`Washington Consumer Protection Act (CPA). In moving for summary judgment, defendants assert that
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`the CPA claim is wholly preempted by the copyright laws, and that the copyright infringement claim is
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`untimely under the applicable statute of limitations. Plaintiff has opposed both bases for summary
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`judgment.
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`I. Preemption
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`The Copyright Act specifically preempts “all legal or equitable rights that are equivalent to any of
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`the exclusive rights within the general scope of copyright as specified by section 106. . . . ” 17 U.S.C.
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`§ 301(a). The rights protected under the Copyright Act include the rights of reproduction, preparation of
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`derivative works, distribution, and display. 17 U.S.C. § 106. In order to resist preemption, the claim
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`under state law must include an “extra element” that makes the right asserted qualitatively different from
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`the rights protected under the Copyright Act. Altera Corp. v. Clear Logic, Inc., 424 F. 3d 1079, 1089
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`(9th Cir. 2005).
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`The parties here agree that the first element of this test—the work at issue falls within the subject
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`matter of copyright—is satisfied. As to the second element, defendants argue that plaintiff has asserted
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`no “extra element” which makes the CPA claim qualitatively different from the copyright claim.
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`Plaintiff contends, however, that
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`[t]he extra elements of the state CPA claim in this case relate to protecting against
`the use of fraudulent means to obtain property to operate a business and are
`related to protecting the legal right to have ordinary contractual relationships not
`interfered with by third parties. Both rights are substantively different than the
`rights protected under the Copyright Act.
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`Plaintiff’s Opposition, p. 20.
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` The elements of a Consumer Protection Act claim in Washington are as follows: (1) the action
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`complained of is an unfair or deceptive act or practice; (2) the action occurred in the conduct of trade or
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`commerce; (3) there is a public interest component to the conduct; (4) there was injury to the plaintiff’s
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`business or property; and (5) there is a causal link between the unfair act and the injury suffered.
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`Nordstrom, Inc., v. Tampourlos, 107 Wash. 2d 735, 739 (1987); citing Hangman Ridge Training
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`Stables, Inc., v. Safeco Title Insurance Co., 106 Wash. 2d 778, 780 (1986). This Court has previously
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 5 of 9
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`held, in an unpublished decision, that the Copyright Act, by protecting the owner’s exclusive rights of
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`reproduction, distribution, and display of the work, is broad enough to encompass all elements of the
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`CPA. CD Law, Inc., v. Lawworks, Inc., 1994 WL 840929 (W.D.Wash. 1994). As shown below,
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`plaintiff has not identified any basis for distinguishing this case from CD Law.
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`One extra element of the CPA that plaintiff claims to assert is the protection “against the use of
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`fraudulent means to obtain property to operate a business”. However, the protection against the use of
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`fraudulent means to obtain property is exactly the purpose of the Copyright Act, so this is not an extra
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`element. The second extra element asserted by plaintiff is the contractual relations argument, apparently
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`made because some courts have held that the enforcement of contractual rights on copyrighted articles is
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`generally not preempted. Bowers v. Baystate Techs. Inc., 320 F. 3d 1317, 1324-25 (Fed. Cir. 2003).
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`However, even if there is such a rule in this circuit, it would not apply here. Plaintiff is not attempting to
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`enforce any contractual right against these defendants. Any injury suffered by plaintiff from defendant’s
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`interference in the contractual relationship between Crane and Mr. Thompson is fully addressed by the
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`Copyright Act.
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`As plaintiff has failed to identify any extra element which makes the CPA claim qualitatively
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`different from the Copyright Act claim, the CPA claim is fully preempted. Defendants’ motion for
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`summary judgment as to the CPA claim is accordingly GRANTED.
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`II. Statute of Limitations on the Copyright Claim.
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`Defendants assert that plaintiff’s copyright claim is barred by the statute of limitations found in the
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`Copyright Act, which states that no civil action may be maintained under the title “unless it is commenced
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`within three years after the claim accrued.” 17 U.S.C. § 507. It is defendants’ contention that the claim
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`accrued in 2001 when Mr. Thompson purchased the plans from Crane. However, there is no evidence in
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`the record as to when the plans were actually copied by Mr. Cline. This defect alone could defeat
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`defendants’ statute of limitations argument.
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`In opposing summary judgment on the statute of limitation, plaintiff asserts both that the
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`violations continued well into 2003, and that the infringement claim did not accrue until Crane actually
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 6 of 9
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`learned of the infringement through Mr. Cline’s phone call to request engineering spec sheets for the
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`Cobblestone homes. Plaintiff, like defendants, has failed to point to any evidence as to when the plans
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`were actually copied by Mr. Cline in violation of the copyright. Without such evidence, this issue cannot
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`be resolved in favor of either party on summary judgment.
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`With respect to the time of accrual, it is plaintiff’s position that the claim did not accrue until the
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`infringement was first discovered by Crane on March 21, 2003 when Mr. Cline called to ask for the
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`engineered specs so that he could build two homes in Cobblestone. Plaintiff cites Roley v. New World
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`Pictures, Ltd., 19 F. 3d 479 (9th Cir. 1994) for the rule that in this circuit, a cause of action for
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`copyright infringement accrues when the plaintiff has knowledge of the infringement, or is chargeable
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`with such knowledge. Id. at 481. Defendants argue that the Ninth Circuit’s application of the discovery
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`rule in copyright cases was overruled by the Supreme Court in TRW Inc. v. Andres, 534 U.S. 19 (2001).
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`However, the Court in TRW addressed claims under the Fair Credit Reporting Act, not the Copyright
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`Act. The post-TRW viability of the discovery rule stated by the Ninth Circuit in Roley for copyright
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`infringement cases was well demonstrated in Kourtis v. Cameron, 419 F. 3d 989, 999 (9th Cir. 2005).
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`Other circuits have agreed, post TRW, with the application of this discovery rule in copyright
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`infringement cases. Bridgeport Music, Inc., v. Diamond Time, Ltd, 371 F. 3d 883 (6th Cir. 2004).
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`Plaintiff has submitted a sworn declaration in which Kim Williams states that she first knew of the
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`use of Crane’s designs by Mr. Cline when he called on March 21, 2003. Mr. Thompson’s declaration
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`supports this statement. Defendant disputes these declarations, but the Court cannot resolve that dispute
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`on summary judgment. Rather, “the evidence of the non-movant is to be believed, and all justifiable
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`inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
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`Under this circuit’s rule that the cause of action for copyright infringement accrues when the plaintiff has
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`knowledge of the infringement, or is chargeable with such knowledge, defendants’ motion for summary
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`judgment on the basis of a statute of limitations bar must be denied. Kourtis v. Cameron, 419 F. 3d
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`989, 999 (9th Cir. 2005); citing Roley, 19 F. 3d at 481. In so finding, the Court rejects defendants’
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`argument that Crane had a duty to check the county records for evidence of possible infringement on
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` ORDER ON MOTION FOR SUMMARY
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 7 of 9
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`their copyrighted plans.
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`Defendants also argue that even if the suit was filed within the statute of limitations, it should be
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`barred by laches. Laches, an equitable remedy, may in appropriate circumstances bar a claim for
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`copyright infringement even if it is brought within the statute of limitations; it bars a plaintiff who, “with
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`full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.” Danjaq LLC v. Sony
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`Corporation, 263 F. 3d 942, 951 (9th Cir. 2001); quoting S. Pacific Co., v. Bogert, 250 U.S. 483, 500
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`(1919). To demonstrate laches, the defendant must prove both “an unreasonable delay by the plaintiff
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`and prejudice to itself.” Id., quoting Couvear v. American Airlines, Inc., 218 F. 2d 1078, 1083 (9th Cir.
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`2000).
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`Defendants here have met neither of these requirements. The time between plaintiff’s discovery
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`of the infringement and the filing of this suit is not unreasonable in light of plaintiff’s assertion that during
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`that time it was pursuing a remedy for the infringement directly from Mr. Cline, pursuant to the
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`agreement made when Crane authorized the engineering spec sheets for the Cobblestone development
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`homes. As to prejudice, defendant has alleged none. Plaintiff’s action is therefore not barred by laches.
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`Summary judgment is proper only if "the pleadings, depositions, answers to interrogatories, and
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`admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any
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`material fact and that the moving party is entitled to judgment as a matter of law." F.R.Civ. P. 56(c).
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`The moving party has the burden of demonstrating the absence of a genuine issue of fact for trial by
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`“identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on
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`file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of
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`material fact.” Celotrex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies this
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`burden, the opponent must set forth specific facts showing that there remains a genuine issue for trial.
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`F.R.Civ. P. 56(e). However, no defense to an insufficient showing is required. Neely v. St. Paul Fire
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`and Marine Insurance Co., 584 F.2d 341, 344 (9th Cir. 1978).
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`A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could
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` ORDER ON MOTION FOR SUMMARY
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`Case 2:05-cv-00251-RSM Document 54 Filed 03/17/06 Page 8 of 9
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`return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248 (1986).
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`If the evidence is merely colorable or is not significantly probative, summary judgment may not be
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`granted. Id. at 249-50. It is not the court’s function at the summary judgment stage to determine
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`credibility or to decide the truth of the matter. Id. Rather, “the evidence of the non-movant is to be
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`believed, and all justifiable inferences are to be drawn in his favor.” Id.
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`Defendants have moved for summary judgment on the copyright infringement claim on the basis
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`of their assertion that it is barred by the three-year statute of limitations. However, they have pointed to
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`no actual evidence in the record which would demonstrate when the copyrighted plans were actually
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`copied by Mr. Cline. Defendants contend that it is plaintiff’s burden to produce proof in support of the
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`copyright claim. However, on summary judgment, it is defendants’ burden to point to the specific
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`evidence that demonstrates that they are entitled to judgment as a matter of law. See, Rosner v. Codata
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`Corp., 917 F. Supp. 1009 (S.D.N.Y. 1996). Defendants have not established the actual dates on which
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`the copyright infringement took place. Plaintiff, on the other hand, has presented evidence to create a
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`genuine issue of material fact as to the date of its knowledge of the infringement, and the consequent
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`accrual of the cause of action. Accordingly, defendants’ motion for summary judgment on the copyright
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`claim is DENIED.
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`III. Motion for Leave to Amend.
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`On February 17, after defendant’s motion for summary judgment was ripe, plaintiff filed a motion
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`for leave to amend the complaint to state a claim directly against Craig Thompson, who is already named
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`by Cline as a third-party defendant. The amended complaint asserts the same two causes of action as the
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`original—copyright infringement and Consumer Protection Act claims. The claims against Mr.
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`Thompson are asserted in ¶ 15 of the “revised” amended complaint1. This paragraph asserts that
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`“without license or authority from Crane Design, Third-Party Defendants copied and illegally provided
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`Crane Design’s Copyright Works to Defendants. . . .Third-Party defendant knew or had reason to know
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`1Plaintiff submitted a “revised” amended complaint along with the reply on this motion.
`Defendant has not had an opportunity to state arguments against the revised amended complaint, and
`should be allowed to do so at the motion hearing.
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` ORDER ON MOTION FOR SUMMARY
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`that Defendants were committing copyright infringement. . . . Additionally, without license or authority
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`from Crane Design, Third-Party Defendants illegally provided at least two of Crane Design’s Copyright
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`Works to a third general contractor, who also built a home in the Summer Place development, utilizing
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`Cranes Copyright Works. . . .” Dkt. # 52-2.
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`F.R.Civ. Proc. 15(a) states that leave to amend should be “freely” given, but only when justice so
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`requires. Here it does not. First of all, plaintiff’s amended complaint is incompatible with its theory of
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`the case, which is that Mr. Thompson’s company (PAR) was authorized by Crane to make unlimited use
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`of the plans. Further, plaintiff assured Mr. Thompson that he would not be sued over this matter; that
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`assurance was given in exchange for his statement regarding Mr. Cline and the June, 2001 meeting with
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`Crane. Finally, there is no newly-discovered basis for this amendment; apart from the fact that one home
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`in Summer Place was built by a different contractor, plaintiff has known all the facts asserted in the
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`amended complaint since the time this suit was filed. Plaintiff’s motion for leave to file an amended
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`complaint is accordingly DENIED.
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`The parties have a deadline of April 28, 2006 for Rule 39.1 mediation, and shall advise the Court
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`promptly when that mediation has been completed.
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`AR
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`ICARDO S. MARTINEZ
`UNITED STATES DISTRICT JUDGE
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`DATED this 17th day of March, 2006.
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` ORDER ON MOTION FOR SUMMARY
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