Design Basics, LLC v. Kerstiens Homes & Designs, Inc.
Docket: Case No. 1:16-cv-00726-TWP-DLP
Court: District Court, S.D. Indiana; September 19, 2018; Federal District Court
Motions for Summary Judgment have been filed by the Management Defendants (Kerstiens Management Corp., Kerstiens Leasing Corp., Kerstiens Holding Corp., and Kerstiens Development, Inc.) and the Home Defendants (Kerstiens Homes, Designs, Inc. and T-Kerstiens Homes Corp.) in a copyright infringement case brought by Plaintiffs (Design Basics, LLC, Design Basics, Plan Pros, Inc., Plan Pros, and Prime Designs Inc.). The Plaintiffs allege that the Defendants infringed on their exclusive rights to certain architectural works and technical drawings. The Management Defendants argue for summary judgment on the basis that the Plaintiffs cannot prove infringement and that they do not engage in creating house plans. The Home Defendants contend they are entitled to summary judgment because there is no evidence showing they had access to the Plaintiffs' copyrighted works, their plans are independently created, and the Plaintiffs have not demonstrated ownership of the copyright registrations.
Additionally, various other motions are pending, including requests for oral argument and motions related to expert testimony and evidence disclosure. The Court granted the Home Defendants’ Motion for Summary Judgment and denied as moot the Management Defendants’ Motion for Summary Judgment, along with the other pending motions.
In terms of background, Plan Pros, Inc. and Prime Designs, Inc. design homes through individual designers and license their designs to builders. Design Basics, founded by Dennis Brozak, has created and licensed thousands of home plans, registering them with the United States Copyright Office and publishing numerous catalogs that have circulated millions of copies.
Design Basics rented targeted lists from the National Association of Home Builders to compile mailing lists for marketing its home plans and publications nationwide. Since the early 2000s, its publications have been featured in 446 stores, including 28 in Indiana, and distributed at various home shows and conventions. The company has successfully marketed over 135,000 licenses for its home designs, generating peak revenues exceeding $4 million annually in the late 1990s and early 2000s. Currently, it offers single-build licenses for more than 2,800 plans, with fees ranging from $700 to $6,000, and has generated over $6 million in licensing revenue since 2009, selling more than 2,500 licenses in the last three years. However, a significant decline in licensing revenue and sales has occurred since making its plans widely available online.
The seven house plans in question for this copyright infringement case include designs owned by Design Basics and others created by Plan Pros and Prime Designs. Design Basics owns the 3098 Duncan, 3385 Brittany, 8096 Pine Ridge, and 8026 Sun Ridge plans, while Plan Pros owns the Kirsten and Bloom designs, and Prime Designs owns the Cartwright design. All plans were created from scratch, except for Kirsten and Cartwright, which are derivatives of pre-existing designs.
The defendants include Kerstiens Homes, Designs, Inc., a long-established residential construction company based in Jasper, Indiana, and T-Kerstiens Homes Corp., a business formed around 1995 that operates in residential construction and sometimes uses the Kerstiens Homes, Designs name.
Defendant Kerstiens Holding Corp. functions solely as a holding company, while Kerstiens Management Corp. rents properties but does not construct houses or create house plans. Kerstiens Leasing Corp. leases vehicles and equipment without engaging in house building or planning. Kerstiens Development, Inc. purchases and subdivides land for sale but also does not build houses or create plans. All Kerstiens entities are owned by Jerome and Doris Kerstiens and their two sons, Todd and Bart. In June 2013, a market research director from Design Basics found what he believed were infringing house plans on Kerstiens Homes' website. He returned in July 2014 and confirmed the presence of these plans, leading to the filing of Plaintiffs’ Amended Complaint on August 30, 2016, alleging copyright infringement against both Management and Home Defendants. The Management Defendants filed for summary judgment, arguing they do not create house plans or build houses, while the Home Defendants contended that the Plaintiffs lack sufficient evidence for a copyright claim and that their plans were independently created. The summary judgment standard allows for judgment when there are no genuine material facts in dispute, requiring the court to view evidence favorably for the non-moving party. A party with the burden of proof must provide specific factual allegations to demonstrate a genuine issue for trial, and mere speculation or conclusory statements are insufficient to counter a summary judgment motion. The court is not obligated to search the record for evidence to oppose such motions.
The excerpt outlines key legal principles related to copyright law and the standards for summary judgment in copyright infringement cases. It specifies that mere factual disputes or doubts do not prevent a motion for summary judgment. The Home Defendants claim entitlement to summary judgment based on their lack of access to the copyrighted works and the assertion that their house plans are not substantially similar. They further argue that their plans were independently created and challenge the plaintiffs' ownership of the copyright registrations. The Management Defendants maintain they are entitled to summary judgment as they do not create house plans or construct houses, thus not infringing any copyrights.
Under 17 U.S.C. § 102(a), copyright protection applies to original works fixed in a tangible medium, including architectural works, which embody the design of a building. However, it excludes standard features like windows and doors from protection. To prove copyright infringement, a plaintiff must demonstrate ownership of a valid copyright and that the defendant copied original elements of the work. Copyright ownership is established through registration, providing prima facie evidence. Since independent creation is not protected, a plaintiff must prove actual copying, which can be inferred from showing the defendant had access to the work and that the infringing work is substantially similar. Access can be demonstrated through direct communication or by showing the work was widely disseminated.
A plaintiff must demonstrate "substantial similarity" between a copyrighted work and an allegedly infringing work after establishing access. This assessment considers whether an ordinary reasonable person would conclude that the defendant unlawfully appropriated the plaintiff's protectable expression by using material of substance and value. Access cannot substitute for substantial similarity, though striking similarity may sometimes imply access. The presence of a common source influencing both works can weaken an inference of copying, particularly in competitive fields like single-family home designs.
In the case at hand, the plaintiffs argue that the Home Defendants' architectural plans closely resemble their copyrighted designs, asserting sufficient access through print mailings and home plan broker websites. However, the court prioritizes the issue of substantial similarity over access. Citing the Seventh Circuit’s guidance from *Design Basics v. Lexington Homes*, the court emphasizes that substantial similarity should be evaluated objectively, focusing on protectable expressions rather than mere similarity of design, especially given the crowded nature of the home design market. The court notes that many design elements are common and driven by consumer expectations, meaning that not all similarities imply unlawful copying. Substantial similarity pertains specifically to protected elements of a work, as opposed to general design features that are widely shared.
When architects adhere closely to established conventions, their original contributions are minimal, resulting in limited copyright protection. Consequently, only near-identical copying could infringe upon the architect's rights. The Seventh Circuit emphasized that assessing substantial similarity should not involve detailed analysis or expert testimony but rather focus on whether the accused work captures the overall concept and feel of the copyrighted work. The court clarified that if the copied elements are not protectable expressions, no infringement claim can arise. In Lexington Homes, the court conducted a thorough examination of the evidence, noting aesthetic distinctions and numerous differences in dimensions, spatial relationships, roofing configurations, and materials between the parties' designs. Given the constraints designers face and the abundance of similar designs available, even minor differences may negate claims of infringement. The court ultimately found that the parties' house designs were not substantially similar and that any resemblances were common in the market, justifying Lexington's entitlement to judgment. The current court is now reviewing the evidence and arguments presented by the plaintiffs, including affidavits from various designers and managers, comparisons of floor plans, and summaries of unique features in the plaintiffs' designs, all aimed at supporting their claims of copying and substantial similarity.
Similarities between the floor plans include the T-shaped connecting wall for the dining room, breakfast nook, and great room; the master suite door’s location at the top of the stairs; the master suite's placement above the kitchen and laundry room; the powder room’s location between the foyer and breakfast nook; an angled hall leading to the master bedroom which creates an angled wall in the kitchen; the kitchen situated between the laundry room and screened porch; the mechanical chase leading to the second floor; the upstairs linen closet; and the L-shaped hall wrapping around the kitchen to access bedrooms and a bathroom.
The Seventh Circuit noted that even subtle differences can negate copyright infringement, indicating that many noted differences are significant. A review of the copyrighted works and defendants' floor plans highlights numerous differences.
1. **Design Basics, "Duncan" vs. Kerstiens, "704"**: The floor plans differ in dimensions of the garage, porch, breakfast nook, dining room, living room, and three bedrooms. Key features in the 704 plan include a walk-through door from the garage, a utility closet in the garage, a linen closet by the laundry room, a back patio, linen closets in both upstairs bathrooms, and a second master bedroom closet—none present in the Duncan. The laundry room in the 704 does not align with the garage, lacks a window, and has differing orientations and sizes of powder rooms and laundry rooms. The Duncan includes a foyer coat closet, living room fireplace, linen closet in the upstairs hallway, a desk in bedroom three, a walk-in master bathroom closet, a whirlpool tub with a window, and an "open to below" view in the foyer, features absent in the 704. The dimensions of the master bedroom closet and the door placement to the master bathroom also differ between the plans.
2. **Design Basics, "Brittany" vs. Kerstiens, "706"**: Differences in the size of the garage, foyer, breakfast nook, kitchen, living room, and four bedrooms are noted. The Brittany lacks a back patio off the breakfast nook, linen closets in both the breakfast nook and upstairs bathroom, and an attic access door, all present in the 706. The laundry room in the 706 is designed to make the triangular mechanical chase smaller. The garage wall configurations differ, with the 706 featuring a side-entry door, while the Brittany has a front-entry door. The orientations of the master bedroom walk-in closet and powder rooms vary, and the foyer and "open to below" area are larger in the 706. The Brittany contains a fireplace, three transoms, three small master bedroom windows, a whirlpool tub with a window in the master bathroom, a bay window in the breakfast nook, and two upstairs hallway linen closets—none of which are found in the 706 plan.
Key differences between the various floor plans, namely "Brittany," "Sun Ridge," "Pine Ridge," and their respective designs (706, 706R, 713, 713B, 708, 708R, and 614B), highlight significant variations in layout and features:
1. **Brittany vs. 706R**: The 706R includes a distinct linen closet in the master bathroom and a walk-through door to the garage, which are not present in the Brittany model.
2. **Sun Ridge vs. 713**: The Sun Ridge features a different size configuration for several areas (garage, mudroom, porch, etc.), lacks a utility closet in the garage, and has several unique features such as a fireplace in the living room and a more extended breakfast nook and screened porch. It also has different orientations for the powder rooms and varying window placements in bedrooms.
3. **Sun Ridge vs. 713B**: Similar differences to those between Sun Ridge and 713 exist, with the exception of a linen closet by the master suite and powder room location, though their shapes and sizes differ.
4. **Pine Ridge vs. 708**: The Pine Ridge exhibits differences in size and features compared to the 708, including the absence of multiple closets and a large L-shaped porch, while having unique elements like a fireplace and a bay window. The configuration of the stairs and the master bedroom's location also differ.
5. **Pine Ridge vs. 708R**: Similar to the previous comparison, most differences noted in the Pine Ridge and 708 are maintained in the Pine Ridge and 708R, with some shared features.
6. **Cartwright vs. 614B**: The Cartwright lacks a walk-through garage door, back patio, and certain bathroom features present in the 614B design, alongside dimensional differences in the garage and dining room.
The document systematically outlines these variations, emphasizing the unique aspects of each floor plan while referencing specific filing numbers for detailed comparison.
The Cartwright home features distinct elements such as a living room fireplace, mudroom drop zone, and a his and hers walk-in closet in the master bathroom, which are not included in the 614B floor plan. Key differences also include the orientation of the master bathroom's separate toilet, laundry room dimensions, and a shorter linen closet between bedrooms in the 614B plan. Additionally, a "planning area" is present next to the foyer in the Cartwright, while the 614B has stairs leading to a basement.
In the comparison between the Kirsten and the 521 floor plans, significant discrepancies arise in the sizes of the garage, dining room, kitchen, and bedrooms. The Kirsten lacks a walk-through garage door, back patio, and several linen closets, which are present in the 521. Conversely, the master bedroom in the 521 is larger, though it has a smaller window. The 521 features a flush wall between the master bathroom walk-in closet and hallway, contrasting with the staggered wall in the Kirsten. The foyer of the 521 contains an office, while the Kirsten has stairs to a basement, and the living room is separated from the office by a solid wall in the 521 but not in the Kirsten.
For the Bloom versus the 617 comparison, the garage, foyer, breakfast nook, kitchen, living room, and four bedrooms show differing dimensions. The Bloom includes a fireplace and drop zone, with side windows in all bedrooms, none of which are found in the 617. The laundry room's specifics, master bathroom linen closet placements, and master walk-in closet locations vary between the designs. The 617 has a smaller foyer but a larger coat closet, with the Bloom featuring a den and a linen closet in the hallway. The garages also differ in entry type and layout, influencing the flow from the garage to the master bedroom.
Ultimately, the Court finds that the extensive differences among the floor plans weaken the Plaintiffs' copyright infringement claim. The similarities noted are not significant enough to meet the "substantial similarity" requirement, as both sets of plans largely reflect common architectural designs typical in suburban areas, limiting copyright protection for specific arrangements.
Home designs referenced in the case are not deemed to be unique artistic works. The Plaintiffs lack evidence to demonstrate substantial similarity as required by Seventh Circuit case law, leading to the conclusion that the Home Defendants are entitled to summary judgment on the copyright infringement claim. The Management Defendants argue for summary judgment, asserting they are not liable for infringement as they do not create house plans or buildings and were named in the lawsuit solely due to their association with the name "Kerstiens." The Plaintiffs contend that the Home and Management Defendants should be treated as a single entity due to their shared ownership and interrelation, which renders the Management Defendants' motion moot following the Home Defendants' summary judgment. Consequently, the Court grants the Home Defendants' motion for summary judgment and denies the Management Defendants' motion as moot. Other pending motions are also denied as moot due to this resolution, including various motions related to expert testimony and evidentiary issues. The Court notes that the seventh defendant, Kerstiens Realty, Inc., is unaccounted for, with no response from the Plaintiffs regarding its status. Final judgment will be issued in a separate order.
