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Design Basics, L.L.C. v. Carhart Lumber Co.

United States District Court, D. Nebraska

February 3, 2016

DESIGN BASICS, L.L.C., Plaintiff,
v.
CARHART LUMBER COMPANY, SCOTT BRIAN CARHART, BRENDA KUHLMAN CARHART, WILLIAM C. CARHART, and MICHAEL HERBOLSHEIMER, Defendants.

MEMORANDUM AND ORDER

Richard G. Kopf Senior United States District Judge

Plaintiff Design Basics, L.L.C., (“DB”) is in the business of publishing and licensing architectural designs. DB brings this copyright infringement action against the defendants (“Carhart”)-who sell home building products and offer blueprint-drafting services-claiming that Carhart “made infringing copies of DB’s house plans” and “may have built one or more infringing structures, ” or aided in doing so. Specifically, DB claims that Carhart “scann[ed], cop[ied], and/or reproduc[ed] unauthorized copies” of DB’s house plans; “creat[ed] derivative works” from the plans; and “advertised, marketed and/or sold these or other infringing structures, or aided and abetted such activities.” (Filing 1, Complaint.)

Carhart has filed a motion for summary judgment (Filing 62), arguing that DB’s claims are barred by the Copyright Act’s statute of limitations. Carhart has also filed a motion to strike (Filing 78) a declaration filed in conjunction with DB’s opposition to Carhart’s motion for summary judgment. Finally, DB has filed an objection (Filing 80) to Magistrate Judge Zwart’s order denying DB’s motion to file an amended complaint.

I. UNDISPUTED MATERIAL FACTS

DB filed this lawsuit on April 18, 2013, alleging in its complaint that “DB first became aware that Defendants had violated its copyrights in one or more distinct ways” on April 20, 2010.[1] In an answer to an interrogatory that asked, “when and how Plaintiff first became aware that Defendant(s) had allegedly violated a copyright of Plaintiff, ” DB answered, “Carl Cuozzo was looking at different [Home Builders’ Associations] in Nebraska for potential new clients to market to. He ran across the Carhart website on April 20th 2010 and noticed they marketed house plans. He then noticed the infringing plans and notified [DB’s Chief Operating Officer].”

After the filing of this lawsuit, Carhart deposed Carl Cuozzo, DB’s senior designer who also investigates potential infringement claims on behalf of DB. Cuozzo testified that he first ran across Carhart’s website on February 24, 2010, at which time he “saw that they had some plans shown on their website.” On that date, Cuozzo saw four “elevations [which] alerted [him] that there might be some infringing floor plans. Some of the elevations looked similar.” When Cuozzo saw the elevations on Carhart’s website on February 24, 2010, he was concerned “that they might be similar or substantially similar to Design Basics’ plans.” (Filing 63-2, Dep. Couzzo at CM/ECF pp. 16-17, 21.)

In Cuozzo’s deposition, he testified that on February 24, 2010, he believed that Carhart’s “Easy Living, ” “Meadow Brook, ” “Nebraskan, ” and “Redfield” plans were “substantially similar to, ” respectively, DB’s “Logan, ” “Sinclair, ” “Rosebury, ” and “Gabriel Bay” plans. However, because Cuozzo “didn’t have time” to further investigate at that time, he printed the portion of Carhart’s website that contained the elevations and put the information “in the file.” Couzzo did not return to the Carhart website until April 20, 2010, when he “went back and looked at the floor plans and ran a history to see if any plans were purchased, had a license purchased with them.” (Id. at CM/ECF p. 18.) On this date, Cuozzo learned that Carhart’s “Nebraskan” plan actually infringed on DB’s “Laramy” plan, and that Carhart’s “Easy Living” plan actually infringed on DB’s “Winter Woods” plan.

In February and March 2014-during the course of discovery in this matter-DB learned that Carhart had infringed upon an additional 17 of DB’s copyrighted house plans. Magistrate Judge Zwart denied DB’s motion to amend the complaint to add these additional infringements.

II. PENDING MOTIONS

A. Motion for Summary Judgment Based on Statute of Limitations

Carhart moves for summary judgment on its defense of the statute of limitations under 17 U.S.C. § 507(b), which provides: “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.” 17 U.S.C. § 507(b) (Westlaw 2016). The question, then, is when DB’s “claim accrued.” The parties do not dispute that Congress has been silent regarding how to determine accrual under the Copyright Act. Plaintiff DB argues that the “discovery rule” applies. (Filing 72, Pl.’s Br. Opp’n Defs.’ Mot. Summ. J. at CM/ECF pp. 16-31.) The Carhart defendants assert that the “occurrence rule” applies, but that DB’s lawsuit is untimely under both the “occurrence rule” and the “discovery rule.” (Filing 64, Defs.’ Br. Supp. Mot. Summ. J. at CM/ECF pp. 10-20.)

1. Occurrence Rule

In the course of deciding whether the equitable defense of laches may bar relief on a copyright-infringement claim brought within § 507(b)’s period of limitations, the Supreme Court recently discussed when a copyright-infringement claim “accrues” for purposes of that statute: “when an infringing act occurs.” Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962, 1969 (2014). Further, “[e]ach time an infringing work is reproduced or distributed, the infringer commits a new wrong, ” and each wrong constitutes a “claim” that “accrues” when the wrong occurs. Therefore, “each infringing act starts a new limitations period.” Id. “Thus, when a defendant has engaged (or is alleged to have engaged) in a series of discrete infringing acts, the copyright holder’s suit ordinarily will be timely under § 507(b) with respect to more recent acts of infringement (i.e., acts within the three-year window), but untimely with respect to prior acts of the same or similar kind.” Id. at 1970.

Applying this “occurrence” rule to this case, DB may “gain retrospective relief running only three years back from the date the complaint was filed.” Id. Because DB’s complaint was filed on April 18, 2013, it may recover for ...


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