Crafting a License to Use Architectural Plans

May, 2005
by Circo, Carl J. and Penny Slicer

The essential commercial value of architectural drawings and other design documents flows not from ownership of the documents themselves but from the copyright of the design. The architect or other design professional who prepares “architectural works” (or the design firm that employs those who prepare them) is the author of them and thus the owner of the copyright. 17 U.S.C. § 201. An architectural work is defined for federal copyright purposes as the “design of a building as embodied in any tangible medium of expression, including a building, architectural plans, or drawings.” 17 U.S.C. § 101. Copyright protection applies to the “overall form as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features.” 17 U.S.C. § 101. The term “building” means “humanly habitable structures that are intended to be both permanent and stationary, such as houses and office buildings, and other permanent and stationary structures designed for human occupancy, including but not limited to churches, museums, gazebos, and garden pavilions.” 37 CFR § 202.11(b)(2).

Lawyers representing project owners should keep these principles firmly in mind when considering the familiar “Instruments of Service” provisions of the American Institute of Architect’s popular owner-architect agreement form, B141-1997. Paragraph 1.3.2.1 of that form provides that the architect is both the author and the owner of the drawings and other design documents the architect prepares.

In a normal setting, a developer gains nothing by negotiating for the ownership of the drawings themselves, because a person who merely owns copyrighted material does not have the right to copy them or prepare derivative works (e.g., modify the drawings) without the authorization of the copyright owner. 17 U.S.C. § 202. This fact alone, however, does not necessarily disappoint the expectations of a developer. A court should normally imply that the architect’s client has a right to use the drawings for purposes of the specific project for which the architect prepares them. I.A.E. Inc. v. Shaver, 74 F.3d 768 (7th Cir. 1996). Additionally, most written agreements for design services, including B141-1997, expressly give the client that right. The purpose here is to explore the options for a developer client who wants greater rights.

A client might take the position that in exchange for the fee, the architect should transfer all rights relating to the design. Although this approach is rarely popular with the design professional, it may be appropriate in unique circumstances. For example, a client interested in securing a signature design, such as a building entryway that will serve as a corporate logo, may want to own the copyright to that design so that the client alone can reproduce or modify the logo and license others to use it. One way to achieve this result is to secure a complete, written assignment of the architect’s copyright. For most real estate developers and their architects, however, an expanded copyright license may be preferable to assignment of the copyright.

Initially, consider a common and relatively simple situation. A developer hires an architect to design a small office building. Even if the developer never expects to copy the plans or to use them except in connection with the specific building project, the license should be broad enough to permit the developer to retain copies of the plans and to use them for reference purposes in maintaining the project. Few architects will object to this notion. In fact, paragraph 1.3.2.2 of AIA’s B141-1997 expressly grants a non-exclusive license to the owner to copy the plans not only for the purpose of constructing the project, but also for the purposes of using and maintaining the project.

We can escalate the situation slightly by considering that the developer may also want the right to furnish copies of the plans from time to time to other architects and design professionals who will use them in preparing tenant finish plans for the initial tenants of the building and for subsequent tenants who may require building improvements and modifications years after completion of the original construction. This merits more than a license to use the plans for constructing, using and maintaining the project, and one might speculate that the typical office building developer expects to have these additional rights. What may surprise the developer is that paragraph 1.3.2.3 of AIA’s B141-1997 expressly denies to the owner any license to use the plans for additions or alterations of the project.

Now consider a developer who wants to use the design of one project for an entirely distinct project. Perhaps the developer intends to build similar office buildings in the same office park or wants to repeat a successful apartment project at a new location. For these purposes, the developer will need a license to re-use the design and to modify the plans. It is highly unlikely that the plans for the original project can be used without any changes at all. Different building sites, even in the same office park, will require adaptations. Moreover, building codes will vary from one city to another, and even within the same city the applicable codes will change over time. Additionally, updated plans, bearing current professional seals, must be submitted for new building permits. In short, the original plans must be adapted and re-issued by a duly licensed design professional. Unless the developer secures a sufficiently broad license in the original agreement with the architect, the developer will either have to negotiate with that same architect to make the necessary changes or will need to secure an additional license from that architect before starting the new project.

In many situations, the developer may be content to address re-use at the time the subsequent project gets underway. If the original project went well and the relationship between the developer and the original architect is a good one, the developer will be inclined to use the original architect for the new project. Even in that case, however, the developer may expect a reduced fee because the architect will save time by adapting and updating the original plans rather than creating new ones. For that purpose, the developer might achieve a better economic result by negotiating a reuse fee as part of the original design services agreement rather than waiting to broach the subject of a discount until the developer is ready to begin the subsequent project. In other situations, the developer may wish to secure a license under the original design services agreement that will allow re-use without further involvement of the original architect either for no additional fee or for a pre-negotiated re-use fee. When this is the case, the developer and the original architect should carefully and thoroughly negotiate the terms of the expanded license as part of the original contract.

Whenever the developer wants the right to use plans for additions and alterations of the original project or for a subsequent project, the architect should consider both the value of the re-use license as an economic matter and the legal risks that re-use may present. The architect’s copyright in the design is a valuable property right, and it belongs exclusively to the author. This suggests that if the architect is willing to grant a re-use license for an entirely distinct project, the developer should expect to pay a fee for the additional right. (For simplicity, we have assumed that a single architect is the author, but the more likely situation is that the architect is the author of some of the plans and the architect’s consultants are the authors of others.) What may be equally important to the original architect is that any re-use for a different project or at a different time and in different circumstances will require further professional services to conform the plans to the new situation. This means that activities, errors and omissions not controlled or controllable by the original architect may cause or contribute to injury, loss or damage under circumstances the parties never contemplated. For these reasons, if the original architect is willing to negotiate an expanded license with the developer, the architect will probably demand protection from these risks.

Counsel for a client who wishes to secure from a design professional more than a simple, non-exclusive license to use the design plans for a specific project should draft supplemental provisions to address all of the issues involved. With this observation in mind, we offer two sample provisions for consideration. These are not models, and we do not endorse them for all circumstances or for any specific circumstance. Rather, they merely illustrate two alternative approaches to expanded rights in design. Both of the sample provisions assume that an architect will provide all of the design for the project, but similar considerations apply if the contract is for engineering services or if a project involves several design professionals. The first sample might be used when the developer wants greater rights for purposes of the specific project involved over the life of the project. The other serves the interests of a developer who wants something that approaches the maximum intellectual property rights available.

Note that neither the broad second example nor this brief discussion addresses all of the intellectual property rights that may be at issue in a given project. For example, we have not here considered: whether and to what extent an architectural work may be deemed to be a “work made for hire” under 17 U.S.C. § 101; any restrictions on making, distributing or displaying photographs or other representations of an architectural work; the advantages of copyright registration; and rights of attribution and integrity under the Visual Artists Rights Act of 1990; the possible role of trade secret and trade dress law in relation to architectural design; and any considerations related to patented technology. Two more comprehensive resources discussing these and other intellectual property issues in the context of building design and construction are 5 Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner § O’Connor on Construction Law §§ 17:85 – 17:87 (2002) and 5 Construction Law, ch. 20 (Steven G. M. Stein ed., 2002).
____________________________________________________________________________ Expanded Right to Use Plans (simple version)

Owner and its contractors, agents, licensees and tenants may copy and re-use the design of the Project and the drawings, specifications and other documents, including those in electronic form, for the Project (collectively, the "Architectural Works”) in connection with any improvements, alterations, expansions or additions to the Project. The license and rights granted under this paragraph control over any restrictions or limitations contained in any other provisions of this agreement. Any re-use of the Architectural Works by Owner, its contractors, agents, licensees or tenants subsequent to final completion of the Project and acceptance of the Project by Owner will be at Owner’s sole risk and without liability to Architect and Architect’s consultants unless the subsequent use is made pursuant to the written consent of Architect to that specific re-use.

Transfer of copyright and more

RIGHTS TO DESIGN

Architect hereby assigns to Owner all right, title and interest in and to the design of the Project and the drawings, specifications and other documents, including those in electronic form, for the Project (collectively, the "Architectural Works”) that have been prepared or created as of the date of this agreement, including all rights in and to the copyright throughout the world and any renewals or extensions thereof, as well as any and all derivations, modifications, changes, translations, revisions, elaborations, adaptations or transformations of the Architectural Works. All of the Architectural Works created after the date of this agreement will be considered a "work made for hire" under the Copyright Laws of the United States. All right, title, and interest in and to such Architectural Works, including copyright thereto, will vest in Owner who will be deemed to be the author of the Architectural Works. In the event that any of such Architectural Works is not considered a "work made for hire" under the Copyright Laws of the United States, Architect hereby assigns and agrees to assign in the future to Owner all right, title, and interest in and to those Architectural Works and all rights in and to the copyright throughout the world, including all renewals and extensions thereof and any and all derivations, modifications, changes, translations, revisions, elaborations, adaptations or transformations of those Architectural Works. Architect expressly waives its rights of attribution and integrity as provided for by 17 U.S.C. §106A in connection with the Architectural works for all uses of the Architectural Works, including but not limited to such uses as the intentional distortion, mutilation, modification or destruction of the Architectural Works. All materials developed in connection with the creation, preparation or use of the Architectural Works, including all books, papers, notes, outlines, computer disks, or diskettes, letters, negatives, plates, photographs, sketches, and illustrations, as well as all copies of any of the Architectural Works, will be provided to and owned by Owner exclusively. Any use by Owner of the Architectural Works subsequent to final completion of the Project and acceptance of the Project by Owner will be at Owner's sole risk and without liability to Architect and Architect's consultants unless the subsequent use is made pursuant to the written consent of Architect to that specific re-use.

[For an express, but limited, indemnity in favor of the architect in lieu of the less specific language of the current last sentence of the above paragraph consider the following: If (i) any of the Architectural Works is used by Owner subsequent to the termination of Architect’s services under this agreement and any of those Architectural Works is modified by Owner in any material respect, or (ii) Owner uses the Architectural Works (excluding Owner’s proprietary details) on projects other than the project for which the Architectural Works were created or produced without the express written authorization of Architect, Owner shall indemnify and hold Architect harmless from and against any claim, loss, liability, damage or expense (including but not limited to attorney's fees, costs and expenses of litigation, fines and penalties) sustained or incurred by Architect, to the extent that such claim, loss, liability, damage or expense results directly from Owner’s misapplication or modification of the Architectural Works without Architect’s involvement.]