Construction projects, by their very nature, operate in the world of tangible property.Quite obviously, tradespersons use machinery and tools to fit building materials together to construct physical buildings.
With material goods acting as both the figurative and literal foundation of the industry, construction companies, and by extension, their construction contracts, could easily focus solely on the tangible elements of each project.
com bkroes hzattys Bryan T. Kroes, Marquette 2013, is a senior associate with Hurtado Zimmerman SC, Wauwautosa, where he practices in construction, real estate, municipal bond finance, and entertainment law.
While tangible property is absolutely essential for a successful construction project, construction companies should not overlook the equally important world of intangible intellectual property. Intangible property rights not only comprise the basis of a commercially successful construction company, but are also critical in providing ongoing revenue streams.
Construction attorneys similarly should acquaint themselves with intellectual property principles pertaining to their clients’ business and be prepared to advise or refer those clients accordingly.
There are four general categories of intellectual property: copyrights, trademarks, patents, and trade secrets. An exhaustive survey of each category would far outweigh the scope of this article, so I will focus solely on copyrights.
Copyright Law – an Introduction
United States copyright law is contained in Title 17 of the United States Code, with protection being afforded to original works of authorship fixed in any tangible medium of expression, now known or later developed, either directly or with the aid of a machine or device.1
Works of authorship include the following categories:
musical works, including any accompanying words;
dramatic works, including any accompanying music;
pantomimes and choreographic works;
pictorial, graphic, and sculptural works;
motion pictures and audiovisual works;
sound recordings; and
Copyright in a work protected under copyright law vests initially in the author or authors of the work.2 Works can also be considered “works made for hire” in which case, the employer or other person for whom the work was prepared is considered the author for purposes of copyright law, and, unless the parties have expressly agreed otherwise in a written instrument, that person or entity for whom the work was created owns all of the rights in the copyright.3
The owner of a copyright has the exclusive rights to do and authorize any of the following:
reproduce the copyrighted work in copies;
prepare derivative works based on the copyrighted work;
distribute copies of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
The author of the work (whether the person who created it or the person for whom it was created, in the case of a work made for hire) does not have to register the work with the U.S. Copyright Office in order to have a copyright ownership right.
Instead, copyright vests in the author the moment the work is fixed in a tangible format, and, for works created after Jan. 1, 1978, last for the life of the author plus 70 years.4 In the case of joint works prepared by two or more persons, the copyright lasts for the life of the last surviving author, plus 70 years.5 For works made for hire, copyright protection lasts for 95 years from the year of its first publication, or 120 years from the year of its creation, whichever expires first.6
Benefits of Copyright Registration
Although the owner or author is not required to register a work, registration with the U.S. Copyright Office does have its significant benefits.
First, registration means prima facie evidence of the validity of the copyright.7 Registration also gives the owner of the copyright the ability to bring a civil action for infringement, and the owner could be awarded statutory damages of $750 to $30,000 per infringing work, together with attorneys’ fees and costs.8
As actual damages can be difficult to prove, and litigation can be long and complex, the ability to collect those statutory damages, costs, and attorneys’ fees are a significant reason to register a copyright. With the passing of the Copyright Alternative in Small-Claims Enforcement (CASE) Act in late 2020, a small claims procedure is now established that, once up and running, may provide an affordable remedy to copyright owners for infringement.
Application to the Construction Industry
Because so much of copyright law applies to the creative arts, it is easy to see why some may not immediately recognize application to the construction industry. However, the opportunities are many.
Perhaps the most obvious application is that “architectural works” are called out specifically in copyright law as a protectable class. An “architectural work” is defined as the “design of a building as embodied in any tangible medium of expression, including building, architectural plans, or drawings.”9 This includes the overall form, as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features.
Regardless of a company’s business model, there is great value in protecting any architectural work. For example, a design professional creating a unique architectural work should protect their plans to preserve rights and remedies if an infringing work emerges elsewhere. Certain companies with a portfolio of architectural works (for example, subdivision homebuilders) also may want to protect their architectural works as a company asset. Since the duration of copyright protection lasts for many years, the owner of an architectural work can both protect and exploit their work to their own financial gain and stability well after initial creation.
Considerations for Copyright Provisions in Construction and Design Contracts
Construction and design contracts should include copyright provisions by clearly identifying who owns the design and what types of uses are permitted.
Although an end-user may sanction and pay for an architectural work, they may not be the owner of the design – a fact that could create quite a bit of misunderstanding or lead to a dispute if not addressed at the initial contracting stage.
If a work is going to be a work made for hire, then that needs to be unequivocally stated. If the designer is going to retain the copyright ownership in the work, however, there is nothing stopping them from using that same design or elements thereof later on in a similar design, subject to scenes a faire (standard element) restrictions.
As such, if an owner has sanctioned a highly unique building where the design professional retains copyright ownership, the owner needs to address whether or not the same design can be reused again, if there is a geographical restriction on such use, and if there will be consideration for such restriction. If the design professional grants a license to another person to use the architectural work, any limitations on that license should also be clearly stated in the contract.
Due to the exclusive rights afforded to copyright owners, if a particular design is going to have any building life-cycle use, these additional uses need to be addressed at the initial contracting stage.
For example, if someone other than the copyright owner will create as-built drawings or utilize the drawings for operations and maintenance purposes, derivative work issues could potentially arise, if not addressed in the contract.
Building Information Modeling and Copyright Considerations
Building Information Modeling (BIM) presents its own unique challenges when it comes to copyright.
In fact, ConsensusDocs has created a Building Information Modeling Addendum (ConsensusDocs® 301) to accompany its suite of construction contracts. The default language in the addendum contemplates that each contributor grants to the owner and the other contributors limited, nonexclusive licenses to reproduce, distribute, display, make derivative works of, and otherwise use certain model elements for that particular project only. However, that language can be negotiated and modified to expand or limit rights.
BIM, by its very nature, includes multiple people contributing to what is intended to be a unified end result. As such, considerations of whether the resulting model will or will not be considered a joint work need to be addressed. Similarly, risk allocation among the various model contributors must be addressed.
Continued in Part 2: Practical Considerations.
This article was originally published on the State Bar of Wisconsin’s Construction and Public Contract Law Section Blog. Visit the State Bar sections or the Construction and Public Contract Law Section web pages to learn more about the benefits of section membership.
1 17 U.S.C. § 102(a)
2 17 U.S.C. § 201(a)
3 17 U.S.C. § 201(b)
4 17 U.S.C. § 302(a)
5 17 U.S.C. § 302(b)
6 17 U.S.C. § 302(c)
7 17 U.S.C. § 410(c)
8 17 U.S.C. §§ 504-505.
9 17 U.S.C. § 101