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Architect’s $3.2M Jury Award Upheld

Tuesday, November 12, 2013

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A Texas construction firm that built hundreds of homes according to architectural plans it did not buy violated the architect's copyright, a U.S. court of appeals has ruled in affirming a multimillion-dollar jury award.

Kipp Flores Architects LLC, of Austin, TX, was awarded $3.2 million in a federal copyright infringement case after Hallmark Design Homes of Sugar Land, TX, constructed some 380 homes based on the architect's copyrighted designs, according to court documents.

The suit was brought in March 2009 and tried in September 2012 in the U.S. District Court for the Southern District of Texas, Houston Division.

architect
© iStock.com / korayhoylu

An Texas architecture firm that develops plans for mass builders has won its second legal victory in 12 years for copyright infringement.

The U.S. Fifth Circuit Court of Appeals affirmed the award Friday (Nov. 8), noting that the case had been “well tried” by U.S. Magistrate Judge Frances Stacy. The opinion was not published, but the ruling is available here.

Hallmark Design Homes has filed for Chapter 7 Bankruptcy to liquidate; thus, the architect's award has become an unsecured claim.

Big Award, Second Case

The jury verdict was based on the profits Hallmark earned from the sales of the houses at issue; the award was one of the largest ever for an architectural copyright case, according to the plaintiff's attorneys.

This is Kipp Flores Architects’ second major legal victory involving architectural copyright infringement, Osha Liang LLP of Austin, TX, said in an announcement on the present case.

In 2001, a federal jury in Norfolk, VA, returned  $5.2 million verdict in the firm’s favor against Virginia-based builders Signature Homes and Residential Concepts.

The Parties

Founded in 1987, by Cary Kipp, AIA, and Sabas Flores, AIA, Kipp Flores Architects creates and generates plans for single- and multi-family houses for mass builders. The firm offers its plans and construction documents for purchase via its website and further contracts with each builder.

Hallmark Design Homes was founded in 2004 by husband-and-wife team Joe and Laura Partain. The company catered primarly to higher-end first- and second-time move-up homebuyers in exclusive masterplan communities, according to a 2007 article on forresidentialpros.com.

In its complaint, Kipp Flores Architects contended that Hallmark Design Homes wrongfully constructed and sold houses based on the architecture firms' copyrighted architectural plans.

Hallmark Arguments on Appeal

In its appeal, Hallmark Design Homes argued that there had been insufficient evidence to support the jury's finding of “substantial similarity” between the original designs and the homes as built.

A jury decides “substantial similarity” by making a side-by-side comparison between the original and the copy to determine whether a layperson would view the two works as substantially similar, Hallmark said in its appellate brief, citing case law.

building under construction
census.gov

Architectural copyright infringement is a "significant problem nationally," an attorney said.

Hallmark said that while Kipp Flores Architects provided generic or standard plans and copies of some of Hallmark’s advertising to compare to the architect’s original drawings, this was not enough.

The firm should have presented “additional evidence” such as the as-built plans, photographs or other depictions of homes built from its designs, the builder argued.

Hallmark Design Homes also argued that the damages were inappropriate, saying the architect had failed to meet its burden of proof.

The plaintiff relied on total sales price from each home as Hallmark’s “gross revenue,” rather than the required proof of gross revenue from each home or reasonably related to the infringement, Hallmark argued.

“Design of the home is just one of dozens of different factors that affect revenue from the sale of a Hallmark home,” the defendant said, noting that location, landscaping, price, proximity to work or school, finish-out and salesperson, were also factors.

The Fifth Circuit rejected the arguments, siding with the architect and affirming the award.

‘Significant Problem’

"Architectural copyright infringement is a significant problem nationally, and we hope the jury verdict and this Fifth Circuit decision will send a message to those in the industry who do not take this issue seriously,” Louis Bonham, counsel for Kipp Flores Architects, said in a statement.

More information about copyright of architectural works in the United States is available here.

An attorney representing Hallmark Design Homes did not return a request for comment.

   

Tagged categories: Architecture; Design; Home builders; Laws and litigation; Residential contractors

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