Tuesday, February 04, 2014

Dastar misunderstanding watch

Fergon Architects LLC v. Oakley Home Builders, Inc., 2014 WL 340035, No. 13 C 6019 (N.D. Ill. Jan. 30, 2014) (magistrate judge)

Fergon sued Oakley for copyright infringement for exceeding its license to use Fergon’s architectural works.  The contract allegedly allowed Oakley to build one home from each design and required Oakley to credit Fergon as the designer in any promotional materials. Oakley allegedly took credit for the designs, not just construction, and built additional homes based on the designs.

The magistrate judge declined to dismiss the copyright claims at this stage.  The allegations that Oakley infringed by “making unauthorized copies and reproductions of” Fergon’s home designs, “selling copies of those designs to third parties,” “preparing derivative works based on those designs,” and “constructing houses based on those designs” were sufficiently specific, even without things like named individuals or dates. 

The next count was styled “false advertising,” but unfortunately the magistrate judge didn’t evaluate it that way (where there’s at least some possibility of focusing on the right issues—commercial advertising or promotion, and materiality).  Instead, the magistrate said that this case involved “reverse passing off,” which occurs when a “producer misrepresents someone else’s goods or services as his own.” Dastar. Comment: No! No, this case does not involve that! Origin of designs (as in, copyrightable material) is not origin of goods or services, or Dastar would have come out the other way!  The magistrate found that Fergon had properly pled that it was the “origin” of the home designs depicted in Oakley’s promotional materials, “because although it did not construct the homes, it conceived of the architectural designs and it owns the copyrights in the designs.”  (Aaaargh.  This is the exact same claim Fox had, that it was the “source” of the expression, even though Dastar made the copies at issue.)  Fergon also alleged that Oakley took credit for the designs by “touting its architectural and design prowess” and stating that it has “mastered the process of taking a custom home from idea to reality,” all while featuring homes designed by Fergon. And it alleged that consumers were likely to be confused, and that it was harmed.

The state-law claims for deceptive trade practices/unfair competition were preempted, though.  The element of “consumer confusion” wasn’t a sufficient additional element to make the claim qualitatively different from an infringement claim.  “Consumer confusion and deception have been held to be inherently present in any copyright action and are therefore not considered extra elements that qualitatively alter the nature of a claim where they are asserted.” The state-law claims here were, in essence, that Oakley represented someone else’s work as its own—“that conduct lies at the heart of the Copyright Act.” (Which is why Dastar bars the reverse passing off claim!)  Since the gravamen of each of the state-law claims was that Oakley passed off Fergon’s designs as its own by “failing to properly disclose Fergon as the actual designer,” “misleadingly holding itself out as a design/build firm and the designer of the Fergon Home Designs,” and engaging in “unauthorized use of the Fergon Home Designs in its commercial advertising,” the claims were preempted.

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