Protect Your Plans

Your bid for every job is based on the plans. That’s clear. What’s not clear unless made explicit in the contract: Who owns those plans? If you or your designer drew the plans, those should be your plans. Leave no doubt. A recent case highlights the issue.

Jason and Kacie Highsmith needed new cabinets and closets in their North Carolina home. The Highsmiths liked a proposal prepared by Design Gaps, Inc. and signed an agreement to have Design Gaps do the work. The contract had no completion date. But eight months later the job still wasn’t done. After multiple delays, the Highsmiths gave up on Design Gaps and opened negotiations with Bryan Reiss of Distinctive Design. Before signing a second agreement for their cabinet job, the Highsmiths shared with Distinctive Design the plan prepared by their first contractor, Design Gaps.

Disregard the ethical question -- sharing a prior contractor’s plan with a subsequent contractor. What’s the legal obligation? What prevents an owner from sharing one contractor’s ideas (plan) with some other contractor? Essentially, who owns the plans? Design Gaps claimed copyright in their plan -- though nothing had been filed with the Registrar of Copyrights. Was passing the plan to Distinctive Design a violation of Design Gaps copyright?

The case went into arbitration, as required by contract. The arbitrator’s decision did no favor for the contractor:

[Design Gaps] failed to enter into evidence a valid copyright registration; however, even if they had, [Distinctive Design] certainly established fair use of the design work, especially considering that [the contractor] did not profit from the design. The sharing of a PDF of the design did not materially impair the marketability of the design. [Design Gaps] failed to prove that [Distinctive Design] or anyone else converted its designs for this project. Bryan Reiss of Distinctive Design confirmed that he did not use Design Gaps' designs for the cabinets. I am convinced by Reiss's testimony and the exhibits provided that any similarity in the designs is due to the limitations of the space and the client's desired layout. Therefore, there has been no violation of any copyright which [Design Gaps] may have had.

The arbitrator denied relief on Design Gaps' counterclaims and declared the Highsmiths the prevailing party, awarding them $152,884 in damages plus $17,411 in arbitration costs and $126,113 in attorney's fees.

Any Time You Draw the Plans

Adding your name and a copyright symbol to your plan isn’t enough. Neither is registering your plan with the Copyright Office. Leave no doubt about who owns the plans. Make it clear in the contract: You own the plans. My recommendation: Use this option in Construction Contract Writer:

Plans, Drawings, Specifications and copies prepared for use in construction under this agreement are the property of Contractor. Contractor retains all common Law and statutory rights to these Plans, Drawings and Specifications. Owner agrees that these documents will not be used on any other project and, with the exception of one record set to be retained by Owner, will be returned to Contractor on request.