Copyright Infringement

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7^th Circuit Court of Appeals

Case Name: Design Basics, LLC, et al., v. Signature Construction, Inc., et al.,

Case No.: 19-2716

Officials: SYKES, Chief Judge, and WOOD and HAMILTON, Circuit Judges.

Focus: Copyright Infringement

Copyright law strikes a practical balance between the intellectual-property rights of authors and the public interest in preserving the free flow of ideas and information and encouraging creative expression, all in furtherance of the constitutional purpose to “promote the Progress of Science and useful Arts.” U.S. CONST. art. 1, § 8, cl. 8; see generally Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183, 1195 (2021). Copyright trolls—opportunistic holders of registered copyrights whose business models center on litigation rather than creative expression—disrupt this balance by inhibiting future creativity with negligible societal benefit. “Like the proverbial troll under the bridge, these firms try to extract rents from market participants who must choose between the cost of settlement and the costs and risks of litigation.” Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093, 1097 (7th Cir. 2017).

Plaintiff Design Basics, LLC, is a copyright troll. Id. at 1096–97. The firm holds registered copyrights in thousands of floor plans for suburban, single-family tract homes, and its employees trawl the Internet in search of targets for strategic infringement suits of questionable merit. The goal is to secure “prompt settlements with defendants who would prefer to pay modest or nuisance settlements rather than be tied up in expensive litigation.” Id. at 1097. As we explained in Lexington Homes, “[t]his business strategy is far removed from the goals of the Constitution’s intellectual property clause.” Id. Instead, it amounts to an “intellectual property shakedown.” Id. at 1096.

This appeal involves yet another Design Basics infringement action, one of more than 100 such suits in the last decade or so. Id. at 1097. When Design Basics was last before this court in Lexington Homes, we were guided by two well established copyright doctrines—scènes à faire and merger— that constrain the ability of infringement plaintiffs to claim expansive intellectual-property rights in a manner that impedes future creativity. Applying these doctrines, we held that Design Basics’ copyright in its floor plans is thin. Id. at 1101–05. The designs consist mainly of unprotectable stock elements—a few bedrooms, a kitchen, a great room, etc.— and much of their content is dictated by functional considerations and existing design conventions for affordable, suburban, single-family homes. When copyright in an architectural work is thin, only a “strikingly similar” work will give rise to a possible infringement claim. Id. at 1105. Applying this standard, we held that no reasonable jury could find for Design Basics and affirmed a summary judgment against it. Id.

This latest appeal meets the same fate. Design Basics sued Signature Construction, Inc., and related companies, accusing them of copying ten of its registered floor plans for suburban, single-family homes. The district court entered summary judgment for the defendants based largely on the reasoning of Lexington Homes.

Design Basics asks us to overrule Lexington Homes. We decline to do so. And we take this opportunity to restate and clarify the elements of a prima facie case of infringement, both as a general matter and more particularly in cases involving works of this type in which copyright protection is thin. For this category of claims, only extremely close copying is actionable as unlawful infringement. Put more precisely, this type of claim may move forward only if the plaintiff’s copyrighted design and the allegedly infringing design are virtually identical. That standard is not satisfied here, so we affirm.

Affirmed

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Derek A Hawkins is Associate Corporate Counsel, IP at Amazon.