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Chi. Bldg. Design, P.C. v. Mongolian House, Inc.

United States Court of Appeals for the Seventh Circuit

February 13, 2013, Argued; October 23, 2014, Decided

No. 12-3037

Opinion

 [*611]  [***1541]   Sykes, Circuit Judge. This case involves claims of copyright infringement arising out of a failed business relationship between a Chicago architectural firm and its client. Chicago Building Design, P.C. ("CBD"), specializes in the design and construction of restaurants. Its client, Mongolian House, Inc., wanted to renovate an upscale restaurant in Chicago known as "Plan B." CBD designed the [**2]  interior of the restaurant and in June 2006 filed blueprints with the City of Chicago to obtain a "repair and replace" building permit for the project. Mongolian House retained CBD to do the construction  [***1542]  work, and the firm completed the renovations in 2007.

Sometime in 2008 a CBD employee visited the City's offices on other business and chanced upon a set of blueprints for Plan B that appeared to be copies of the firm's designs but were labeled with another architect's name. CBD asked the City for a copy of the blueprints to determine if they were in fact copies of its own. The City denied the request, saying the blueprints were exempt from disclosure. In the meantime, Mongolian House defaulted on payments due CBD for the 2006-2007 work. On May 8, 2009, the City issued a new building permit for Plan B based on the 2008 blueprints. On February 13, 2012—not quite three years later—CBD sued Mongolian House, its owners, and its architect alleging copyright infringement and assorted state-law claims.

The defendants moved to dismiss the federal claims as time-barred under the Copyright Act's three-year statute of limitations. See 17 U.S.C. § 507(b). The district court granted the motion, holding that CBD was [**3]  on "inquiry notice" of a possible copyright violation when its employee happened upon the 2008 blueprints at the City's offices, which occurred not later than December 31, 2008. The limitations clock started to run on that date, the court held, even though CBD was unable to discover whether the 2008 blueprints infringed its copyright. The court also rejected CBD's alternative argument under the "continuing violation" doctrine, holding that CBD failed to allege acts of infringement within the limitations period. The court relinquished jurisdiction over the state-law claims, and CBD appealed.

 [*612]  We reverse. The Supreme Court recently clarified that ] the Copyright Act's statute of limitations establishes a "separate accrual rule" so that "each infringing act starts a new limitations period." Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1969, 188 L. Ed. 2d 979 (2014). CBD's complaint alleges potentially infringing acts that occurred within the three-year look-back period from the date of suit, so the case should not have been dismissed. To the extent that CBD seeks recovery for earlier infringing acts, the issue may have to be revisited on remand in light of Petrella.

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770 F.3d 610 *; 2014 U.S. App. LEXIS 20511 **; 112 U.S.P.Q.2D (BNA) 1541 ***; Copy. L. Rep. (CCH) P30,680

CHICAGO BUILDING DESIGN, P.C., and JEREMIAH JOHNSON, Plaintiffs-Appellants, v. MONGOLIAN HOUSE, INC., RYAN GOLDEN, MARK PERRES, and JOHN A. WILSON, Defendants-Appellees.

Prior History:  [**1] Appeal from the United States District Courtfor the Northern District of Illinois, Eastern Division. No. 12 C 1010 — Elaine E. Bucklo, Judge.

Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 891 F. Supp. 2d 995, 2012 U.S. Dist. LEXIS 107226 (N.D. Ill., 2012)

CORE TERMS

infringing, blueprints, limitations period, distribute, statute of limitations, three-year, rights, exclusive right, inquiry notice, discovery, copies, copyright infringement, discovery rule, architectural, accrues, cases, three year, limitations, look-back, diligent, starts, building inspection, complaint alleges, building permit, Copyright Act, inspections, restaurant, violating, renovate

Copyright Law, Civil Infringement Actions, Defenses, Statute of Limitations, Civil Procedure, Appeals, Standards of Review, De Novo Review, Affirmative Defenses, Statute of Limitations, General Overview, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Governments, Legislation, Time Limitations, Extensions & Revivals, Ownership Rights, Distribution, Adaptations, Reproductions, Scope of Copyright Protection, Copyright Infringement Actions, Reviewability of Lower Court Decisions, Preservation for Review, Damages, Types of Damages, Statutory Damages