Design Basics, LLC v. Lexington Homes, Inc.

Opinion

 [***1129]  [*1096]   Hamilton, Circuit Judge. This copyright suit shows the difficulty in finding protected creative expression in a crowded field, in this case, architectural design of single-family homes. The case also shows the challenge in administering intellectual property law to discourage so-called intellectual property "trolls" while protecting genuine creativity.

Plaintiffs Design Basics, LLC; Prime Designs, Inc.; and Plan Pro, Inc. (collectively, [**2]  "Design Basics") and their affiliates claim rights to some 2700 home designs. They sued defendants Lexington Homes, Inc. and related parties (collectively, "Lexington") for copyright infringement, contending that Lexington built homes that infringed four of Design Basics' designs.

The district court granted summary judgment to Lexington, finding no evidence that Lexington ever had access to Design Basics' home plans. Without access, the court reasoned, there could be no copying and no copyright infringement. We affirm. We agree with the district court that Design Basics has no evidence of access. We also conclude that no reasonable jury could find that Lexington's accused plans bear substantial similarities to any original material in Design Basics' plans.

I. Factual and Procedural Background

A. Design Basics and the Art of the Intellectual Property Shake-down

Design Basics has been in the business of producing market-ready designs for modest single-family homes for several decades. In 2009, Patrick Carmichael and Myles Sherman purchased Design Basics as an investment opportunity. Carmichael acknowledged in his deposition that "potential copyright infringement cases influence[d his] decision [**3]  to become an owner of  [*1097]  Design Basics." He testified that proceeds from litigation have become a principal revenue stream for Design Basics.

 [***1130]  A search of the Public Access to Court Electronic Records (PACER) system reveals that Design Basics has been party to over 100 federal lawsuits, the vast majority of which have been filed since the 2009 change in ownership. Nearly all involve copyright claims asserted by Design Basics. Design Basics offers its employees incentives to scout out potential copyright infringement cases, paying its employees a finder's fee in the form of a percentage of the net recovery relating to any home plans that they located. Design Basics filed this lawsuit after employee Carl Cuozzo discovered Lexington's website and its supposedly infringing plans while investigating other Design Basics cases on the Internet.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.