Wereldhave USA-San Antonio, L.P. v. Peter Fillat Architects, Inc., 2010 WL 419388 (D. Md. 2009)
The owner and developer of a $400 million multiphase project, currently being constructed (or not constructed) in San Antonio, engaged an architectural firm to provide designs for a portion of the project. The firm provided a proposal for five different sections, each of which contained language that stated that the parties would, after approval, enter into the standard American Institute of Architect’s agreement. Of the five proposals, however, only two were executed. And the two proposals that were executed contained notations replacing the standard AIA agreement with a “mutually acceptable agreement.”
According to the plaintiff developer, it paid the architectural firm over 2.7 million dollars for its services. Things went sour. The developer claimed the architectural firm was late in submitting designs; the architecture firm claimed its tardiness was due to the late submission of essential documentation by the developer.
The architectural firm refused to provide the developer access to the designs, claiming that it was owed $491,000 for its services. The developer claimed that it offered to place the money for the counter-claim into escrow pending final decision by the Court — but that the offer was rejected by the architectural firm.
The developer filed a breach of contract action against the architectural firm seeking, among other things, $2 million in damages and a declaratory and injunctive relief that the the architectural firm must provide access to the designs, and that it had a license to build the development from its designs. The developer claimed that the entire construction project would be delayed, if not shut down, without the plans.
Non-exclusive implied license
The question of whether the architectural firm granted the developer a non-exclusive license to use its copyright in the architectural designs formed a backdrop to the case. Even if the developer were to obtain a copy of the designs, it would not be able to start building without committing copyright infringement unless the Court were to find that it was granted an implied non-exclusive license. The architectural firm argued that it did not intend to grant an implied license that would permit the developer to use the designs after it was no longer involved in the construction. The firm used Nelson-Salabes v. Morningside Dev., LLC, 284 F.3d 505, 516 (4th Cir.2002) as precedent:
(explaining that implied nonexclusive license exits where (1) the parties engaged “in a short-term discreet transaction as opposed to an ongoing relationship”; (2) the architect used a written contract, such as a standard AIA, which provides that the copyrighted materials could not be used without the architect’s involvement in project or without express permission; and (3) the parties conduct “during the creation or delivery of the copyrighted materials” shows that the parties permitted continued use of the materials after the architect was no longer involved and without his consent).
The TRO
The Court noted that both parties made compelling arguments about the breach of contract and implied license arguments, and that it did not have a developed record that would allow it to grant a TRO. The Court, however, made it clear that it’s denial of a TRO should not be read as predictive of a denial of a preliminary injunction.
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