Seventh Circuit revives copyright suit over blueprints; says question of first impression could have "implications far beyond this case"

Overturning the lower court, a federal appeals panel last week gave a Chicago architecture firm the green light to renew its copyright violations case against a restaurant company.

The Seventh Circuit Court of Appeals handed down its ruling on Thursday, determining that the restaurant company’s allegedly repeated acts of sharing with Chicago city building officials exact copies of the firm’s work, but bearing another architect’s name, could have reset the statute of limitations in the case, while also raising an unprecedented question of whether showing copied architectural plans could violate copyright law.

The ruling supported the appeal of plaintiffs Chicago Building Design P.C. (CBD) and the architecture firm’s principal, Jeremiah Johnson, and overturned U.S. District Judge Elaine E. Bucklo's dismissal of their complaint against Mongolian House Inc., affiliated corporate officers Ryan Golden and Mark Perres, and the company’s architect, John A. Wilson.

Judge Diane S. Sykes wrote the Seventh Circuit opinion, with judges William J. Bauer and David F. Hamilton concurring.

The case centers on a dispute between the two companies that dates back to 2008.

In the years prior, CBD had worked with Golden, Perres and their company, Mongolian House, designing blueprints to guide the renovation of Plan B Bar & Kitchen, “an upscale restaurant” in the 1600 block of North Milwaukee Avenue in the city's Wicker Park neighborhood.

According to the recent ruling, CBD secured approval for the renovation project from city officials and was then hired by Mongolian House to oversee construction, in exchange for $15,000 for the blueprint design services, and $259,000 in cash and 15 percent of Plan B’s profits for the construction supervision services.

Plan B opened in April 2007.

In 2008, court documents state a CBD employee while on other business stumbled upon a design plan for Plan B that CBD believed was the same as its original design for the restaurant, but had the name of Mongolian House's architect, Wilson, on it.

CBD then launched an inquiry, but was blocked by the city from obtaining Wilson’s purported blueprints, even as Mongolian House, Golden, Perres and Wilson moved ahead with using those blueprints to obtain a “full permit” from the city in 2009, which allowed the restaurant owners to do more extensive work to the restaurant than the more limited permit CBD had worked under.

CBD alleged Mongolian House had used those copyrighted plans to pass building inspections at various times through 2012. Mongolian House, the ruling notes, also did not complete payments to CBD, delivering just $11,000 for design work and $45,000 for the construction services.

Plan B has since closed and in 2012, CBD sued.

In 2013, Bucklo dismissed CBD’s case, siding with Mongolian House, which argued that because CBD had first become aware of the potential infringement in 2008, the architecture firm was on “inquiry notice” at that time, it filed its suit six weeks beyond the three-year window allowed under the limitations set in federal copyright law.

On appeal, CBD argued Mongolian House's repeated use of the plans in 2009 and beyond constituted continuing violations of its distribution rights under federal law. As such, the company argued, the limitations clock should correlate with those alleged violations.

The Seventh Circuit agreed, noting that precedent dictates courts need to not only set the limitations window from the first discovery of potential copyright infringement, but “to ask in copyright cases … whether the complaint contains allegations of infringing acts that occurred within the three-year look-back period from the date on which the suit was filed.”

“Here, the answer to that question is plainly ‘yes,’” Sykes wrote for the panel.

In their analysis, Sykes and her colleagues also addressed the question of whether CBD’s case could be limited by the extent of the audience to whom the allegedly copied plans were shown.

Mongolian House argued that because it only showed the plans to city building officials--hence, a “limited publication”-- CBD’s distribution rights were not violated.

The judges, however, said that question needs to be more fully argued and addressed at trial, as it could have “implications far beyond this case.”

“As far as we can tell, this is a question of first impression in this circuit and apparently in other circuits as well,” Sykes wrote. “As a general matter, the scope of the exclusive right to distribute … is a difficult issue on which courts have disagreed.”

For those reasons, the Seventh Circuit sent the case back to the federal trial court, saying CBD should have the chance to press its claim and the court should address the questions raised in the case.