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Design Basics, LLC v. WK Olson Architects, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 31, 2018




         Plaintiffs Design Basics, LLC (“Design Basics”) and Carmichael & Dame Designs, Inc. (“CDD”), architectural design companies that create home plans and sell design licenses, discovered home plans on Defendants WK Olson Architects, Inc. (“WK Olson”) and R&D Custom Homes' websites that appear to copy those of Design Basics and CDD. To protect their copyrights, Plaintiffs filed this suit against WK Olson, its controlling shareholder William K. Olson, R&D Custom Homes, and its controlling shareholders, Daniel DeVivo and Rocky Spano. In their first amended complaint, Plaintiffs bring claims for willful and non-willful copyright infringement in violation of the Copyright Act, 17 U.S.C. § 106, vicarious infringement against the controlling shareholders, and violation of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1202.[1] WK Olson and Olson move to dismiss the first amended complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Because Plaintiffs have not met their pleading burden, instead only setting forth conclusory allegations to support their claims, the Court dismisses the first amended complaint without prejudice.


         Design Basics, a limited liability company, creates, markets, publishes, and licenses the use of “architectural works.” Doc. 31 at ¶ 2. CDD engages in similar work to Design Basics, and indeed, one of its principals purchased Design Basics with another individual in 2009. Olson controls WK Olson, another corporation involved in residential architecture and design.

         Design Basics and CDD have created over 350 new home design plans since 2009, which they have registered with the United States Copyright Office. Design Basics and CDD offer single-build licenses for their home designs for a fee ranging from $700 to $6, 000. Since 2009, they have generated over $6 million in licensing revenue from over 8, 000 construction licenses. Each of Plaintiffs' designs takes between 55 and 90 hours to complete and involves creating a preliminary sketch, a redline, and a plan, and then drafting construction drawings. Plaintiffs have ample freedom to create whatever designs they choose, aside from building code requirements such as hallway width and window opening sizes.

         In addition to creating its own designs, Design Basics advertises, markets, and facilitates the sale of several other companies' designs, including CDD's. Design Basics has used various methods to make its design plans available to the public, including design catalogs, displays at stores like Menards, conventions and shows, and websites, including its own, While Design Basics has focused more on its online presence in recent years, it previously heavily marketed its designs through catalog distribution, sending them directly to businesses, including WK Olson.

         Design Basics has found that, as its marketing has increased, so has the piracy of its copyrighted home designs. For example, one lumberyard's employees admitted to copying Design Basics' works, and Design Basics also encountered a builder that did not even bother changing the names of three of Design Basics' plans that the builder used without a license. This has led Design Basics to bring lawsuits to discourage copyright infringement of its architectural works.

         At the end of 2015, Paul Foresman, Design Basics' Director of Business Development, was researching infringement cases in Illinois and Indiana when he came across R & D Custom Homes' website, That website's “Floor Plan” section directed him to another webpage run by WK Olson, Foresman found several designs on that looked similar to Design Basics' and CDD's designs. Specifically, these plans, identified by plan number, [3] appeared to copy from eleven of Design Basics' plans and one of CDD's plans.[4]


         A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Anchorbank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.


         I. Copyright Infringement Claims (Counts 1-8)

         To state a claim for copyright infringement under 17 U.S.C. § 106, Plaintiffs must plausibly allege that (1) they own a valid copyright, and (2) WK Olson copied “constituent elements of the work that are original.” Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). Here, Plaintiffs allege both willful and non-willful copyright infringement. In the case of willful infringement, the Copyright Act allows for an increased statutory damage award under 17 U.S.C. § 504(c)(2). Willful infringement occurs where a defendant “knows that its conduct is an infringement or if the infringer has acted in reckless disregard of the copyright owner's right.” Wildlife Exp. Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 211 (7th Cir. 1994) (citation omitted). Plaintiffs also seek to hold Olson vicariously liable for copyright infringement; however, they must first “plead sufficient facts for a valid claim of direct copyright infringement” against WK Olson. Hart v., Inc., No. 15-C-01217, 2015 WL 8489973, at *5 (N.D. Ill.Dec. 8, 2015).

         First, although WK Olson and Olson acknowledge that Plaintiffs hold valid copyrights, they argue that Plaintiffs' claims fail to sufficiently set forth the required second prong of a copyright infringement claim. Plaintiffs may demonstrate copying of constituent elements in two ways: (1) through direct evidence, such as an admission of copying by the defendant; or (2) showing that the defendant had an opportunity to copy the original, referred to as “access, ” and that the works in question are “substantially similar” to each other, or, in other words, “that the two ...

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