Civil By Stanton B. Miller Who Owns the Drawings? The last thing anyone involved in a construction project needs is a lawsuit, so it is important to understand how to prevent litigation whenever possible. Recognizing what is preventable, however, is not always easy. This is particularly true in the case of disputes over ownership and use of what the American Institute of Architects (AIA) refers to as “instruments of service,” which include construction drawings, sketches, surveys and other drawings created by design professionals. Disputes over instruments of service can be nasty, prolonged and expensive. As in any war, when the participants – in this case, project owners and design professionals – start shooting, innocent bystanders such as contractors and users may become collateral damage. Because these lawsuits involve claims of copyright infringement, the stakes can be incredibly high. The cost to litigate any copyright infringement case may easily run into six figures and, in the construction arena, can morph into an attempt to shut down the project. The good news is it’s not that hard to minimize the possibility of these disputes from arising. Owners and design professionals must July 2011 simply create a contract that accurately reflects the needs of the project and the legitimate competing interests of the parties. To do so, they must first recognize what those interests are. The 2007 revisions to the flagship AIA architect/owner form contracts made significant progress in this area, at least as far as owners and contractors are concerned. However, they still employ a one-size-fits-all approach, and, while widely used, the AIA forms are hardly universally accepted. Transferring Copyrights Much confusion in this process relates to a seemingly counter-intuitive principle – the copyright in the instruments of service will usually be owned by the design professional, not the owner who paid for them. There are some exceptions where the owner becomes the owner of the copyrights, such as when the design professional is the owner’s employee. However, the design professional is typically an independent contractor and, as such, owns the copyright. The parties can change this by signing a contract in which the architect transfers the copyright to the owner. However, most standard form contracts including the AIA forms do the opposite and confirm the design professional’s ownership. That is not to say that either the law or the form contracts give the owner no rights in the instruments of service - only that the rights are limited. The rights in these cases basically fall into two broad categories: the rights in the physical drawings themselves and the intellectual property rights. Although the project owner may own the physical drawings, in the construction process those rights are incomplete unless the owner can provide copies of the drawings to contractors and subcontractors, who must have the right to copy them and prepare shop drawings based upon them. Although an owner may own the physical drawings, most standard form contracts pro- IN THIS SECTION vide that the owner can use them for a limited purpose. The 2007 AIA B101 owner architect agreement, for example, provides that the owner may use the drawings to complete, maintain and alter the project as long as he pays the full amount due to the architect. This is far better for owners than the 1997 version of the AIA form contracts, which provided that the owner, who paid for the drawings, received a right to use them to complete the project but not the right to use them for additions. Ames Construction Inc. g p. 114 Analyzing Needs Guam International Airport Authority While the rights in the 2007 AIA and similar forms may be sufficient in most cases, none of the major standard forms give the owner the rights to use the instruments of service on other projects. Furthermore, while the AIA forms provide that the owner may terminate the services for “convenience,” the owner must pay the architect a license fee “solely for the purpose of completing, using and maintaining the project.” The amount of the fee is left blank, and it is not unusual for the parties to fail to insert any number in the blank provided. Sometimes the omission is inadvertent, and in some cases results because the parties fail to agree on the amount of the fee. If they can’t reach agreement while negotiating a contract, there may be little chance of reaching an amicable agreement after the owner has terminated the architect’s service. Note that when the owner terminates for convenience, the form omits the owner’s right to use the drawings for renovations to the same project. In many projects, the owner will not want to forgo that possibility. All these rights are predicated on the owner making full payment to the architect under the contract. Before executing a form contract, owners and architects should analyze their respective needs to determine if they are being met by the form they chose. For example, most form contracts will not meet the needs of an owner who plans to use the drawing for a rollout of similar structures, such as chain restaurants or retail operations. The form contract limits the owner’s use to the one project that is the subject of the contract. If the owner plans to use those drawings as a prototype on other projects, he needs to make sure the contract includes the necessary rights. The owner may have to pay an additional fee to the architect for this, and the owner has more leverage to negotiate that fee before signing the contract than after the architect completes his services. An owner contemplating a signature building will be deeply disappointed if the architect constructs its twin for someone else – think of two buildings looking like the Guggenheim in close proximity. Since the form contract provides that the architect owns the copyright in the drawings, he can do whatever he wants with them. Again, the owner must evaluate his needs and make sure those needs are met by the signed contract. Avoiding Problems An owner can avoid all of the problems I’ve described with one simple change. If the contract provides that the owner, not the architect, owns the copyright in the instruments of service, the owner can do with them as he sees fit. While many architects will object, sometimes the payment Ames is getting the word out about the Milton E. Proby Parkway project. g p. 128 The Authority is ready for an increased population. Company Profiles 114 Ames Construction Inc. – Milton E. Proby Parkway 118 Munilla Construction Management LLC – Miami International Airport 122 RoadSafe Traffic Systems Inc. 126 Flatiron Construction Corp. 128 Guam International Airport Authority Capital Improvement Program of an additional fee will remove the objection. Some architects will require the payment of the entire fee before the copyright passes to the owner. This is a reasonable request since it provides the architect with additional assurance that the owner will pay for services rendered. In addition, the architect will generally want the contract to reflect that the architect will incur no liability when another architect uses his or her drawings. The key is for the parties to recognize the issues, get them on the table and comprehensively deal with them. Unfortunately, this sometimes doesn’t happen until the parties are disenchanted with each other and amicable agreements are hard to reach. STANTON B. MILLER is a partner in the law firm of Ungaretti & Harris, based in Chicago. As a construction and intellectual property attorney, Miller has negotiated construction contracts for a wide variety of projects including factories, hospitals, museums and hotels. He also represents clients in construction-related disputes. He can be reached at 312-977-4395 or sbmiller@uhlaw.com. Published by Business Media Publications Ltd. Tel: 312.236.4090 Fax: 312.236.4266 On behalf of Ungaretti & Harris © 2011 Business Media Publications Ltd. All rights reserved.