Design Basics, LLC v. Westport Homes of Fort Wayne, Inc. et al
OPINION AND ORDER DENYING 27 Defendants' Motion for Partial Summary Judgment. Signed by Chief Judge Theresa L Springmann on 3/24/2017. (jss)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
DESIGN BASICS, LLC,
WESTPORT SUBURBAN HOMES
OF FORT WAYNE, INC., and
WESTPORT HOMES, INC.,
CAUSE NO.: 1:16-CV-170-TLS
OPINION AND ORDER
This matter comes before the Court on the Motion for Partial Summary Judgment [ECF
No. 27] filed by Defendants Westport Homes of Fort Wayne, Inc. and Westport Home, Inc.
(collectively “the Defendants”), on November 22, 2016. In the Defendants’ Brief in Support of
the Motion [ECF No. 28], the Defendants argue that the statute of limitations provision in the
Copyright Act bars Plaintiff Design Basics, LLC’s claims based on infringing acts that occurred
prior to May 19, 2013 (the “Look-Back Date”). This matter is fully briefed and ripe for review.
The Plaintiff is a Nebraska company that creates, markets, publishes, and licenses the use
of architectural works and technical drawings. The Defendants are Fort Wayne companies that
build homes. On May 19, 2016, the Plaintiff filed a Complaint [ECF No. 1] against the
Defendant for “publish[ing], distribut[ing], market[ing], and advertis[ing] certain architectural
designs for single family residential homes” that infringe the Plaintiff’s copyrighted works.
(Compl. ¶¶ 13–24, ECF No. 1.) The Defendants “built homes based on floor plans named in
Plaintiff’s Complaint for at least ten years” prior to the lawsuit, spanning both before and after
the Look-Back Date. (Def.’s Br. in Supp. of Mot. Summ. J. 3, ECF No. 28.) On November 22,
2016, the Defendants moved for Partial Summary Judgment. The Plaintiff filed its Response to
the Defendants’ Motion [ECF No. 38] on December 20, 2016, and the Defendants’ Reply [ECF
No. 44] was filed on January 17, 2017.
STANDARD OF REVIEW
Summary judgment is warranted when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). Summary judgment is the moment in litigation where the nonmoving party is
required to marshal and present the court with evidence on which a reasonable jury could rely to
find in that party’s favor. Goodman v. Nat’l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010).
A court should only deny a motion for summary judgment when the nonmoving party presents
admissible evidence that creates a genuine issue of material fact. Luster v. Ill. Dep’t of Corrs.,
652 F.3d 726, 731 (7th Cir. 2011) (first citing United States v. 5443 Suffield Terrace, 607 F.3d
504, 510 (7th Cir. 2010); then citing Swearnigen-El v. Cook Cty. Sheriff’s Dep’t, 602 F.3d 852,
859 (7th Cir. 2010)). A court’s role in deciding a motion for summary judgment “is not to sift
through the evidence, pondering the nuances and inconsistencies, and decide whom to believe.
[A] court has one task and one task only: to decide, based on the evidence of record, whether
there is any material dispute of fact that requires a trial.” Waldridge v. Am. Heochst Corp., 24
F.3d 918, 920 (7th Cir. 1994). Material facts are those that are outcome determinative under the
applicable law. Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997). Although a bare contention
that an issue of material fact exists is insufficient to create a factual dispute, a court must
construe all facts in a light most favorable to the nonmoving party, view all reasonable inferences
in that party’s favor, see Bellaver v. Quanex Corp., 200 F.3d 485, 491–92 (7th Cir. 2000), and
avoid “the temptation to decide which party’s version of the facts is more likely true,” Payne v.
Pauley, 337 F.3d 767, 770 (7th Cir. 2003).
This Court has original jurisdiction over copyright claims pursuant to 28 U.S.C.
§ 1338(a). The Copyright Act states that “[n]o civil action shall be maintained under [its]
provisions . . . unless it is commenced within three years after the claim accrued.” 17 U.S.C.
§ 507(b) (emphasis added). The Defendants argue that the recent Supreme Court decision in
Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), determined that a copyright
claim “accrue[s]” at the time of the infringing act. The Plaintiff argues that Petrella did not
change the Seventh Circuit “discovery rule” that a claim accrues when the injured party
discovers or should have discovered with due diligence that an infringing act occurred. The
Court must decide which party’s interpretation of the law is correct.
Petrella concerned the classic film Raging Bull, the copyright to which the plaintiff
possessed and which she claimed MGM infringed by marketing and distributing it for roughly
three decades. 134 S. Ct. at 1970–71. The question before the Supreme Court was limited to the
“application of the equitable defense of laches to copyright infringement claims brought within
the three-year look-back period.” Id. at 1972. In discussing the Copyright statute as a whole, the
Supreme Court stated that in an infringement suit “the limitations period generally begins to run
at the point when ‘the plaintiff can file suit and obtain relief.’” Id. at 1969. “A copyright claim
thus arises or ‘accrue[s]’ when an infringing act occurs.” Id. But in a footnote, the Supreme
Court noted that “nine Court of Appeals have adopted, as an alternative to the incident of injury
rule, a ‘discovery rule,’ which starts the limitations period when ‘the plaintiff discovers, or with
due diligence should have discovered, the injury that forms the basis for the claim,” and that it
would “not pass on the question” of which one was correct. Id. at 1969 n.4. Accordingly, the
Supreme Court did not purport to change any accrual laws in its Petrella opinion.
A recent Supreme Court decision confirms this reading of Petrella. See SCA Hygiene
Prods. Aktiebolag v. First Quality Baby Prods., LLC, — S. Ct. — , 2017 WL 105978 (Mar. 21,
2017). SCA Hygiene presented the same question—whether the equitable defense of laches
brought within a statute’s limitations period—but in the similar context of the Patent Act. Id. at
*3. The respondent argued that “the accrual of a claim, the event that triggers the running of a
statute of limitations, occurs when a plaintiff knows of a cause of action. Id. at *7. The Supreme
Court noted that such a statement
is not ordinarily true. As we wrote in Petrella, “[a] claim ordinarily accrues ‘when [a]
plaintiff has a complete and present cause of action. . . .’ ” While some claims are subject
to a “discovery rule” under which the limitations period begins when the plaintiff
discovers or should have discovered the injury giving rise to the claim, that is not a
universal feature of statutes of limitations. . . . And in Petrella, we specifically noted that
“we have not passed on the question” whether the Copyright Act’s statute of limitations
is governed by such a rule.
Id. (citations omitted). SCA Hygiene confirms that the Supreme Court has not weighed in, one
way or another, on when a cause of action accrues for purposes of a copyright claim.
The Seventh Circuit follows the “discovery rule” for accrual purposes. Gaiman v.
McFarlane, 360 F.3d 644, 653 (7th Cir. 2004). Two Seventh Circuit opinions since Petrella
confirm that the Supreme Court’s decision did not abrogate the discovery rule within this Circuit.
Like Petrella, Chicago Building Design, P.C. v. Mongolian House, Inc., 770 F.3d 610 (7th Cir.
2014), involved a defendant’s infringing acts that occurred within the “three-year lookback
period.” Id. at 616. To determine if the plaintiff’s complaint was time barred, “the right question
to ask . . . [wa]s whether the complaint contain[ed] allegations of infringing acts that occurred
within the three-year lookback period from the date on which the suit was filed.” Id. However,
the court “express[ed] no opinion” as to whether “Petrella abrogate[d] the discovery rule in
copyright cases,” id. at 618, and thus it was not central to its holding.1 In Consumer Health
Information Corp. v. Amylin Pharmaceuticals, Inc., 819 F.3d 992 (7th Cir. 2016), the Seventh
Circuit considered a “dispute over copyright ownership.” Id. at 995. The Seventh Circuit stated
that “when the gravamen of a copyright suit is a contest over copyright ownership, the claim
accrues when the claimant has express notice of a competing claim of ownership.” Id. at 996.
This rule for a copyright ownership claim was distinguished from an infringement claim, the
latter of which accrued “at the time the wrong occur[ed].” Id. (citing Petrella, 134 S. Ct. at
1969). The Court did not discuss Petrella further or its impact upon the discovery rule.
Although the discovery rule may be abrogated within this Circuit someday, this Court is
“bound to follow Seventh Circuit precedent.” Frerck v. Pearson Educ., Inc., 63 F. Supp. 3d 882,
887 n.3 (N.D. Ill. 2014) (holding same). As that precedent stands today, the discovery rule
controls the determination of when a copyright infringement claim accrues, and Petrella does not
instruct otherwise. Accordingly, the Plaintiff’s claims regarding infringing acts that occurred
more than three-years before this action commenced are not barred as a matter of law. The
Defendants’ Motion for Partial Summary Judgment is denied.
In remanding the case, the Seventh Circuit allowed for the possibility that the plaintiff could
seek “a right to recover for infringing acts that occurred . . . outside the three-year lookback period,”
which was not an issue properly before the court. Id. Assuming Petrella abrogated the discovery rule,
such a suggestion would have been impossible because any infringing act that occurred greater than threeyears prior would necessarily have fallen outside the three-year lookback period and thus been time
barred. The Seventh Circuit’s suggestion makes more sense if the discovery rule remained unchanged
after Petrella, as the plaintiff could seek recovery for infringing acts that occurred outside the three-year
lookback period so long as the plaintiff did not have actual or constructive knowledge.
For the foregoing reasons, the Defendants’ Motion for Partial Summary Judgment [ECF
No. 27] is DENIED.
SO ORDERED on March 24, 2017.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
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