Design Basics, LLC v. Mitch Harris Building Company, Incorporated et al

Filing 75

OPINION and ORDER denying 57 , 58 , 60 , and granting in part and denying in part 62 and 63 . Signed by District Judge Linda V. Parker. (AFla)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DESIGN BASICS, LLC,
Plaintiff,
Civil Case No. 16-14019
Linda V. Parker

v.
MITCH HARRIS BUILDING CO., INC.,
BLANK-HAM DEVELOPMENT, LLC,
MINDEN INVESTMENTS, LLC, and
MITCHELL L. HARRIS,
Defendants.
________________________________/
OPINION AND ORDER

Plaintiff Design Basics, LLC filed this lawsuit against Defendants on
November 11, 2016, alleging violations of the federal Copyright Act and the
Digital Millennium Copyright Act (“DMCA”). Defendant Blank-Ham
Development LLC and Minden-Investments, LLC have been terminated as parties.
The matter is presently before the Court on the following three1 motions filed by

1

The docket suggests that there are six motions pending; however, Defendants
filed two versions of their motion to dismiss and motion for summary judgment,
with one copy redacting confidential information and the second copy filed under
seal. Further, when filing their reply brief in support of their summary judgment
motion, Defendants inadvertently designated it as a separate motion (See ECF No.
74.)

the remaining defendants, Mitch Harris Building Co., Inc. and Mitchell L. Harris
(hereafter collectively “Defendants”):
• Motion to Dismiss for Spoliation Evidence (ECF Nos.
57, 58);
• Motion to Strike Plaintiff’s Expert & Expert Report (ECF
No. 60); and
• Motion for Summary Judgment (ECF Nos. 62, 63).
The motions have been fully briefed. Finding the facts and legal arguments
adequately presented in the parties’ briefs, the Court is dispensing with oral
argument pursuant to Eastern District of Michigan Local Rule 7.1(f).
The Court begins with Defendants’ motion for sanctions and motion to strike
Design Basics’ expert and expert report, as the outcome of those motions heavily
influences the Court’s analysis of Defendants’ summary judgment motion. First,
the Court provides a general overview of the facts and procedural background
relevant to Defendants’ motions for sanctions and to strike.
Brief Factual and Procedural Background
Design Basics is a Nebraska corporation engaged in the business of creating,
publishing, and licensing original architectural plans and designs. Dennis Brozak
founded Design Basics and ran the company until it was purchased by Patrick
Carmichael, a Texas home builder and contractor, and Myles Sherman in 2009.

2

Since the mid-1980’s, Design Basics has published home plan catalogs and,
since the advent of the internet, has published its designs on its website and
through its marketing partners. It owns copyrights in numerous architectural
works for which the United States Copyright Office has issued certificates of
registration, including the plans at issue in this lawsuit: 2761 Mayberry, 1748
Sinclair, 2100 Fenton, 1752 Lancaster, 2656 Castlar, 8037 Carriage Hills, 3484
MacCready, and 2245 Tyndale (collectively “Copyrighted Works”).
Between 1998 and 2005, Design Basics received average annual revenue of
$4 million from the licensing of its original home designs. Defendants—long-time
residential home builders located in Brighton, Michigan—were among Design
Basics’ customers. From approximately 1998 to 2006, Defendants purchased
and/or received over a 100 of Design Basic’s design plan catalogs and paid
approximately $20,000 to purchase at least 40 construction licenses from Design
Basics, including the Copyrighted Works. Design Basics’ licenses authorized
Defendants to construct homes based on the Copyrighted Works, advertise the
Copyrighted Works, and modify the Copyrighted Works to fit the needs of
Defendants’ customers.
Beginning in 2009, Design Basics’ revenue fell well below $1 million
annually. Design Basics attributes the decline to widespread theft of its
copyrighted plans by home builders and lumber yards, which it believes increased
3

dramatically between 2004 and 2009. Carmichael, who met Brozak in the mid1990’s, encouraged Design Basics to pursue copyright infringement lawsuits
against these home builders and lumber yards. Carmichael pledged to pay for the
litigation costs and expenses of these lawsuits and to “quarterback” the litigation
with attorney Dana Lejune (Design Basics’ counsel in this case), in exchange for a
50% interest in any amount recovered in the litigation. Eventually Brozak agreed
to this plan and Design Basics filed its first copyright infringement lawsuit in
March 2006: Design Basics, Inc. v. Granite Ridge Builders, Inc., No.
1:2006cv0072 (N.D. Ind. filed Mar. 10, 2006) (“Granite Ridge Litigation”).
Carl Cuozzo had been an employee at Design Basics since the late 1980’s
and Carmichael enlisted him to assist in the Granite Ridge Litigation, which
eventually settled for approximately $3.6 million. Cuozzo thereafter quit Design
Basics and began working for Carmichael, finding additional infringement matters
to pursue on behalf of Design Basics. Additional employees of Design Basics
were enlisted to assist Cuozzo in this endeavor: Paul Foresman (former President
and current Vice President of Design Basics); Greg Dodge (current Vice President
and Chief Technology Officer of Design Basics); and Trish Baker. 2

2

Design Basics LLC was formed in May 2009, after Carmichael purchased Design
Basics, Inc. The restructuring of the company and their distinctions are not
relevant for purposes of the pending motions. Thus, the Court refers to the preand post-2009 entities singularly as “Design Basics.”
4

In May 2009, Carmichael, along with Sherman, purchased Design Basics,
including its intellectual property. By that time, approximately 40 possible
infringement matters had been identified; however, by 2010, Design Basics had
filed only four lawsuits against alleged copyright violators. In subsequent years, it
filed more than 100 copyright infringement matters.
In the meantime, in January 2010, Design Basics experienced a massive
roof leak at its offices, causing water damage to the contents of cardboard banker
boxes. The boxes were marked “CC” and were believed to contain customer
change orders. They in fact contained, at least in part, important documents
relating to the authorship of Design Basics’ copyrighted designs. The documents
were destroyed. According to Defendants, Design Basics destroyed other sources
of information relevant to this matter. Specifically, between 2009 and 2013,
Design Basics allegedly destroyed 15 computers and a server used in its business.
This included a desktop computer used by Cuozzo and a laptop computer used by
Foresman—two individuals tasked with researching entities allegedly infringing
Design Basics’ copyrights.
Design Basics alleges that it discovered Defendants’ infringing activity on
November 13, 2013. According to Design Basics, Defendants are displaying and
marketing architectural works that copy Design Basics’ 2761 Mayberry and 1748
Sinclair plans (also referred to collectively as the “Alleged Copied Works”).
5

Additionally, Design Basics alleges that Defendants are displaying and marketing
Copyrighted Works without attaching the required copyright management
information (“CMI”).3 Design Basics therefore filed this lawsuit on November 11,
2016, two days before the applicable three-year limitations period expired.
On June 1, 2017, the Court entered its first scheduling order in this matter.
Between that date and July 20, 2020, the parties submitted eight stipulated orders
extending the deadlines in that order, which the Court signed. The Eighth
Amended Scheduling Order—which the Court warned would be the last—set a
July 29, 2020 deadline for Rule 26(a)(2) expert disclosures, an August 31, 2020
deadline for expert rebuttal disclosures, an October 1, 2020 deadline for fact and
expert discovery, and a November 2, 2020 deadline for the filing of dispositive
motions and motions challenging experts.
Design Basics provided Defendants with a copy of a report from its
architectural expert, Matthew McNicholas, on September 30, 2020. The report
was authored on October 24, 2019. When first served with Defendants’
interrogatories on September 9, 2017, Design Basics did not identify McNicholas
as an expert witness; rather, Design Basics responded that it had not yet retained an

3

Specifically, Design Basics alleges that Defendants display and market the
following Design Basics’ plans without attaching CMI: 2100 Fenton, 1752
Lancaster, 2656 Castlar, 8037 Carriage Hills, 3484 MacCready, and 2245 Tyndale.
6

expert. Design Basics never supplemented its answer. However, Design Basics
identified McNicholas as a possible expert in its witness list filed September 29,
2017. According to Defendants, they produced an “Expert Rebuttal Report” from
their expert, Dr. Robert Greenstreet, on August 31, 2020, despite not knowing who
was going to testify as an expert for Design Basics or what that expert was going to
say.
Motion to Dismiss
In their motion to dismiss, Defendants ask the Court to dismiss Design
Basics’ claims against them or, alternatively, for an adverse inference instruction
due to Design Basics’ destruction of relevant evidence and failure to adequately
respond to Defendants’ discovery requests. Specifically as to the former,
Defendants refer to the documents relevant to the authorship of the Alleged Copied
Works which were destroyed after the 2010 flood and the computers and server
destroyed between 2009 and 2014, which Defendants maintain may have contained
evidence showing that Design Basics discovered Defendants’ alleged infringement
before November 13, 2013 and that, therefore, this lawsuit was filed beyond the
relevant limitations period. Defendants also assert that, in response to their
discovery requests, Design Basics has not adequately searched its electronic assets,
inquired of key employees or asked them to collect information responsive to
Defendants’ discovery requests, searched the files of key employees, or produced
7

documents that Carmichael and/or Design Basics’ employees testified exist.
Defendants maintain that Design Basics’ destruction of evidence and similar
discovery abuses led a magistrate judge in this district to recommend sanctions
against it in another copyright infringement action: Design Basics, LLC v.
Marhofer, No. 12-14894, 2015 U.S. Dist. LEXIS 178465 (E.D. Mich. June 15,
2015) (M.J. Hluchaniuk).
Rule 37 of the Federal Rules of Civil Procedure allows a court to issue
sanctions against a party that fails to comply with a court order compelling
discovery. The rule identifies the available sanctions, including an adverse
inference instruction, “prohibiting the disobedient party from supporting or
opposing designated claims or defenses,” or dismissing the action in whole or in
part. Fed. R. Civ. P. 37(b)(2). Rule 37 requires sanctions even without a court
order where a party fails to provide information or identify a witness as required
under the rule, unless the failure was substantially justified or is harmless. Fed. R.
Civ. P. 37(c)(1). However, absent a motion, such sanctions are limited to the
exclusion of that information or witness at a hearing or trial. Id. Upon motion, the
court may impose additional sanctions, including those available under Rule
37(b)(2).
A court may also “impose sanctions on a party for misconduct in discovery
under its inherent power to manage its own affairs.” Residential Funding Corp. v.
8

DeGeorge Fin. Corp., 306 F.3d 99, 106-07 (6th Cir. 2002) (citing DLC Mgmt.
Corp. v. Town of Hyde Park, 163 F.3d 124, 135-36 (2d Cir. 1998)). Prior to
sanctioning a party for bad faith conduct in litigation under its inherent authority,
however, the court must comply with the mandates of due process and find that the
requisite bad faith exists. First Bank of Marietta v. Hartford Underwriters Ins.
Co., 307 F.3d 501, 511 (6th Cir. 2002) (citing Chambers v. Nasco, Inc., 501 U.S.
32, 50 (1991)). Moreover, while a federal court is not precluded from using its
inherent authority to sanction bad faith conduct simply because that conduct could
also be sanctioned under a statute or federal rule, the Supreme Court has advised
courts to “ordinarily . . . rely on the Rules rather than the inherent power.” Id.
(emphasis removed) (quoting Nasco, 501 U.S. at 50).
Spoliation
The Court begins with the evidence Design Basics irrefutably destroyed:
authorship records, computers, and a server. Pursuant to its inherent powers, a
court may “impose many different kinds of sanctions for spoliated evidence,
including dismissing a case, granting summary judgment, or instructing a jury that
it may infer a fact based on lost or destroyed evidence.” Automated Solutions
Corp. v. Paragon Data Sys., Inc., 756 F.3d 504, 513 (6th Cir. 2014) (quoting
Adkins v. Wolever, 554 F.3d 650, 652-53 (6th Cir. 2009)). “Spoliation is defined
as the intentional destruction of evidence that is presumed to be unfavorable to the
9

party responsible for its destruction.” United States v. Boxley, 373 F.3d 759, 762
(6th Cir. 2004) (citing Nationwide Mut. Fire Ins. Co. v. Ford Motor Co., 174 F.3d
801, 804 (6th Cir. 1999)). To warrant sanctions for the spoliation of evidence, the
movant must show: “(1) that the party having control over the evidence had an
obligation to preserve it at the time it was destroyed; (2) that the records were
destroyed with a culpable state of mind[4]; and (3) that the destroyed evidence was
“relevant” to the party’s claim or defense such that a reasonable trier of fact could
find that it would support that claim or defense.” Beaven v. U.S. Dept. of Justice,
622 F.3d 540, 553 (6th Cir. 2010) (emphasis added) (quoting Residential Funding,
306 F.3d at 107).
Duty to Preserve
The Sixth Circuit has stated that the duty to preserve attaches when the party
“has notice that the evidence is relevant to litigation or should have known that the
evidence may be relevant to future litigation.” John B. v. Goetz, 531 F.3d 448, 459
(2008) (citing Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.
2001); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216-18 (S.D.N.Y. 2003)).
According to Defendants, because by 2009 Design Basics had a business strategy
of identifying and suing builders for copyright infringement, “future litigation”

4

As discussed infra at pages 12-13, the 2015 amendments to the Federal Rules of
Civil Procedure impacted this second element.
10

means any potential lawsuit Design Basics might file against any defendant to
protect its intellectual property. Defendants do not cite a single case in which a
court found the duty to preserve information to have existed indefinitely due to the
possibility of future copyright litigation. Nor do Defendants cite any case
interpreting future litigation so expansively in any context.
The term “future litigation” does not mean any possible or hypothetical
lawsuit. Instead, it means “reasonably foreseeable” specific litigation. Zubulake,
220 F.R.D. at 216 (quoting West v. Goodyear Tire & Rubber Co., 167 F.3d 776,
779 (2d Cir. 1999)); see also United States v. Kitsap Physicians Serv., 314 F.3d
995, 1001 (9th Cir. 2002) (finding no spoliation because the defendant was not on
notice of a “future specific” lawsuit). The duty to preserve evidence runs to an
identifiable opposing party. Town of Westport v. Monsanto Co., No. 14-12041,
2015 WL 13685105, at *4 (D. Mass. Nov. 5, 2015) (citing In re Ethicon, Inc. v.
Pelvic Repair Sys. Prod. Antitrust Litig., 299 F.R.D. 502, 516 (S.D. W. Va. 2014);
(Delta-AirTran Baggage Fee Antitrust Litig., 770 F. Supp. 2d 1299, 1308 (N.D.
Ga. 2011); Point Blank Solutions, Inc. v. Toyobo Am., Inc., No. 09-61166, 2011
WL 1456029, *26 (S.D. Fla. Apr. 5, 2011); Brigham Young Univ. v. Pfizer, Inc.,
282 F.R.D. 566, 572 (D. Utah 2012)). Stated differently, the “duty to preserve
relevant evidence arises when the party in possession of the evidence knows that
litigation by the party seeking the evidence is pending or probable . . ..” Kounelis
11

v. Sherrer, 529 F. Supp. 2d 503, 518 (D.N.J. 2008) (emphasis added) (citing Joe
Hand Promotions v. Sports Page Cafe, 940 F. Supp. 102, 104 n.13 (D.N.J. 1996);
Baliotis v. McNeil, 870 F. Supp. 1285, 1290 (M.D. Pa. 1994)); see also Point
Blank Solutions, 2011 WL 1456029, at *25 (quoting Kounelis); Realnetworks, Inc.
v. DVD Copy Control Ass’n, 264 F.R.D. 517, 526-27 (N.D. Cal. 2009) (holding
that a “general concern over litigation” regarding the product RealDVD did not
“create a duty to preserve all documentation related to RealDVD” and that a duty
to preserve only arose when “a potential claim was identified or future litigation
was probable” with the parties in question). The party asserting spoliation “must
first show that [the spoliating party] owed them a duty to preserve documents.” In
re Delta/Air Tran, 2011 WL 915322, at *5.
Design Basics destroyed the authorship documents, server, and most of the
computers before November 13, 2013, when it claims to have discovered
Defendants’ infringing activity. The authorship documents were destroyed in early
2010 and the computers and server were discarded sometime between 2009 and
2013. Defendants present no evidence to show that Design Basics had notice that
the subject documents, server, and computers were relevant to the instant litigation
or should have known that the evidence may be relevant to specific future litigation
when they were destroyed. This distinguishes the present matter from Marhofer,
the case on which Defendants primarily rely to support their spoliation motion. In
12

Marhofer, the magistrate judge concluded that Design Basics had a duty to
preserve as early as November 2009, when it claimed to have discovered evidence
of its claims against the defendants. 2015 U.S. Dist. LEXIS 178465, at *4.
However, the one exception in the instant matter is the laptop computer Cuozzo
used from approximately 2012 to 2014, which was recycled in or around April
2014, several months after Design Basics purportedly discovered Defendants’
infringing activity. (Cuozzo 3/5/20 Dep. at 9-10, ECF No. 58-3 at Pg ID 2236.)
As of April 2014, Design Basics did have a duty to preserve relevant information.
However, for the reasons stated below, satisfaction of this element alone is not
enough to impose the requested spoliation sanctions.
Culpable State of Mind
Effective December 1, 2015, Federal Rule of Civil Procedure 37 was
amended to include the following:
(e) Failure to Preserve Electronically Stored Information. If
electronically stored information that should have been
preserved in the anticipation or conduct of litigation is lost
because a party failed to take reasonable steps to preserve it,
and it cannot be restored or replaced through additional
discovery, the court:
(1) upon finding prejudice to another party from loss of the
information, may order measures no greater than necessary to
cure the prejudice; or

13

(2) only upon finding that the party acted with the intent to
deprive another party of the information’s use in the litigation
may:
(A) presume that the lost information was unfavorable to the
party;
(B) instruct the jury that it may or must presume the
information was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
Fed. R. Civ. P. 37(e). As a result of this amendment, a party seeking the more
severe sanction of dismissal or an adverse inference instruction must show that
evidence was destroyed with the “ ‘intent’ to deprive [the moving party] of the
information’s use.” Applebaum v. Target Corp., 831 F.3d 740, 745 (6th Cir. 2016)
(quoting Fed. R. Civ. P. 37(e)). “A showing of negligence or even gross
negligence will not do the trick.” Id. (citing Fed. R. Civ. P. 37, 2015 Advisory
Comm. Note).
The Court is not able to conclude that Cuozzo’s laptop was recycled with the
intent to deprive Defendants of information contained therein.5 First, according to

Defendants believe Design Basics’ actions are nefarious—consistent with the
business model Defendants believe Design Basics adopted in 2009 to earn its
revenue primarily through intellectual property shakedowns rather than the
licensing of its architectural works. Whether Design Basics is a copyright troll or
simply a copyright owner vigorously protecting its intellectual property is
something the Court cannot know for sure. However, as the latter is a legitimate
endeavor, Design Basics’ aggressive pursuit of claimed infringers is not sufficient
on its own to confer bad faith in its litigation tactics.
14
5

Cuozzo, the laptop’s hard drive was backed up before it was destroyed. (Cuozzo
3/5/20 Dep. at 9-11, ECF No. 58-3 at Pg ID 2235-35; see also Dodge 2//27/20
Dep. at 108-113, ECF No. 64-19 (indicating that hard drives were preserved before
laptops were destroyed).) While Defendants point out that relevant information on
the laptop could have been deleted before the backup, there is no evidence that it
was.
Second, Defendants offer nothing but supposition that Cuozzo had any
information on the laptop relating to them. Defendants maintain that there must
have been information about them on Cuozzo’s laptop because he was heavily
involved in researching potential infringers and researched Defendants in 2014.
But Design Basics has indicated that Paul Foresman and Rick Molnar discovered
Defendants’ allegedly infringing activity (see Dodge 2/27/20 Dep. at 139, ECF No.
64-19; Answer No. 3 to Defs’ Interrogatories, ECF No. 66-9 at Pg ID 3477), and
Cuozzo testified that the research he did in April 2014 involved reviewing some
documents (i.e., “papers”) that Foresman gave him (Cuozzo 3/5/20 Dep. at 50-53,
ECF No. 58-3 at Pg ID 2245). Cuozzo testified that Foresman gave him these
physical documents, Cuozzo never scanned them into his computer, and that
Cuozzo returned them to Foresman afterward. (Id.) Defendants also assert that
Cuozzo admittedly had folders related to Defendants on prior laptops. However,

15

the deposition testimony cited by Defendants does not support this assertion.6 (See
Mot. at 30 n. 18, ECF No. 57 at Pg ID 1370 (citing Cuozzo 3/6/20 Dep. at 50, ECF
No. 58-3 at Pg ID 2245).)
For these reasons, the Court concludes that spoliation sanctions are not
warranted.
Other Alleged Discovery Abuses
Defendants argue that sanctions are further warranted due to other discovery
abuses by Design Basics. More specifically, Defendants maintain that Design
Basics did not adequately search its electronic assets or inquire of key employees
to uncover information that should have been produced in response to Defendants’
discovery requests. For example, Defendants believe that if Design Basics had
more diligently searched, it would have located and been required to produce pre2014 infringement research concerning Defendants, information related to
Defendants in its Chelsea Lumber files, information concerning Defendants in

For these reasons, the Court also cannot conclude that the destruction of Cuozzo’s
laptop resulted in the spoliation of information relevant to Defendants’ defenses.
The Court finds it unnecessary to discuss the relevance element in depth, however,
as a movant’s inability to show any one element precludes a spoliation sanction.
Adkins v. Wolever, 692 F.3d 499, 504 (6th Cir. 20012) (explaining that the test
prescribed in Beaven is conjunctive and thus if at least one of the prongs is not
satisfied, a spoliation sanction is unwarranted).
6

16

Rick Molnar’s files, and a “Suspected Infringement Form” for Defendants dated
earlier than the one produced.
Defendants, however, never filed a motion to compel in this matter to bring
to the Court’s attention the now purported insufficiencies in Design Basics’
responses to Defendants’ discovery requests. As a result, the Court has never been
able to question Design Basics as to how they searched for information to respond
to Defendants’ discovery requests. Nor, as a result, has the Court ordered Design
Basics to search differently or more diligently for the information Defendants
believe exists but has not been produced. Rule 37 does not contemplate the
sanctions Defendants seek absent such a motion or order. See Fed. R. Civ. P.
37(b), (c). Without this process, the Court cannot conclude with certainty that
Design Basics has in fact failed to produce documents or provided insufficient
answers in response to Defendants’ discovery requests.7
Defendants also assert that Design Basics submitted a false declaration from
Janie Murnane concerning the destruction of authorship records due to water
damage. The Court finds it unnecessary to consider this assertion, however, in

7

Defendants merely speculate and are suspicious that additional relevant evidence
has been withheld. The Court cannot sanction a party for failing to produce
evidence where there is no clear indication the evidence even exists.
17

light of its finding that the destruction occurred before Design Basics had a duty to
preserve this evidence in connection with the present lawsuit.
While the Court retains the inherent authority to sanction a party for badfaith conduct, Rule 37 offered Defendants an adequate mechanism to address
Design Basics’ purported discovery abuses. As the Supreme Court and Sixth
Circuit have advised, a court should be reluctant to use its inherent power where an
available rule or statute is “up to the task[.]” First Bank of Marietta, 307 F.3d at
511 (quoting Chambers, 501 U.S. at 50).
For these reasons, the Court is denying Defendants’ request for sanctions
based on Design Basics’ purported discovery abuses.
Motion to Strike Expert
Defendants move to strike the testimony and report of Design Basics’
expert, Matthew McNicholas, because Design Basics served Defendants with the
report on September 30, 2020, after the July 29, 2020 deadline in the Court’s
scheduling order. Defendants claim prejudice due to the untimely filing because
discovery closed the day after the report was produced.
Design Basics maintains in response that counsel for the parties repeatedly
agreed to extend the deadlines in this case—as reflective of their eight stipulations
to do so—and that Design Basics’ counsel was in good faith acting under an
agreement with Defendants’ counsel to produce expert reports beyond the date set
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forth in the final scheduling order when it produced the report on September 30.
As evidence of such an agreement, Design Basics points out that neither party filed
an expert report by the July 29 deadline and that defense counsel never asked about
Design Basics’ absent expert report. Further, Design Basics maintains that the
expert report produced by Defendants on August 31, 2020—also beyond the
scheduling order’s deadline—is in fact not a rebuttal report—despite its label—but
the expert’s initial report. According to Design Basics, its counsel repeatedly
communicated to Defendants’ counsel that the report of Design Basics’ expert was
already prepared but would not be produced until Defendants’ report was ready, as
the scheduling order required simultaneous production of initial expert reports.
Design Basics counters Defendants’ claim of prejudice, asserting that counsel
discussed continued discovery, despite the passing of the discovery deadline,
including depositions of the parties’ experts.
Notably, in reply, Defendants do not refute Design Basics’ assertions
regarding the parties’ communications concerning expert reports and discovery.
(See ECF No. 72.)
Under Rule 26 of the Federal Rules of Civil Procedure, parties must disclose
inter alia the identity of trial witnesses and a written report of expert witnesses.
Fed. R. Civ. P. 26(a)(2). A party using a retained expert must furnish a written
report containing “a complete statement of all opinions to be expressed and the
19

basis and reasons therefor.” Fed. R. Civ. P. 26(a)(2)(B). These disclosures must
be made “at the times and in the sequence that the court orders.” Fed. R. Civ. P.
26(a)(2)(C).
Federal Rule of Civil Procedure 37(c)(1) “mandates that a trial court punish
a party for discovery violations in connection with Rule 26 unless the violation was
harmless or is substantially justified.” Roberts ex rel. Johnson v. Galen of
Virginia, Inc., 325 F.3d 776, 782 (6th Cir. 2003) (quoting Vance v. United States,
No. 98-5488, 1999 WL 455435, at *3 (6th Cir. June 25, 1999)). The burden falls
on the potentially sanctioned party to prove harmlessness and/or substantial
justification. Id. Here, Design Basics provides a substantial justification: an
agreement between the parties to delay the exchange of expert reports. Defendants
do not dispute Design Basics’ assertion that counsel had such an agreement,
focusing instead on the unrelated discovery abuses of which they accuse Design
Basics. Further, despite Defendants’ label, their expert’s report—also submitted
past the deadline for doing so in the Court’s scheduling order—clearly is not a
rebuttal report. (See ECF No. 60-4.)
Moreover, in light of the parties’ agreement to conduct the depositions of
their experts beyond the discovery deadline, the “late” disclosure of McNicholas’
report is harmless. Adding to this finding is the fact that Design Basics had
informed Defendants well before the expert deadlines that its expert’s report was
20

complete and ready for production but was not produced because of the parties’
agreement to exchange their reports simultaneously.
For these reasons, the Court is denying Defendants’ motion to strike.
Summary Judgment
Defendants seek summary judgment with respect to Design Basics’ claims
against them. Defendants first argue that Design Basics cannot prove its claims
because it lacks proof of ownership. Next Defendants argue that Design Basics’
claims are barred by the applicable three-year limitations period. Lastly,
Defendants maintain that Design Basics cannot prove infringement or the
necessary removal of CMI.
The standard for evaluating Defendants’ summary judgment motion is well
established and need not be elaborately restated. Pursuant to Federal Rule of Civil
Procedure 56, a movant is entitled to summary judgment if “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). The court must accept as true the non-movant’s
evidence and draw “all justifiable inferences” in the non-movant’s favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Ownership
To prove its claims, Design Basics must show that it is the owner of the
copyrights at issue. Lexmark Int’l, Inc. v. Static Control Components, Inc., 387
21

F.3d 522, 534 (6th Cir. 2004) (citing Feist Publ’ns, Inc. v. Rural Tel. Serv. Co.,
499 U.S. 340, 361 (1991); Kohus v. Mariol, 328 F.3d 848, 853 (6th Cir. 2003))
(stating elements of a copyright infringement claim); 17 U.S.C. § 1202(b)(1) (“No
person shall, without the authority of the copyright owner or the law . . .
intentionally remove or alter any copyright management information”) (emphasis
added). Defendants maintain that Design Basics cannot prove that it is the owner
of the Copyrighted Works.
There is no dispute that Design Basics registered the Copyrighted Works
with the United States Copyright Office. (See Compl. Exs. 1-8, ECF Nos. 1-2 to 19.) In judicial proceedings, “the certificate of registration made before or within
five years after first publication of the work shall constitute prima facie evidence of
the validity of the copyright and the facts stated in the certificate.” 17 U.S.C.
§ 410(c); see also Lexmark, 387 F.3d at 533-34. Defendants have the burden to
rebut this presumption. Id. (citing Hi-Tech Video Prods., Inc. v. Capital
Cities/ABC, Inc., 58 F.3d 1093, 1095 (6th Cir. 1995)). To rebut the presumption of
validity, the defendant “must simply offer some evidence or proof to dispute or
deny the plaintiff’s prima facie case of infringement.” United Fabrics Int’l, Inc. v.
C&J Wear, Inc., 630 F.3d 1255, 1257 (9th Cir. 2011) (citations omitted).
Design Basics’ copyright registrations list it as the author of the works. (See
Compl. Exs. 1-8, ECF Nos. 1-2 to 1-9.) Copyright ownership vests in the work’s
22

author. 17 U.S.C. § 201(a). Usually, the author is the creator of the work. Id.
§ 102. However, there is an exception for “works made for hire.” Id. § 201(b).
If the work is made for hire, the owner is the person for whom the work was
prepared. Id. The Copyright Act defines a “work made for hire” as:
(1) a work prepared by an employee within the scope of his or
her employment; or
(2) a work specially ordered or commissioned for use as a
contribution to a collective work, as a part of a motion picture
or other audiovisual work, as a translation, as a supplementary
work, as a compilation, as an instructional text, as a test, as
answer material for a test, or as an atlas, if the parties expressly
agree in a written instrument signed by them that the work shall
be considered a work made for hire. . . .
Id. § 101. Architectural works do not fit into any of the categories of “specially
ordered or commissioned” work. Warren Freedenfeld Assoc. v. McTigue, 531
F.3d 38, 48 (1st Cir. 2008) (citing M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903
F.2d 1486, 1492 (11th Cir. 1990); Meltzer v. Zoller, 520 F. Supp. 847, 855 (D.N.J.
1981)); Richard J. Zitz, Inc. v. Pereira, No. 99-9399, 2000 WL 1239830, at *4 (2d
Cir. Aug. 31, 2000).
Defendants rely in part on the destruction of the authorship documents and
the sanctions requested for that destruction to rebut the presumption that Design
Basics is the owner of the Copyrighted Works. However, for the reasons discussed

23

earlier, Defendants are not entitled to an adverse inference based on spoliation.8
Defendants also rely on deposition testimony reflecting that individuals identified
as the creators of Design Basics’ Copyrighted Works were not employees of
Design Basics when the works were created. (Cuozzo 3/5/20 Dep. at 202-09, ECF
No. 58-3 at Pg ID 2274-75.) Even if such evidence “casts doubt” on the validity of
the copyrights, Design Basics responds with executed assignments from several
individuals identified as designers of the Copyrighted Works, pursuant to which
the individuals assigned their right, title, and interest in the works to Design
Basics. (ECF Nos. 64-6 to 64-8.) Ownership of a copyright can arise through
assignment, also. See In re Napster, Inc. v. Copyright Litig., 191 F. Supp. 2d 1087,
1097 (N.D. Cal. 2002).
For these reasons, Defendants fail to show that there is no genuine issue of
material fact as to Design Basics’ ownership (or lack thereof) of the Copyrighted
Works.

8

Defendants cannot overcome the presumption that Design Basics owns the
Copyrighted Works simply by pointing out that Design Basics lacks evidence to
demonstrate who authored those works. Design Basics’ obligation to present such
evidence does not arise unless and until Defendants present evidence casting doubt
on the validity of the copyright. In other words, Design Basics does not have to
offer any proof other than the certificates of registration unless and until
Defendants present evidence to rebut the prima facie presumption of copyright
validity that accompanies a registration certificate.
24

Statute of Limitations
A three-year limitations period applies to claims under the Copyright Act
and the DMCA. 17 U.S.C. § 507(b). Such claims “accrue[] when a plaintiff
knows of the potential violation or is chargeable with such knowledge.” Roger
Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d 383, 390 (6th Cir. 2007)
(quoting Bridgeport Music, Inc. v. Rhyme Syndicate Music, 376 F.3d 615, 621 (6th
Cir. 2004)). “Because each act of infringement is a distinct harm, the statute of
limitations bars infringement claims that accrued more than three years before suit
was filed, but does not preclude infringement claims that accrued within the
statutory period.” Bridgeport Music, 376 F.3d at 621 (citing Roley v. New World
Pictures, Ltd., 19 F.3d 479, 481 (9th Cir. 1994)); Roger Miller Music, 477 F.3d at
390 (explaining that “a claim for copyright infringement can accrue more than
once because each infringement is a distinct harm”). “[E]ach new infringing act
causes a new three year statutory period to begin.” Roger Miller Music, 477 F.3d
at 390 (quoting Ritchie v. Williams, 395 F.3d 283, 288 n.5 (6th Cir. 2005)).
To support their statute of limitations defense, Defendants once again point
to Design Basics’ purported spoliation and destruction of evidence. Defendants
argue that Design Basics concealed and destroyed the evidence demonstrating that
its claims are stale. As discussed above, however, the Court declines to issue

25

spoliation sanctions. Therefore, Defendants have not met their burden of showing
that the statute of limitations bars Design Basics’ claims.
Proof of Copyright Infringement
Defendants maintain that Design Basics lacks evidence to prove that
Defendants copied its architectural works.
A plaintiff asserting copyright infringement must show “(1) ownership of a
valid copyright [in the work] at issue . . . and (2) that the defendant copied
protectable elements of the work.” Lexmark Int’l, 387 F.3d at 534 (citing Feist
Publ’ns, 499 U.S. at 361; Kohus, 328 F.3d at 853). “The first prong tests the
originality and non-functionality of the work, both of which are presumptively
established by the copyright registration. Id. (internal citation omitted). “The
second prong tests whether any copying occurred (a factual matter) and whether
the portions of the work copied were entitled to copyright protection (a legal
matter).”
As an initial matter, Defendants point out that they were authorized to
construct homes based on Design Basics’ plans, redraw/modify the plans, and
advertise the plans in their business operations. (Carmichael 3/4/20 Dep. at 149,
ECF No. 57-14 at Pg ID 1628; Cuozzo 3/6/20 Dep. at 292-295, ECF No. 62-3 at
Pg ID 2545-46.) “Anyone who is authorized by the copyright owner to use the
copyrighted work . . . is not an infringer of the copyright with respect to such use.”
26

Sony Corp. of Am. v. Universal City Studios Inc., 464 U.S. 417, 433 (1984);
Johnson v. Jones, 149 F.3d 494, 500 (6th Cir. 1998). Authorized use may be
granted in writing, orally, or implied from conduct. Johnson, 149 F.3d at 500; see
also Graham v. James, 144 F.3d 229, 235 (2d Cir. 1998).
Design Basics is not required to show that Defendants’ use of Design
Basics’ copyrighted works was unauthorized; rather, Defendants bear the burden of
proving that their use of Design Basics’ plans was authorized. Muhammad-Ali v.
Final Call, Inc., 832 F.3d 755, 760-61 (7th Cir. 2016); John G. Danielson, Inc. v.
Winchester-Conant Props., Inc., 322 F.3d 26, 40 (1st Cir. 2003). Defendants do
not satisfy this burden. This is because Defendants offer no evidence to show that
the alleged infringing plans originated from Design Basics’ 2761 Mayberry or
1748 Sinclair plan. In other words, Defendants fail to show that they modified
licensed plans to develop the plans that Design Basics alleges are substantially
similar to the Alleged Copied Works.
Defendants alternatively argue that Design Basics cannot demonstrate that
they copied the 2761 Mayberry or 1748 Sinclair plan. Where direct evidence of
copying is absent—which appears to be conceded in this case (see ECF No. 69 at
Pg ID 3717)—a plaintiff alleging copyright infringement must show that the
defendant had access to the allegedly infringed work and that there is a “substantial
similarity between the two works at issue.” Kohus, 328 F.3d at 853-54 (quoting
27

Ellis v. Diffie, 177 F.3d 503, 506 (6th Cir. 1999)). Access is not at issue here, as
Defendants admittedly licensed the Alleged Copied Works.
In Kohus, the Sixth Circuit adopted the following two-step test for
substantial similarity:
[T]he first step “requires identifying which aspects of the
artist’s work, if any, are protectible by copyright,” . . . the
second “involves determining whether the allegedly infringing
work is ‘substantially similar’ to protectible elements of the
artist’s work,
Id. at 855 (quoting Sturdza v. United Arab Emirates, 281 F.3d 1287, 1296 (D.C.
Cir. 2002). Expert testimony “will almost certainly [be] required” at the first step.
Id. at 856. For example, where the work at issue involves technical drawings, a lay
person may not “understand what constitutes creativity in th[e] area, which
elements are standard for the industry, and which elements are dictated by
efficiency or by external standards.” Id. at 858. Whether expert testimony is
required at the second step will depend on who the “intended” or “target” audience
is. Id. at 857 (emphasis removed).
As relevant to the first step, “[n]ot all ‘copying’ is actionable[.]” Id. at 853.
A plaintiff alleging copyright infringement “must prove ‘copying of constituent
elements of the work that are original.” Id. (alteration in Kohus) (quoting Feist
Publ’ns, 499 U.S. at 361). Therefore, “[t]he essence of the first step is to filter out
the unoriginal, unprotectible elements—elements that were not independently
28

created by the inventor, and that possess no minimal degree of creativity—through
a variety of analyses.” Id. at 855 (internal citation omitted). In cases involving a
functional object, it also “is necessary to eliminate those elements dictated by
efficiency.” Id. at 856 “It also is important to filter out scenes a faire: those
elements that follow naturally from the work’s theme, rather than from the author’s
creativity, or elements that are dictated by external factors such as particular
business practices.” 9 Id. (internal quotation marks and citations omitted); see also
Design Basics, LLC v. Forrester Wehrle Homes, Inc., 302 F. Supp. 3d 933, 942
(N.D. Ohio 2018) (explaining that “external considerations—that is, industry
standards, consumer expectations, zoning requirements, and the like—can limit the
amount of protected expression within architectural works.”).
“Once the unprotectible elements have been filtered out, the second step is to
determine whether the allegedly infringing work is substantially similar to the
protectible elements of the original.” Id. at 856. In Kohus, the Sixth Circuit
modified the standard employed at this step, providing for different approaches
depending on the “intended audience.” Id. at 857. As the court explained:
This will ordinarily be the lay public, in which case the finder
of fact’s judgment should be from the perspective of the lay
observer or . . . the ordinary reasonable person. But in cases
As one district court alternatively explained: “a scene that must be included in a
work[.]” Design Basics, LLC v. Forrester Wehrle Homes, Inc., No. 3:15cv666,
2017 WL 5444569, at *4 (N.D. Ohio 2017).
29
9

where the audience for the work possesses specialized expertise
that is relevant to the purchasing decision and lacking in the lay
observer, the trier of fact should make the substantial similarity
determination from the perspective of the intended audience.
Expert testimony will usually be necessary to educate the trier
of fact in those elements for which the specialist will look.
Id. The Sixth Circuit has warned, however, that “a court should be hesitant to find
that the lay public does not fairly represent a work’s intended audience.” Id.
(quoting Dawson v. Hinshaw Music, Inc., 905 F.3d 731, 733 (4th Cir. 1990)).
Defendants assert that Design Basics lacks evidence to show that the alleged
infringing plans are substantially similar to Design Basics’ Alleged Copied Works.
First, Defendants maintain that Design Basics’ expert on copying should not be
allowed to testify because his expert report was produced beyond the deadline in
the Court’s scheduling order. Second, according to Defendants, Design Basics’
corporate designee, Cuozzo, is unqualified to opine on “substantial similarity” as
he was unable to provide a definition of “infringement” during his deposition.
Lastly, Defendants argue that Design Basics cannot demonstrate substantial
similarity because the Alleged Copied Works contain only unprotected elements.
As discussed above, the Court is not striking the testimony of Design
Basics’ expert. With respect to Cuozzo, he is not called as a legal expert and thus
his inability to define the term “infringement” is immaterial. It appears that he has
sufficient experience in home design plans (see Cuozzo Decl. ¶¶ 2, 4, ECF No. 6930

2 at Pg ID 3756-57) to testify regarding the components of architectural works and
to opine on the similarities between the relevant plans. With this evidence (i.e., the
testimony of Design Basics’ expert, Matthew McNicholas, and Cuozzo), there is a
genuine issue of material fact with respect to substantial similarity and whether the
Copyrighted Works contain protectable elements. Further, after conducting a sideby-side comparison of the plans and examining the purported differences, the
Court believes the issue of substantial similarity is best left for the trier of fact. See
Kohus, 328 F.3d at 853 (quoting Wickham v. Knoxville Int’l Energy Exposition,
Inc., 739 F.2d 1094, 1097 (6th Cir. 1984)) (explaining that “[i]n copyright
infringement cases ‘granting summary judgment, particularly in favor of a
defendant, is a practice to be used sparingly[.]”); see also Hoehling v. Universal
City Studios, Inc., 618 F.2d 972, 977 (2d Cir. 1980) (“Because substantial
similarity is customarily an extremely close question of fact, summary judgment
has traditionally been frowned upon in copyright litigation[.]”).
For these reasons, the Court concludes that Defendants are not entitled to
summary judgment on Design Basics’ copyright infringement claims.
Digital Millennium Copyright Act
Design Basics alleges that Defendants distributed architectural plans that
were copies and/or derivatives of Design Basics’ plans for which the CMI had
been removed and/or omitted. (See Compl. ¶¶ 42-44, ECF No. 1 at Pg ID 10.)
31

As relevant to Design Basics’ claim, the DMCA provides:
Removal or alteration of copyright management
information. No person shall, without the authority of the
copyright owner or the law—
(1) intentionally remove or alter any copyright management
information,
(2) distribute or import for distribution copyright management
information knowing that the copyright management
information has been removed or altered without authority of
the copyright owner or the law, or
(3) distribute, import for distribution, or publicly perform
works, copies of works, or phonorecords, knowing that
copyright management information has been removed or altered
without authority of the copyright owner or the law,
knowing, or, with respect to civil remedies under section 1203,
having reasonable grounds to know, that it will induce, enable,
facilitate, or conceal an infringement of any right under this
title.
17 U.S.C. § 1202(b). 10 The statute defines CMI as the information conveyed in
connection with copies of a work, such as its title, author, copyright owner, the

In response to Defendants’ summary judgment motion, Design Basics argues
that it also alleges a violation of subsection (a) of the statute, which prohibits
providing CMI that is false or distributing or importing for distribution CMI that is
false. 17 U.S.C. § 1202(a). Based on the allegations in the Complaint, the Court
fails to see how Design Basics alleges conduct falling within this section.
Nowhere does Design Basics assert that Defendants displayed or distributed
architectural plans with false CMI. Design Basics does not elaborate on the
substance of its purported § 1202(a) claim in its brief. (ECF No. 69 at Pg ID
3732.)
32
10

terms and conditions for use of the work, and identifying numbers or symbols
referring to the work’s copyright information. Id. § 1202(c)(3). A plaintiff
alleging a violation of § 1202(b) must show: (1) the existence of CMI on the
infringed work; (2) removal and/or alteration of that information; (3) that the
removal and/or alteration was done intentionally; and (4) that the removal was
done with knowledge or reason to know that it will induce, enable, facilitate, or
conceal an infringement. See Mango v. BuzzFeed, Inc., 356 F. Supp. 3d 368, 37677 (S.D.N.Y. 2019); Janik v. SMG Media, Inc., No. 16 Civ. 7308, 2018 WL
345111, at *12 (S.D.N.Y. Jan. 10, 2018).
Defendants maintain that Design Basics’ DMCA claim fails because it lacks
evidence that Defendants removed CMI from Design Basics’ “product or original
work.” (ECF No. 63 at Pg ID 2916 (emphasis added by Defendants) (quoting
Design Basics, LLC v. WK Olson, No. 1:17-cv-7432, 2019 WL 527535, at *5
(N.D. Ill. Feb. 11, 2019)) (“An action for removal of copyright management
information requires the information to be removed from a plaintiff’s product or
original work.”).) In WK Olson, the court explained that “basing a drawing on
another’s work is not the same as removing copyright management information[.]”
2019 WL 527535, at *5 (quoting Frost-Tsuji Architects v. Highway Inn, Inc., No.
13-00496, 2014 WL 5798282, at *5 (D. Haw. Nov. 7, 2014)). As the district court
explained in Frost-Tsuji Architects: “ ‘Virtually identical’ plans could have been
33

created by redrawing [the plaintiff]’s plans and not including [the plaintiff]’s
copyright management information, but that would not involve any removal or
alteration of copyright management information from [the plaintiff]’s original
work.” 2014 WL 5798282, at *5; see also Kirk Kara Corp. v. W. Stone & Metal
Corp., No. cv-20-1931, 2020 WL 5991503, at *6 (C.D. Cal. Aug. 14, 2020)
(dismissing the plaintiff’s DMCA claim even though “the works may be
substantially similar,” because the “[d]efendant did not make identical copies of
[the p]laintiff’s works and then remove the engraved CMI”). As Design Basics
alleges only that Defendants “removed and/or omitted [CMI] from copies of
[Design Basics’] works” (Compl. ¶¶ 42, 44, ECF No. 1 at Pg ID 10), Defendants
argue that they are entitled to summary judgment on Design Basics’ DMCA claim.
Design Basics responds that this interpretation of the statute is contrary to its
intent and case law interpreting it, which hold that liability attaches where a party
intentionally omits CMI or facilitates the omission of CMI. (ECF No. 69 at Pg ID
3731 (citing GC2 Inc. v. Int’l Game Tech, PLC, 255 F. Supp. 3d 812, 822 (N.D. Ill.
2017); Agence France Presse v. Morel, 769 F. Supp. 2d 295 (S.D.N.Y. 2011)).) In
GC2 Inc., however, the defendant was alleged to have removed CMI from
electronic copies of the plaintiff’s original artwork. 255 F. Supp. 3d at 816-17,
821. Similarly, in Agence France Presse, the plaintiff posted the defendant’s
photographs on its online database, designating the plaintiff and an image licensing
34

company as licensing agents and a third party as the photographer. 769 F. Supp.
2d at 299-300. As such, neither case suggests that the statute applies when CMI is
removed or omitted from non-original work.
As Design Basics does not allege that Defendants removed or omitted CMI
from Design Basics’ original works, the Court is granting summary judgment to
Defendants with respect to Count IX of the Complaint.
Conclusion
In summary, the Court finds spoliation sanctions unwarranted in this matter.
Design Basics shows that its “late” disclosure of its expert and his report was
substantially justified as it was in accordance with the parties’ agreement. Thus,
the Court declines to strike the expert’s testimony or his report. Finally,
Defendants fail to show that they are entitled to summary judgment based on their
statute of limitations and ownership defenses. The Court finds a genuine issue of
material fact with respect to whether Defendants copied Design Basics’ 2761
Mayberry or 1748 Sinclair plans. Defendants are entitled to summary judgment,
however, with respect to Design Basics’ DMCA claim.
Accordingly,
IT IS ORDERED that Defendants’ Motion to Dismiss for Spoliation of
Evidence (ECF Nos. 57, 58) is DENIED.

35

IT IS FURTHER ORDERED that Defendants’ Motion to Strike Plaintiff’s
Expert and Expert Report (ECF No. 60) is DENIED.
IT IS FURTHER ORDERED that Defendants’ Motion for Summary
Judgment (ECF Nos. 62, 63) is GRANTED IN PART AND DENIED IN PART.
IT IS SO ORDERED.

s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: November 29, 2021

36