Copyright infringement claim over Chicago building blueprints reinstated by Seventh Circuit

by Charles Miller

Chicago Building Design, P.C. (“CBD”) specializes in the design and construction of restaurants. Mongolian House, a CBD client, wanted to renovate an upscale restaurant in Chicago known as “Plan B.” CBD designed the interior of the restaurant and in June 2006 filed blueprints with the City of Chicago to obtain a “repair and replace” building permit for the project. Mongolian House retained CBD to do the construction work, and the firm completed the renovations in 2007.

Sometime in 2008, while visiting the City’s offices on other business, a CBD employee chanced upon a set of blueprints for Plan B that appeared to be copies of the firm’s designs but were labeled with another architect’s name. On May 8, 2009, the City issued a new building permit for Plan B based on the 2008 blueprints. On February 13, 2012—not quite three years later—CBD sued Mongolian House, its owners, and its architect alleging copyright infringement and assorted state-law claims.

The defendants moved to dismiss the federal claims as time-barred under the Copyright Act’s three-year statute of limitations. The district court granted the motion, holding that CBD was on “inquiry notice” of a possible violation of its rights when its employee visited the City’s offices on other business and “saw the blueprints, which happened no later than Dec. 31, 2008.” According to the district court, the limitations period began to run on that date even though CBD “could not at that time verify that infringement had occurred.” Starting the limitations clock on that date meant that CBD’s suit was filed about six weeks too late.

The Seventh Circuit Court of Appeals has now reversed and reinstated the case. Chicago Bldg. Design, P.C. v. Mongolian House, Inc., No. 12-3037, 2014 WL 5368839 (7th Cir. Oct. 23, 2014). The Seventh Circuit’s opinion relies heavily on Petrella v. Metro–Goldwyn–Mayer, Inc., ––– U.S. ––––, ––––, 134 S.Ct. 1962, 1969, 188 L.Ed.2d 979 (2014), which was decided after the district court dismissed CBD’s case. In Petrella, the Supreme Court clarified that the Copyright Act’s statute of limitations establishes a “separate accrual rule” so that “each infringing act starts a new limitations period”:

[W]hen a defendant commits successive violations, the statute of limitations runs separately from each violation. Each time an infringing work is reproduced or distributed, the infringer commits a new wrong. Each wrong gives rise to a discrete “claim” that “accrue[s]” at the time the wrong occurs. In short, each infringing act starts a new limitations period. […]

Under the [Copyright] Act’s three-year provision, an infringement is actionable within three years, and only three years, of its occurrence. And the infringer is insulated from liability for earlier infringements of the same work. […] Thus, when a defendant has engaged (or is alleged to have engaged) in a series of discrete infringing acts, the copyright holder’s suit ordinarily will be timely under § 507(b) with respect to more recent acts of infringement (i.e., acts within the three-year window), but untimely with respect to prior acts of the same or similar kind.

Petrella, 134 S.Ct. at 1969–70.

The district court had ruled that the statute of limitations began to run when CBD had “inquiry notice,” i.e., knowledge that would have led a reasonable person to start investigating the possibility that his rights had been violated. However, in light of Petrella, the Seventh Circuit held that “the right question to ask in copyright cases is 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.” Chicago Bldg. Design, P.C., supra.

Here, the answer to that question is plainly “yes.” The complaint alleges that Perres, Golden, and Wilson distributed the infringing blueprints to building inspectors during inspections in July 2009 and periodically thereafter, through January 2012. These acts fall within the three-year limitations period from the date of suit (February 13, 2012).

Id. Because CBD’s complaint alleges potentially infringing acts that occurred within the three-year look-back period from the date of suit, the case should not have been dismissed.

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** Michael Heygood, James Craig Orr, Jr. and Eric Pearson were selected to the Super Lawyers List, a Thomson Reuters publication, for the years 2003 through 2014.