December 13, 2011 - 8:15am
HANOVER ARCHITECTURAL SERVICE, P.A. v. CHRISTIAN TESTIMONY-MORRIS, N. P. – Architectural Firm Defeats Former Client’s Claim of “Implied License” to Use Plans for Church Conversion Project Posted by:

 

On November 29, 2011, in Hanover Architectural Service, P.A. v. Christian Testimony-Morris, N.P., No. 10-cv-05455 (D.N.J., 11-29-2011), the U. S. District Court for the District of New Jersey ruled against a copyright infringement defendant’s motion to dismiss for failure to state a claim, in a case providing a useful reminder on the limits of implied licenses to use copyrighted architectural plans. 

 

The plaintiff, Hanover Architectural Service, P.A. (“Hanover”), is an architectural firm that was initially engaged by the defendant church, Christian Testimony-Morris, N.P. (“the Church”), to evaluate whether a warehouse in Boonton, New Jersey, could be reconstructed into a church, including sanctuaries, offices and other spaces. The defendant Chang, as president of the Church and chair of its building committee, first contacted Hanover in early 2005, and multiple discussions followed. These talks led to a series of agreements between the Church and Hanover for specific services.

 

The first agreement engaged Hanover to review the existing warehouse and provide an architectural design for the purpose of obtaining a variance from the Boonton township authorities. The second agreement engaged Hanover to provide the project building, electrical and other designs needed to comply with local building code requirements during the permit application process. During the negotiation of this second agreement, the Church allegedly told Hanover that the Church intended to retain Hanover to administer the building of the church conversion. Hanover alleged that its pricing for the second agreement was below fair market value, because it expected to recoup its invested hours during the project administration. In 2006, Hanover and the Church executed a third agreement for the second phase of the project design process, whereby Hanover would provide additional building and other designs needed for the permit process. Hanover delivered the variance work and submitted the needed designs to the township to support the building permit application.

 

After the designs were delivered to the township in June 2007, the Church informed Hanover that it would not retain Hanover to administer the project. Hanover notified the Church in two letters that Hanover’s designs were copyright protected, and Hanover registered its designs as copyrighted architectural works. Hanover continued to revise the project plans as the township requested, and delivered copies of those changes to the Church. However, the Church did not use Hanover for the conversion project, and its attorney notified Hanover that the agreements with Hanover were terminated. Failing to resolve its issues with the Church, Hanover filed suit on several grounds.

 

Moving to dismiss the copyright claim, the Church and other defendants asserted that, among other grounds, the Church held an implied license to use the Hanover designs for the project. No such license had been expressly given by Hanover, but copyright law does not require an implied nonexclusive license to be written. Such an implied license can be oral or implied from the circumstances, and can occur when a person requests the creation of a work, the creator of the work makes that particular work and delivers it to the requesting party, and the creator of the work intends that the requesting party copy and distribute the work. The defendants argued that all of those factors applied here.

 

The federal court rejected the defendants’ argument. Hanover’s complaint alleged facts that defeated the crucial factor of intent to license the Church’s use of the designs for carrying out the building conversion. In two letters delivered in September 2007, Hanover reminded the Church that the designs were copyright protected and could not be used or modified without Hanover’s permission. The fact that these letters were sent after the Church notified Hanover of the Church’s decision not to use Hanover for the project, did not negate Hanover’s intention to protect its copyrights and not to grant an implied license in the project designs.

 

Hanover Architectural Service P.A. is a useful reminder that parties requesting the creation of copyrighted architectural works do not automatically acquire rights to use the completed works for all purposes.  The defendants in this case might have avoided this dispute if they had assured that the agreements with Hanover provided for such subsequent use of the designs beyond the permitting phase of the project.  Such a provision might have entailed higher pricing for the designs, or Hanover might have refused, but in either circumstance the parties could have avoided the confrontation depicted in this court opinion.