United States District Court, N.D. Indiana, Fort Wayne Division
OPINION AND ORDER
THERESA L. SPRINGMANN JUDGE
matter comes before the Court on cross-motions by both
Plaintiff Design Basics, LLC, and Defendant Lancia Homes,
Inc. The Defendant filed a Motion for Partial Summary
Judgment [ECF No. 19] on September 16, 2016, arguing that the
statute of limitations provision in the Copyright Act bars
the Plaintiff's claims based on infringing acts that
occurred prior to February 3, 2013. The Plaintiff filed a
Cross-Motion for Partial Summary Judgment [ECF No. 33] on
October 28, 2016, arguing that the Defendant's
affirmative defense fails and that it was entitled to
judgment as a matter of law on its infringement claims. This
matter is fully briefed and ripe for review.
following facts are not disputed. The Plaintiff is a Nebraska
company that “creates, markets, publishes and licenses
the use of architectural works and technical drawings.”
(Foresman Decl. ¶¶ 2-4, ECF No. 34-1.) The
Defendant is a Fort Wayne company that builds homes. (Lancia
Aff. ¶ 4, ECF No. 21-1.) Between May and July 2013, one
of the Plaintiff's employees “conducted research
about [its] customers and potential customers in
Indiana” by visiting their websites to obtain basic
contact information. (Foresman Decl. ¶¶ 5, 9-10.)
On July 14, 2013, that employee visited the Defendant's
website “and discovered several infringing homes being
advertised.” (Id. ¶ 12.) Using “an
internet search engine that archives websites over time,
” the Plaintiff discovered that the Defendant had
actually been advertising infringing versions of the
Plaintiff's homes since May 18, 2006. (Id.
February 3, 2016, the Plaintiff filed its Complaint [ECF No.
1] against the Defendant alleging copyright infringement. The
Defendant filed its Answer [ECF No. 10], which was amended on
April 29, 2016 [ECF No. 11]. On September 16, 2016, the
Defendant moved for Partial Summary Judgment. The Plaintiff
filed its Response to the Plaintiff's Motion [ECF No. 32]
on October 28, 2016, and the Defendant's Reply [ECF No.
41] was entered on November 9, 2016. Also on October 28,
2016, the Plaintiff moved for partial summary judgment. The
Defendant's Response to the Plaintiff's Motion [ECF
No. 43] was entered on November 21, 2016, and the
Plaintiff's Reply [ECF No. 51] was filed on December 15,
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 Cnty.
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). With cross motions, a court must
“construe all inferences in favor of the party against
whom the motion under consideration is made.” Allen
v. City of Chi., 351 F.3d 306, 311 (7th Cir. 2003)
(quoting Hendricks-Robinson v. Excel Corp., 154 F.3d
685, 692 (7th Cir. 1998)).
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 Defendant argues
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
“accrue[s]” 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.
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 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. 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.
Seventh Circuit is one of those courts of appeals that
follows the “discovery rule.” Gaiman v.
McFarlane, 360 F.3d 644, 653 (7th Cir. 2004). Two
Seventh Circuit opinions since Petrella confirm that
the 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. 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
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.
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
Defendant's Motion for Partial Summary Judgment is
Plaintiff's Cross-Motion for Partial Summary Judgment
seeks to go one step further by arguing that it is entitled
to judgment as a matter of law on the issue of when the
Plaintiff “discovered [the Defendant's]
infringement of [the Plaintiff's] copyrights.”
(Reply 1, ECF No. 50.) The Plaintiff's evidence
purportedly shows that it had actual knowledge that the
Defendant had infringed its copyrights on July 14, 2013, and
that it reasonably should not have known of any infringing
acts at an earlier date. (Foresman Decl. ¶¶ 12-14,
17-18.) However, the Defendant put forth evidence that the
Plaintiff has frequently sued for copyright infringement of
its designs in this District since 2006, after it was
notified that there are companies in the District that use
its designs. (See Granite Ridge Compl. Exs. 2-3, ECF
No. 43-1). In one such litigation in a sister circuit, the
Plaintiff's representatives “testified that they
routinely performed research on potential infringements as
far back as 2006.” (See Marhofer R & R 10,
ECF No. 43-2.) The Defendant states that this presents a
question of fact as to whether the Plaintiff reasonably
should have known about any infringing acts more than three
years before it filed this lawsuit.
of reasonableness are subjective questions of fact for
determination by the jury. Learning Curve Toys, Inc. v.
PlayWood Toys, Inc., 342 F.3d 714, 725 (7th Cir. 2003);
see also Warren Freedenfeld Assocs., Inc. v.
McTigue, 531 F.3d 38 (1st Cir. 2008) (“It stands
to reason that determining when a reasonable person would
have become aware of a copyright infringement is a
fact-sensitive enterprise.”). Viewing all the evidence
in a light favorable to the nonmovant, a jury could find that
the Plaintiff reasonably should have known of ...