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Design Basics, LLC v. Lancia Homes, Inc.

United States District Court, N.D. Indiana, Fort Wayne Division

March 9, 2017

DESIGN BASICS, LLC, Plaintiff,
v.
LANCIA HOMES, INC. d/b/a Lancia Construction, Springmill Development, Lacnai Real Estate, Lancia Homes, Springmill Wood Development, and Waterford Enterprises, Defendant.

          OPINION AND ORDER

          THERESA L. SPRINGMANN CHIEF JUDGE.

         This matter comes before the Court on Defendant Lancia Homes, Inc.'s Motion to Certify Issue for Interlocutory Appeal [ECF No. 55]. On January 19, 2017, the Court issued its Opinion and Order [ECF No. 52] in which it denied the Defendant's Motion for Partial Summary Judgment [ECF No. 19] and the Plaintiff's Cross-Motion for Partial Summary Judgment [ECF No. 33]. The Defendant filed this present Motion on February 10, 2017, and the Plaintiff filed its Response [ECF No. 57] on February 24, 2017. A Reply [ECF No. 59] was entered on March 3, 2017, so the Defendant's Motion is now ripe for ruling.

         BACKGROUND

         This is a case involving the copyright laws. 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. ¶ 17.)

         On 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 Defendant argued that the Plaintiff's copyright claim was time barred because, under recent Supreme Court and Seventh Circuit precedent, the claim “accrued” at the time of the infringing act. Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014); Consumer Health Info. Corp. v. Amylin Pharmas., Inc., 819 F.3d 992 (7th Cir. 2016); Chi. Building Design, P.C. v. Mongolian House, Inc., 770 F.3d 610 (7th Cir. 2014). The Plaintiff argued that the “discovery rule” still governed the statute of limitations in the Seventh Circuit. After review of the Motions, this Court stated that:

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 denied.

(Opinion & Order 5, ECF No. 52.)

         DISCUSSION

         The Court may certify an order for appeal if it “involves a controlling question of law, as to which there is a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate determination of the litigation.” 28 U.S.C. § 1292(b). The Seventh Circuit's stated criteria for such appeals is:

[T]here must be a question of law, it must be controlling, it must be contestable, and its resolution must promise to speed up the litigation. There is also a nonstatutory requirement: the petition must be filed in the district court within a reasonable time after the order sought to be appealed.

Ahrenholz v. Bd. of Tr. of Univ. of Ill., 219 F.3d 674, 675 (7th Cir. 2000). “We have interpreted ‘question of law' to refer to a question regarding the meaning of a statutory or constitutional provision, regulation or common law doctrine.” Boim v. Quranic Literacy Inst., 291 F.3d 1000, 1007 (7th Cir. 2002). The parties dispute whether the issue to be certified on appeal is “contestable” and whether it will “materially advance” the litigation.

         First, the Court's Opinion & Order addressed a pure question of law. It began by summarizing Petrella, in which “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.' . . . ‘A copyright claim thus arises or accrue[s] when an infringing act occurs.'” (Opinion & Order 4 (citations omitted).) Then, the Court analyzed Seventh Circuit precedent post-Petrella to determine whether the accrual rule displaced the “discovery rule.” In Chicago Building Design, the court considered a copyright infringement claim but “express[ed] no opinion” as to whether “Petrella abrogate[d] the discovery rule in copyright cases.” 770 F.3d at 618.[1] And in Consumer Health, the court assessed a dispute over copyright ownership, distinguished the statute of limitations for those claims from infringement claims, and noted that the claims for the latter accrued “at the time the wrong occur[ed].” 819 F.3d at 995-96. However, the Consumer Health court had no occasion to explain how Petrella impacted the discovery rule for infringement claims. Accordingly, this Court found that the Supreme Court's decision had left the “discovery rule” intact within the Seventh Circuit and denied the Defendant's Motion for Partial Summary Judgment for that reason.[2] This interlocutory appeal is an “abstract legal issue” and will not require “hunting through the record . . . to see whether there may be a genuine issue of material fact lurking there, ” Ahrenholz, 219 F.3d at 677, because the Plaintiff's arguments are based solely on the Seventh Circuit's legal interpretation of the Copyright Act after Petrella.

         Second, the issue of law here is controlling. “A question of law may be deemed ‘controlling' if its resolution is quite likely to affect the further course of the litigation, even if not certain to do so.” Sokaogon Gaming Enter. Corp., v. Tushie-Montgomery Assocs., Inc., 86 F.3d 656, 659 (7th Cir. 1996). The question of law that the Defendant raises will affect the further course of the litigation because the Court has ruled that the Plaintiff's infringement claims arising more than three-years before this litigation are not time-barred. The question of whether or not Petrella abrogates the Seventh Circuit's “discovery rule” would render those infringement claims originating more than three-years before this litigation time-barred.

         Third, the Court's ruling on the statute of limitations issue is contestable. That is, “there is substantial ground for difference of opinion.” 28 U.S.C. § 1292(b). It is true, as the Plaintiff points out, that the “overwhelming majority of the courts-including the Seventh Circuit-apply (Opinion & Order 5 n.2. (citations omitted).) the discovery rule to claims of copyright infringement” after Petrella. (Resp. 4, ECF No. 57.) However, the Seventh Circuit has not had occasion to address this pure question of law head-on. As this Court explained in its summary above, the question of “whether the discovery rule has been abrogated within this Circuit after Petrella” was not raised on appeal in either of the two Circuit cases issued since the Supreme Court's opinion. Consumer Health involved copyright ownership disputes, not copyright infringement claims, and Chicago ...


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