United States District Court, S.D. Indiana, Indianapolis Division
DESIGN BASICS, LLC, PLAN PROS, INC., and PRIME DESIGNS INC., Plaintiffs,
KERSTIENS HOMES & DESIGNS, INC., T-KERSTIENS HOMES CORP., KERSTIENS REALTY, INC., KERSTIENS MANAGEMENT CORP., KERSTIENS LEASING CORP., KERSTIENS HOLDING CORP., and KERSTIENS DEVELOPMENT INC., Defendants.
ENTRY ON PENDING MOTIONS
WALTON PRATT, JUDGE
matter is before the Court on Motions for Summary Judgment
filed by Defendants Kerstiens Management Corp., Kerstiens
Leasing Corp., Kerstiens Holding Corp., and Kerstiens
Development, Inc. (collectively, the “Management
Defendants”) (Filing No. 88), and Defendants
Kerstiens Homes & Designs, Inc., and T-Kerstiens Homes
Corp. (collectively, the “Home Defendants”)
(Filing No. 136). Plaintiffs Design Basics, LLC
(“Design Basics”), Plan Pros, Inc. (“Plan
Pros”), and Prime Designs Inc. (“Prime
Designs”) (collectively, “Plaintiffs”)
filed this copyright infringement action alleging that
Defendants have violated and continue to violate
Plaintiffs' exclusive rights in certain architectural
works and technical drawings depicting architectural works.
The Management Defendants contend that they are entitled to
summary judgment because Plaintiffs cannot demonstrate how
they infringed upon Plaintiffs' copyrights in certain
architectural works, and they are not even in the business of
creating house plans or building houses. The Home Defendants
argue they are entitled to summary judgment because
Plaintiffs cannot show that they had access to
Plaintiffs' copyrighted works or that the Home
Defendants' architectural plans are substantially similar
to Plaintiffs' copyrighted materials, their architectural
plans were independently created, and Plaintiffs have failed
to establish that they own the registrations in the
pending are several other motions: Motion for Oral Argument
on Kerstiens' Motion for Summary Judgment (Filing No.
149), Renewed Motion to Require Plaintiffs to Post Bond
for Costs and Expenses (Filing No. 159),
Defendants' Objections to Expert Testimony That May Be
Proffered by Plaintiffs (Filing No. 176),
Plaintiffs' Motion to Exclude Expert Testimony and
Request for Daubert Hearing (Filing No. 196),
Plaintiffs' Motion in Limine Regarding Evidence not
Provided By Defendants in Discovery (Filing No.
197), and Plaintiffs' General Motion in (Filing
No. 199). For the following reasons, the Court
grants the Home Defendants' Motion for
Summary Judgment and denies as moot the
Management Defendants' Motion for Summary Judgment, as
well as the other pending motions.
following facts are not necessarily objectively true, but as
required by Federal Rule of Civil Procedure 56, the facts are
presented in the light most favorable to Plaintiffs as the
non-moving parties. See Zerante v. DeLuca, 555 F.3d
582, 584 (7th Cir. 2009); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986).
Plan Pros, Inc. is in the business of designing homes through
its single designer and draftsman, Carl Cuozzo. It has
designed five new home plans since 2016 (Filing No. 147-1
at 2-3). Similarly, Plaintiff Prime Designs, Inc.
designs home plans through a single designer, Marc Behrens
(Filing No. 147-7 at 2). Plan Pros and Prime Designs
generate revenue by licensing home designs to builders
through Plaintiff Design Basics and other plan brokers
(Filing No. 147-1 at 3; Filing No. 147-7 at 2;
Filing No. 147-9 at 4).
Design Basics is a residential design firm founded in Omaha,
Nebraska, in the 1980s by Dennis Brozak. Design Basics
creates custom and ready-made home plans for single and
multi-family homes. It markets these home plans through plan
catalogs, home building industry publications, brokerage
marketing partners, client-specific publications, and the
internet (Filing No. 147-9 at 3). Design Basics has
designed thousands of home designs from scratch, including
350 new home plans since 2009. It licenses these home plans
as complete sets of construction drawings that can be
modified to meet the customer's design needs. Design
Basics registers its designs with the United States Copyright
Office before or near the time of publishing and marketing.
1990, Design Basics has published more than 180 home catalogs
and other publications containing its home designs and has
circulated more than 4.2 million copies of those publications
to builders and other consumers across the country. Design
Basics rented targeted lists from the National Association of
Home Builders, which included the contact information of
builder members of local home builders associations. Design
Basics used these lists and other lists to compile mailing
lists and then send its publications to potential customers
across the country (Filing No. 147-20 at 3-4).
the early 2000s, Design Basics' home plans, plan
catalogs, and other publications have been displayed at
Carter Lumber and Menards locations across the country, which
total 446 stores, including 28 stores in Indiana. Design
Basics also has distributed its home plan publications as
handouts at numerous home shows, conventions, and trade
shows. Id. at 4-5. It has widely disseminated its
house plans on the internet on its own website as well as on
the websites of leading plan broker companies. Id.
Basics has had success marketing and licensing its home
designs to builders. It has more than 164, 000 customers
across the country who have purchased more than 135, 000
licenses to build homes from plans marketed or designed by
Design Basics. At its peak in the late 1990s and early 2000s,
Design Basics was earning more than $4 million annually from
licensing revenues (Filing No. 147-9 at 3, 4, 9).
Design Basics currently offers single-build licenses for any
home design in its inventory of more than 2, 800 plans for
fees ranging from $700.00 to $6, 000.00. Since 2009, it has
issued 8, 272 licenses for its home plans for a total of more
than $6, 000, 000.00 in licensing revenue. More than 2, 500
licenses have been sold in the last three years. Concerning
the seven home designs at issue in this lawsuit, Design
Basics has earned $25, 000.00 in licensing revenue from
selling 116 licenses since 2009. Id. at 3-4.
Design Basics made its house plans readily available on the
internet, it noticed a precipitous decline in house plan
licensing revenue. At its peak, Design Basics' licensing
revenue was above $4 million annually, but that dropped to
less than $1 million annually after making its house plans
widely available on the internet. Corresponding with the
decline in licensing revenue was a precipitous decline in the
number of licenses that builders and other customers
purchased from Design Basics. Id. at 9-10.
the thousands of house plans that Design Basics licenses to
builders and other customers are seven house plans that are
at issue in this copyright infringement case. The seven house
plans at issue are the 3098 Duncan, 3385 Brittany, 8096 Pine
Ridge, 8026 Sun Ridge, Kirsten, Bloom, and Cartwright
(collectively, “Copyrighted Works”). Design
Basics created and owns the 3098 Duncan, 3385 Brittany, 8096
Pine Ridge, and 8026 Sun Ridge designs. Plaintiff Plan Pros
created and owns the Kirsten and Bloom designs. Plaintiff
Prime Designs created and owns the Cartwright design. All of
the house plans at issue in this case were created from
scratch with the exception of the Kirsten plan, which was a
derivative of Plan Pros' Leftwich design, and the
Cartwright plan, which was a derivative of Prime Designs'
Dekyan plan. The Leftwich and Dekyan plans were created from
scratch (Filing No. 147-1 at 4-5; Filing No.
147-7 at 3-4; Filing No. 147-9 at 8-9).
Kerstiens Homes & Designs, Inc. is a construction company
that has specialized in residential construction for nearly
fifty years. It is based out of Jasper, Indiana (Filing
No. 147-36 at 2-3). Defendant T-Kerstiens Homes Corp.
was started around 1995 to do work in residential
construction. It sometimes did business as Kerstiens Homes
& Designs (Filing No. 147-32 at 9, 11, 12, 93).
Kerstiens Holding Corp. does not engage in any business;
rather, it is a holding company that owns stock of other
companies. Defendant Kerstiens Management Corp. is in the
business of renting properties that it owns. It has never
built any houses or created any house plans. Defendant
Kerstiens Leasing Corp. is in the business of leasing
vehicles and equipment. Like Kerstiens Management, Kerstiens
Leasing has never built any houses or created any house
plans. Defendant Kerstiens Development, Inc. is in the
business of purchasing land, subdividing the land into lots,
and selling the lots. It also has never built any houses or
created any house plans (Filing No. 89-1 at 2). The
Kerstiens entities are owned and controlled by a combination
of the same four individuals: Jerome and Doris Kerstiens and
their two sons, Todd and Bart (Filing No. 147-32 at
2013, Design Basics' director of business development
conducted market research in Indiana in an effort to develop
more business. He researched the websites of home builders
throughout Indiana, which had previously been one of Design
Basics' best-selling states. When he went to the website
of Kerstiens Homes & Designs, he discovered what he
believed to be infringing copies of the Copyrighted Works. He
returned to the website again in July 2014 and found the same
house plans that he believed infringed the Copyrighted Works
(Filing No. 147-26 at 3-4).
Amended Complaint was filed on August 30, 2016 (Filing
No. 38), which asserts claims of copyright infringement
against the Management Defendants and the Home Defendants.
Thereafter, the Management Defendants filed a summary
judgment motion, asserting they are not in the business of
creating house plans or building houses and did not infringe
the Copyrighted Works (Filing No. 88). The Home
Defendants also filed a summary judgment motion, asserting
that Plaintiffs' evidence cannot support the elements of
a copyright claim. They also assert that their house plans
were independently created, and Plaintiffs have not shown
they own the registrations in the Copyrighted Works
(Filing No. 136).
SUMMARY JUDGMENT STANDARD
purpose of summary judgment is to “pierce the pleadings
and to assess the proof in order to see whether there is a
genuine need for trial.” Matsushita Elec. Indust.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Federal Rule of Civil Procedure 56 provides that summary
judgment is appropriate if “the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.”
Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487,
489-90 (7th Cir. 2007). In ruling on a motion for summary
judgment, the court reviews “the record in the light
most favorable to the non-moving party and draw[s] all
reasonable inferences in that party's favor.”
Zerante, 555 F.3d at 584 (citation omitted).
“However, inferences that are supported by only
speculation or conjecture will not defeat a summary judgment
motion.” Dorsey v. Morgan Stanley, 507 F.3d
624, 627 (7th Cir. 2007) (citation and quotation marks
omitted). Additionally, “[a] party who bears the burden
of proof on a particular issue may not rest on its pleadings,
but must affirmatively demonstrate, by specific factual
allegations, that there is a genuine issue of material fact
that requires trial.” Hemsworth, 476 F.3d at
490 (citation omitted). “The opposing party cannot meet
this burden with conclusory statements or speculation but
only with appropriate citations to relevant admissible
evidence.” Sink v. Knox Cty. Hosp., 900
F.Supp. 1065, 1072 (S.D. Ind. 1995) (citations omitted).
much the same way that a court is not required to scour the
record in search of evidence to defeat a motion for summary
judgment, nor is it permitted to conduct a paper trial on the
merits of [the] claim.” Ritchie v. Glidden
Co., 242 F.3d 713, 723 (7th Cir. 2001) (citations and
quotation marks omitted). “[N]either the mere existence
of some alleged factual dispute between the parties nor the
existence of some metaphysical doubt as to the material facts
is sufficient to defeat a motion for summary judgment.”
Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391,
395 (7th Cir. 1997) (citations and quotation marks omitted).
Home Defendants argue they are entitled to summary judgment
based on a lack of access to the Copyrighted Works, and their
house plans are not substantially similar to the Copyrighted
Works. They also argue summary judgment is appropriate
because their house plans were independently created, and
Plaintiffs have not shown they own the registrations in the
Copyrighted Works. The Management Defendants independently
argue they are entitled to summary judgment because they do
not create house plans or build houses, and thus, they did
not infringe the Copyrighted Works.
17 U.S.C. § 102(a), “copyright protection subsists
. . . in original works of authorship fixed in any tangible
medium of expression . . . from which they can be perceived,
reproduced, or otherwise communicated.” Copyright
protection applies to several categories of works of
authorship, including “architectural works.” 17
U.S.C. § 102(a)(8). An “architectural work”
is defined as “the design of a building as embodied in
any tangible medium of expression, including a building,
architectural plans, or drawings. The work includes the
overall form as well as the arrangement and composition of
spaces and elements in the design, but does not include
individual standard features.” 17 U.S.C. § 101.
“The following structures, ...