IP Law Daily, COPYRIGHT—D.S.C.: Architect’s motion to strike copyright counterclaims should have stayed at home, (Mar 13, 2023)

By Matthew Hersh, J.D.

The homebuilding dispute was still at the pleading stage and not ready for factual development.

A motion to strike two counterclaims in a copyright lawsuit over a series of home designs was premature because it challenged the factual basis of the counterclaims rather than whether they adequately stated legal claims, the federal court for Charleston, South Carolina, has held The court, in what was essentially a basic refresher on civil procedural rules, found that it was enough for the time being that the counterclaims effectively stated claims, even if their factual underpinning was in dispute (Kenneth Miller Architecture, LLC v. Sabal Homes LLC, March 9, 2023, Norton, D.).

The lawsuit arose out of the relationship between Kenneth Miller, an architect, and Florida based homebuilder Sabal Homes. While working with the homebuilder, the architect came up with a series of residential plans. He later left the homebuilder to form his own company, KMA. But the relationship turned sour when his former employee, along with another homebuilder, allegedly pilfered his designs by copying them for their marketing and advertisements and then selling homes based on the designs.

The architect sued the two homebuilders for copyright infringement, along with a number of other claims. The homebuilders, in turn, responded with a series of counterclaims, among them a claim of fraud on the copyright office and a claim of work for hire. The homebuilder moved to strike those two counterclaims, leading to this opinion.

Fraud on the copyright office. The court denied the motion to strike on all counts. The first of the two challenged counterclaims alleged that the architect falsely claimed that he was the sole owner of the designs when he applied for registration with the Copyright Office. To be sure, the court observed, the two homebuilders were required to meet the heightened standard applicable under the federal rules in order to state this claim. But the homebuilders easily met that test, the court held. Here, the homebuilders specifically alleged the person who alleged made the false statement (the architect), the nature of the alleged falsehood (ownership of the designs), and the time and place of the alleged fraud (the application of registration to the Copyright Office). No more was needed, the court observed.

Nor did it matter that the architect claimed to have evidence supporting the validity of his ownership claim, the court observed. That argument was premature, the court noted, because the question here was whether the homebuilders had adequately pleaded a case of fraud, not that they were capable of proving that case. “A failure to prove fraud,” the court observed, “is not tantamount to a failure to plead fraud under Rule 9(b).”

Work for hire. The architect’s motion to strike the work for hire counterclaim suffered from the same defect, the court held. The two homebuilders argued that when the architect created the designs that were the subject of the lawsuit, he actually did so under the direction and control of Sabal Homes—meaning that it was Sabal, not the architect, that owned the works. The architect argued, again, that this counterclaim was belied by the facts. But that would have to be decided another day, the court noted. For now, the counterclaims stated a claim, and that was enough to deny the motion to strike.

The Case is No. 2:22-cv-02891-DCN.

Attorneys: Todd Maurice Hess (Hess Law, PLLC) for Kenneth Miller Architecture, LLC and Kenneth Miller. Steve Allen Matthews (Haynsworth Sinkler Boyd, P.A.) for Sabal Homes, LLC and Toll Bros., Inc.

Companies: Kenneth Miller Architecture, LLC; Sabal Homes, LLC; Toll Bros., Inc.

Cases: Copyright SouthCarolinaNews