If You Build A House Based On Copyright Infringing Plans That You Bought In Good Faith... Are You Infringing?

from the maybe-so dept

Tue, Aug 18th 2009 6:55pm — Mike Masnick

Michael Scott points us to an interesting -- if a bit technical legally speaking -- discussion over whether or not indemnifications exist for copyrighted materials. The discussion involves a homebuilder, who built some homes based on plans he bought from a third party. It later turned out that the plans were infringing copies, but the builder believed they were legit. So, in any common sense world, the liable party should be the guy who sold the infringing plans. But at least some lawyers and judges seem to believe that there is no indemnification in copyright law, and thus the copyright holder can basically sue whoever he wants up and down the chain. But, of course, not everyone sees it that way, and by the end of the post, it's pretty clear that the court in this particular case got it wrong. Blaming the builder, who had no clue that the plans were infringing, simply makes no sense.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: building, copyright, first sale, indemnification

42 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Rose M. Welch (profile), 18 Aug 2009 @ 6:57pm

This is very similiar to the law firm who got sued because they purchased a site that had some infringing material. How were they supposed to know? They purchased the material in good faith.

I know that in my jewelry store, we purchase jewelry from people, and it if turns up stolen, the police and the victims certainly don't hold us responsible! The person who stole the items is responsible. If that is true for real goods, how could it be less true for intellectual property?

This is getting silly.
[ link to this | view in thread ]
Anonymous Coward, 18 Aug 2009 @ 7:06pm

Ignorance sadly is not a very good defense.
[ link to this | view in thread ]
Ed C., 18 Aug 2009 @ 7:14pm

The shades of "ignorance"
It's not as if the guy was buying DVDs from some street vendor outside of a theater, and then claiming that he thought the vendor was legit!
[ link to this | view in thread ]
you want a name well for now my name is fred., 18 Aug 2009 @ 7:32pm

Here is the simple fact: The contractor gets sued. He in turn sues the person who sold him the plans for the amount of any judgement he has to pay, plus additional. It passes on down the line. Unlike that stupid website judgement, the deal is clear here: The contractor is at fault up front, and he then needs to litigate on down the line. Each step bears it's own piece of the responsibility.
[ link to this | view in thread ]
Anonymous, 18 Aug 2009 @ 7:43pm

"Here is the simple fact: The contractor gets sued. He in turn sues the person who sold him the plans for the amount of any judgement he has to pay, plus additional. It passes on down the line. Unlike that stupid website judgement, the deal is clear here: The contractor is at fault up front, and he then needs to litigate on down the line. Each step bears it's own piece of the responsibility."

How is this anything but a complete waste of resources? If the chain is 10 parties long then you get 10 unnecessary lawsuits, instead of just having the copyright holder go straight to the party acting in bad faith. To say nothing of what happens if the bad actor is insolvent: Perfectly innocent people on the hook for penalties designed to deter fraudulent actors.
[ link to this | view in thread ]
Dark Helmet (profile), 18 Aug 2009 @ 7:49pm

Re:
"Here is the simple fact: The contractor gets sued. He in turn sues the person who sold him the plans for the amount of any judgement he has to pay, plus additional. It passes on down the line. Unlike that stupid website judgement, the deal is clear here: The contractor is at fault up front, and he then needs to litigate on down the line. Each step bears it's own piece of the responsibility."

Amazing how many lawyers your solution requires. It won't work after I've been proclaimed King of America and have made my first order of business the senseless slaughter of the entire legal system. Bwahahahahaha!

....No, seriously, I plan to take over America.
[ link to this | view in thread ]
..., 18 Aug 2009 @ 7:56pm

Using that logic
Can i4i sue me if I buy a copy of word ?
[ link to this | view in thread ]
Chargone (profile), 18 Aug 2009 @ 8:01pm

Re: Re:
i, for one, welcome America's new helmeted overlord.

....

from the other end of the Pacific Ocean, of course.
[ link to this | view in thread ]
The Cenobyte, 18 Aug 2009 @ 8:04pm

floor tile
My father was once sued because he didn't specify they use floor tile on the floor and the wall tile on the wall in a building he designed. Someone then someone walked in on a rainy day slipped, fell and broke a leg. They sued the contractor too and they won both cases. Then my father had to sue the contractor to get his money back and won. In the end it only cost him time but it seemed pretty silly overall, the contrator got screwed twice for the same mistake and the lawyers made out great.
[ link to this | view in thread ]
Dark Helmet (profile), 18 Aug 2009 @ 8:04pm

Re: Re: Re:
"i, for one, welcome America's new helmeted overlord."

Check out my new campaign slogan:

"Dark Helmet: Just as black, but without the hypocrisy..."
[ link to this | view in thread ]
Anonymous Coward, 18 Aug 2009 @ 8:20pm

Dark Helmet when you say take over america do you mean The america's TM or North America?
also do you like fluffy stuff or furry stuff better?

so if say someone infringes something and a chain is created would it be possible to sue everyone on the chain no matter how far removed they are from the original transaction. lol trans. like even if the chain is say 100 links long? and if so how come no one has like tried to wait and see how long a chain can become and make a gazzillion dollars from sueing?
[ link to this | view in thread ]
Dark Helmet (profile), 18 Aug 2009 @ 8:32pm

Re:
"Dark Helmet when you say take over america do you mean The america's TM or North America?
also do you like fluffy stuff or furry stuff better?"

A. The Stars and Stripes America. The rest of the Americas are largely too effed for even me to bother with. Especially Argentina. Entirely too many German last names for a South American country, if you take my meaning.

B. I prefer furry fluffers.

That is all.
[ link to this | view in thread ]
NullOp, 18 Aug 2009 @ 9:07pm

The truth
As previously stated, "and the lawyers made out great." Laws are passed to generate revenue for the legal profession.
[ link to this | view in thread ]
diabolic (profile), 18 Aug 2009 @ 9:19pm

Re: Re:
Is that King Dark Helmet or Dark King Helmet?
[ link to this | view in thread ]
Jesse McNelis, 18 Aug 2009 @ 9:30pm

1. set up dummy company
2. use dummy company to sell copyrighted material to legit company
3. use legit company to sell on copyrighted material to consumers.
4 dissolve dummy company
5. PROFIT!!

Seems like a good plan to me. The dummy company takes the fall and the legit company makes millions without fear of getting sued.
[ link to this | view in thread ]
Mr Big Content, 18 Aug 2009 @ 9:43pm

This Is Why We Need DRM
If the plans had been encrypted with proper DRM, then the house would also end up encrypted. Then the buyer wouldn't have been able to move in without obtaining a proper authorization key. Problem solved.
[ link to this | view in thread ]
ChrisB (profile), 18 Aug 2009 @ 10:34pm

Re:
If you buy stolen property from someone, and the police discover it, you lose it. That's how it works in Canada. That's why pawn shops make you fill out a form and show ID before they buy your stuff.
[ link to this | view in thread ]
Big Al, 18 Aug 2009 @ 10:52pm

Re: Re: Re:
From the other end of the Pacific Ocean, it would probably be Far King Helmet ;)
[ link to this | view in thread ]
Amaress, 19 Aug 2009 @ 1:27am

Re: This Is Why We Need DRM
Nah, It'd be hacked on Pirate Bay within a couple hours. Still. Even after everyone's been "scared" away.
[ link to this | view in thread ]
Doctor Strange, 19 Aug 2009 @ 2:03am

Re: Using that logic
Can i4i sue me if I buy a copy of word ?

Yes, they could.

Your question is phrased imprecisely, of course. I take issue only because on Techdirt, there's no perceived difference between being sued and being sued successfully. So yes, i4i can sue you for just about anything they want.

The question you presumably really want answered is: can they sue you with a ghost's chance in hell of winning?

Yes also, although not for the same reasons as in this story here. This is a copyright issue; the i4i vs. Word issue is a patent issue. A patent grants an exclusive right to make, use, or sell an invention. Since you would be a Word user, you could be found liable for infringement. Of course, the costs of suing you individually greatly exceed what they could possibly expect to recover, so it won't happen.

Microsoft actually is fairly explicit about how it indemnifies and attempts to protect its end-users against these sorts of things. It's one of Microsoft's selling points over things like open-source software. Whether or not you think this indemnification has any value is entirely up to you.
[ link to this | view in thread ]
Richard, 19 Aug 2009 @ 2:32am

Re:
It is only ignorance of the law that is not a defence.

Ignorance of the facts of a case may well be.
[ link to this | view in thread ]
Ben Robinson (profile), 19 Aug 2009 @ 3:29am

My former company had a similar problem.
I used to work for a company that made HR software. We had a pretty similar situation to the one described. A number of years previously the current shareholder bought out his partner to become the sole shareholder (it is a private company). The outgoing partner retained no rights to any of the company's products. A number of year later we discovered that another company was selling a product that bore a striking resemblance to one of our older generation products. We were not actively marketing this product any more but it was still available and we were supporting a number of customers who still used the software. We contacted the other company and sure enough they told us that they had purchased the source code for it from the former business partner. We sent them a copy of our source code for comparison and they said that the it was a very close match source code they had been sold. We could have taken the easy route and sued the company for selling our product. However they were clearly the victims here so what we did instead was that we sold them the rights to the source code (it was after all and old generation product), and then worked with them so that they could now sue the outgoing business partner for selling them source code fraudulently.

This seems to be a good common sense way of dealing with this sort of thing, the victims cooperate to go after the perpatrator.
[ link to this | view in thread ]
Anonymous Coward, 19 Aug 2009 @ 5:08am

Re: Re: Re: Re:
All hail that farking helmet !!!!
[ link to this | view in thread ]
Paul, 19 Aug 2009 @ 6:04am

Re: Using that logic
ZIIIIINNNNNGGG.

Good point.
[ link to this | view in thread ]
Trails, 19 Aug 2009 @ 7:50am

Re: Re:
"No, seriously, I plan to take over America."

We could tell cause of the helmet.
[ link to this | view in thread ]
Talking Ape, 19 Aug 2009 @ 8:27am

Re: Re:
Oh, shit...there goes the planet!
[ link to this | view in thread ]
Anonymous Coward, 19 Aug 2009 @ 8:35am

Re: My former company had a similar problem.
We could have taken the easy route and sued the company for selling our product. However they were clearly the victims here so what we did instead was that we sold them the rights to the source code (it was after all and old generation product), and then worked with them so that they could now sue the outgoing business partner for selling them source code fraudulently.

Now how are the lawyers going to keep up with the payments on their third vacation house with you doing common-sense things like that? I'm surprised your lawyers didn't sue you for failing to sue this other company.
[ link to this | view in thread ]
Anonymous Coward, 19 Aug 2009 @ 9:58am

Are some contending that the house itself believed to be infringing, or is this a "fruit of the poisonous tree" type of issue?
[ link to this | view in thread ]
Gatewood Green (profile), 19 Aug 2009 @ 10:50am

Re: Rose's question
I know that in my jewelry store, we purchase jewelry from people, and it if turns up stolen, the police and the victims certainly don't hold us responsible! The person who stole the items is responsible. If that is true for real goods, how could it be less true for intellectual property?

Simply because if your jewelery is stolen, you no longer have it to use yourself. If I have a copy of your floor plan, you *still* have it yourself and can still use it even though I have a copy of it. Now if I used (what I have reasonable reason to believe is) a legitimate floor plan supplier, how am I supposed to know (s)he did not obtain your plans legitimately. How do I know my supplier did not create the plans themselves?
Nothing silly here at all. The 'source' of the plans the builder used should be on the hook for whatever the plans would have cost plus punitive damages as appropriate. Now if you can prove the builder did not obtain the plans *in good faith* legitimately, then (s)he is on the hook for same (addressing the shell company proposal in another comment).
[ link to this | view in thread ]
HolaJohnny (profile), 19 Aug 2009 @ 10:56am

Re: Re:
Dark Helmet your now on the FBI watch list. Your just an exhibitionist showing off for them. Your sick! *cue evil laugh*
[ link to this | view in thread ]
HolaJohnny (profile), 19 Aug 2009 @ 10:59am

Re: Re:
Dark Helmet your now on the FBI watch list for that comment. Your just an exhibitionist showing off for them. Your sick! *cue evil laugh* And just because your too good for Argentina doesn't mean I am. Damn they have some good beef. I'll take over Argentina just to have a monopoly on their beef. And by monopoly I mean I'm going to eat it all myself...
[ link to this | view in thread ]
Dark Helmet (profile), 19 Aug 2009 @ 12:03pm

Re: Re: Re:
"Damn they have some good beef. I'll take over Argentina just to have a monopoly on their beef. And by monopoly I mean I'm going to eat it all myself..."

You will have to get it all before Martin Bormann's grandkids do...
[ link to this | view in thread ]
TSO, 19 Aug 2009 @ 12:11pm

> Blaming the builder, who had no clue that the plans were infringing, simply makes no sense.

Since when courts make sense? I might've missed the memo...
[ link to this | view in thread ]
Vic, 19 Aug 2009 @ 1:14pm

Re: Re:
Right. Based on that logic I can understand why the contractor MUST return the plans. Should I italicize? THE PLANS! And that's it! I am all for this verdict!
[ link to this | view in thread ]
Vic, 19 Aug 2009 @ 1:20pm

Going on, and on, and on...
Next step - sue those who bought those houses...

Next step - sue the banks, who provided mortgages for buying those houses...

Next step - (who else?).
[ link to this | view in thread ]
Chris Brand, 19 Aug 2009 @ 1:37pm

Where's the infringement ?
I can see that the unauthorised copy of the plans that the builder used is infringing, but it doesn't sound like the builder made that copy, or distributed it.

Did the court actually rule that the house was an infringing copy of the plans ? Or what ?
[ link to this | view in thread ]
Anonymous Coward, 19 Aug 2009 @ 3:59pm

Movies can't buy insurance?
The issue here is indemnity not infringement. However, the house is pretty clearly an infringing copy if the builder is halfway competent. If he screwed it up so badly its unrecognizable as a house, he may have an out. Otherwise, the house is either a copy as a near-perfect rendition in a different medium or a derivative work even if the builder deviated from the plants.

Regarding indemnity, there is no way this ruling will stand. It looks like the court messed up by not using the occupying-the-field test. I really doubt there is evidence of Congressional intent to prevent indemnification. The side effect of this would be to prevent insurance for non-willful copyright infringement. This means every movie ever made is up a creek.

From a Chicago school angle, we allow insurance against any kind of legal liability except for intentional torts and gross negligence. This is economically efficient. It is not economically efficient to treat unintentional copyright liability the same as an intentional tort.
[ link to this | view in thread ]
Anonymous Coward, 21 Aug 2009 @ 12:17am

Re: Re:
If you buy stolen property from someone, and the police discover it, you lose it.

It's not like that in all countries. In I believe it's Sweden, after five years it's yours. And in Japan the original owner must pay the new owner what ever he paid for it to get it back.
[ link to this | view in thread ]
Anonymous Coward, 21 Aug 2009 @ 12:19am

Re: Re: Re:
Right. Based on that logic I can understand why the contractor MUST return the plans. Should I italicize? THE PLANS! And that's it! I am all for this verdict!

And all the infringing copies he made, including those incorporated into buildings.
[ link to this | view in thread ]
Anonymous Coward, 21 Aug 2009 @ 12:21am

Re: Re:
It is only ignorance of the law that is not a defence.

Ignorance of the facts of a case may well be.

How about ignorance of the facts of law about a case?
[ link to this | view in thread ]
Anonymous Coward, 21 Aug 2009 @ 12:24am

Re:
The contractor is at fault up front, and he then needs to litigate on down the line. Each step bears it's own piece of the responsibility.

Sounds like a lawyer's dream come true.
[ link to this | view in thread ]
Anonymous Coward, 21 Aug 2009 @ 12:28am

Re: Re: Using that logic
Of course, the costs of suing you individually greatly exceed what they could possibly expect to recover, so it won't happen.

How so? If they recover legal costs plus damages, how doe they come out behind?
[ link to this | view in thread ]