AHPP 177 - 185 (PDF) Architect's Legal Issues

Studies by some professional malpractice carriers have shown that one of the leading reasons for claims against an architect is the architect’s initial pursuit (whether in formal litigation or not) of fees due on the project. There is a belief in the industry, although not scientifically proven, tha...

Studies by some professional malpractice carriers have shown that one of the leading reasons for claims against an architect is the architect’s initial pursuit (whether in formal litigation or not) of fees due on the project. There is a belief in the industry, although not scientifically proven, that the reason that some owners file counterclaims against architects is an attempt to get the architects to compromise, or walk away from, their outstanding fees. The time and cost expended in defending such a claim may exceed any fees that are ultimately realized. As such, all architects must thoroughly consider the potential risks and benefits of asserting such a claim before commencing such a demand. It is critical that architects employ diligence during the course of the project to ensure that their fees do not fall into significant arrears, as well as to include contractual provisions when first forming their contract with the owner that will assist them if such a situation arises. C LAI MS AVOIDAN C E There is a belief held by many in the construction industry that if an architect practices long enough, they are almost certain to be involved in a claim of some sort. In reality, many architects are never formally personally made a party to litigation, but almost everyone is ultimately involved in one or more disputes involving a project and at least threatened with litigation. Notwithstanding that fact, the architect can definitively and substantially reduce the odds of being included in a claim as well as the odds of being found liable if a claim unfortunately arises by taking proactive preventative steps. For instance, having a proper contract, as discussed above and elsewhere, is invaluable. Two other key steps that each and every architect should employ on a regular basis are proper communication with their client and using proper documentation on each project. A staggering percentage of claims in the construction industry are based, in whole or in part, on the failure of the parties to properly communicate. On construction projects, problems often arise when the failure in communication leads to a failure to manage the expectations of the other party. On construction projects, project participants often come to the table with markedly different backgrounds, experiences, and goals, which all result in each of the participants having significantly different expectations. Those differences are typically most acute in the relationship between architects and clients. Many clients have limited or no prior construction experience and do not understand the nuances involved in the process. Such clients have high expectations for their projects, beyond anything ever contemplated by the architect. The problem is often that both sides assume that the other has similar thoughts and expectations as they do regarding critical components of the project. By the time those differences become evident, significant problems may exist on the project. It is incumbent upon the architect not to assume that the owner is of the same mindset of the architect. At the risk of being too elementary or redundant, the architect must continuously endeavor at each and every step of the project to assist the owner in knowing what to expect in both the short term and long term during the design/ construction of the project. For instance, owners may also fail to realize that professional judgment, and potentially owner input, is required at each step, since the architect makes the recommendations and the owner makes the decisions. Architects need to remind these project participants that buildings, unlike automobiles, cannot be pretested. Despite the effort, care, and conscientiousness of the architect, the process of taking a project from drawing to reality has a lot of unknowns. The architect must make the owner aware of these unknowns, their potential impact on the project, and what is being done to address them. ▶ Suggestions regarding proper documentation are more fully discussed in the backgrounder, Project Documentation, which accompanies this article. 5.1 Architects and the Law 177 PA R T 2 : F I R M M A N A G E M E N T Collection Actions for Architectural Fees BACKGROUNDER P ROJECT DOCUMEN TAT ION PA R T 2 : F I R M M A N A G E M E N T D o nald W. Doeg , Esq., P. E., LE ED AP Perhaps the most critical component to a successful construction project is effective communication. Among the many benefits of proper communication, one of the most compelling is that it will mitigate, and perhaps even eliminate in certain circumstances, any potential claims. Project documentation is perhaps the most essential element of communication in the construction industry. It is critical that architects maintain appropriate documentation for each and every project. Not only is it beneficial to the daily activities for each project, it is invaluable if claims ultimately arise. If a construction dispute goes to litigation, the adjudication of many construction claims often takes place literally years after the event(s) in question occurred. In many of those disputes, the exact wording and timing of the critical communications plays a large role in the outcome of the case. Unfortunately, many of us cannot remember what we had for dinner a few days ago, let alone all of the nuances of a conversation that occurred several years prior. However, contemporaneous documentation during the project is generally allowed as evidence during a trial and can greatly influence the final outcome of the trial, in either a positive or negative way. Documentation accomplishes a number of purposes: • Provides a written record of the contractual relationships between the parties • Provides a written record of the scope of the work to be accomplished • Serves as an ongoing communication process that tends to raise the level of understanding between the parties and eliminate problems • Provides a chronology of the events of the project • Provides a consolidated record if the parties have to revisit the project at a later date Written contracts provide a critical part of each and every construction project. These contracts define the relationships between the various parties, including identifying the scope of work to be performed by each party. On virtually every construction project, the scope of work is readily defined in the project documents. From these documents, an interested party can determine the intended final result of the project and construct the project accordingly. In addition to the project specifications and drawings, a number of other documents are critical to this goal. These include shop drawings, submittals, change orders, sketches, and Request For Information (RFI) responses issued during construction, project correspondence, construction change directives, and a host of other documents. Each of these documents can be critical to the final result. Constant communication tends to raise the understanding of each party with respect to their responsibilities and the 178 Organizational Development roles of others. In addition, since no one likes surprises, it is a means by which potential surprises and problem areas can be mitigated or eliminated at a very early stage. Correspondence, clarifying sketches/drawings, and RFIs all serve this goal. More often than not, problems that are discussed during the project can be resolved with no permanent downside to any party. Without communication, if a party attempts to sweep a potential problem under the rug, it will typically lead to far more serious consequences down the road. Unfortunately, the possibility of a lawsuit is a very real threat on almost every construction project. These claims can involve a combination of the multitude of parties central to the construction, including the owner, the surety, design professionals, the contractor, subcontractors, suppliers, or any of their employees. Lawsuits can also involve outsiders, such as visitors to the construction site. The possibilities of potential claims are seemingly endless. In such an environment, the importance of proper documentation only increases. Often, trials involving construction disputes happen years after the actual events leading to the claim. It is not uncommon for trials to take place four to seven years after the project was completed. Without proper documentation, it is difficult to properly recall the key events surrounding the alleged claims. Even the best-intentioned people have trouble remembering details, and especially when it comes to monetary or liability issues, some may have “difficulty” remembering precise details. As you might expect, there is often a heated dispute over certain key events on any trial. Contemporaneous documentation is critical in resolving those disputes or influencing the decision maker(s) several years later. Courts often look to documentation based on the fact that court cases occur years later and memories can be faded or slanted during that time. In some instances it may seem that the party who has the most proper documentation wins. Conversely, there are also certain potential problems associated with project documentation. If a party spends too much time attempting to document every conceivable detail (an admittedly impossible task), the project will likely become either cost prohibitive or impossible to complete in the given time frame. In addition, documenting files and sending frequent “CYA” type letters to everyone on the job, including the client, often leads to another set of problems, not the least of which may be a sense of distrust or unease created for the client. The amount of paperwork necessary for proper communication on any given job can be extremely subjective. An architect must balance a wide range of considerations, including but not limited to the size and complexity of the project and the personalities and reputations of the other entities involved. There is a certain amount of required paperwork on any project. For instance, contracts, change orders, drawings, specifications, shop drawings, and documents relating to any governmental approval process are critical E STABLI S H P RO P ER O FFI CE P RO T OCOL FOR REC O RD KEE PING As indicated above, if a matter ultimately goes to litigation, the courts will often be persuaded to allow many, but not all, project documents into evidence. In order to be permitted into evidence, the party seeking to admit the documents must get around the fact that the documents themselves generally constitute hearsay and could be precluded on that basis. Hearsay is a statement (either oral or written) made out of the court that is offered as evidence to establish the truth of the facts contained in the statement. For instance, an expert’s report regarding an investigation into a roofing problem and the conclusions of that investigation are hearsay. That report will likely not be admitted into evidence. However, many documents that are generated during the construction project, while technically hearsay as well, will be admitted into evidence under the business records exception to the hearsay rule. While the rules may vary slightly from state to state, in essence, for a document to be admitted under this exception to the hearsay rule it must be shown that (1) the document was made during the regular course of business; (2) it was the regular course of business to make such a record; and (3) the record was made when the act, transaction, or event occurred, or shortly thereafter. Accordingly, it is essential for architects to establish office protocol that requires the keeping of certain records for each and every project, and maintaining them in a timely fashion. If an architect is inconsistent with the types of records they keep from project to project, or are not timely making such records, they run the risk of having certain records excluded from evidence if litigation does arise. Given that project documentation is often very beneficial to the architect if a claim arises, it is well worth the effort to keep proper records. The office protocol should also include provisions under which senior personnel review the work of junior associates on a periodic basis. The experienced architects can assist associates in preparing proper documentation and recognize issues soon after they arise rather than letting them fester and grow. CONT ENT OF PR OJECT DOC UM ENTATI ON The wording of an architect’s documentation is also critical. A concise description of the relevant facts, without editorializing, is essential. When problems inevitably arise during the course of a project, it is very important that the description of the issues in the contemporaneous documentation do not hastily come to any conclusions regarding the cause or liability. All too often, given limited facts available at the time that the incident first arises, architects jump to conclusions in their daily log or site observation reports as to the cause, sometimes making incriminating comments about themselves, their firm, or their consultants. Do not jump to hasty conclusions regarding cause or liability for problems. Frequently, additional facts subsequently come to light after the initial discovery of the problem that shed an entirely different light on the likely cause or culprit. However, if the architect has admitted fault in their earlier documentation, it is almost certain that admission will be used against them at the time of trial. If a problem arises, the project documentation should consist of the facts that are known, possibly as well as a listing of potential causes to be investigated further if known at the time. For instance, if a residential roof starts to leak, the architect’s documentation should not consist of an entry reading, “The roof now leaks due to my failure to include the proper flashing,” even if at the time this seems to be the cause. Instead, an entry should state something along the lines of, “Roof is apparently leaking. Need to investigate installation of shingles and review flashing details.” Further investigation often reveals that the initial determinations of cause and liability were incorrect, either in whole or in part. However, a poorly written initial report in which liability is admitted can be fatal in subsequent litigation. R EQUIR ED DOC UMENTATION In order to persuasively present or defend a claim, adequate documentation will be needed. The goal should be to be able to re-create exactly what happened on a job, when, and why. Among the documents suggested for use from the beginning of a job, before there is any reason to even think about claims, are: • Diary/daily notebook or site observation reports (if electronic devices are not used). • Write in ink. • Use bound or spiral notebooks (they add credibility that the notes were contemporaneous if a dispute later arises since one cannot add new pages between existing notes). (continued) 5.1 Architects and the Law 179 PA R T 2 : F I R M M A N A G E M E N T to any job. However, the required amount and nature of other project documentation is not an absolute quantity and often comes down to common sense, or a gut instinct. Perhaps one of the best rules of thumb to use when deciding the amount of paperwork to generate is for the architect to try to put himself in the shoes of the recipient. In generating paperwork to the client, the owner, the architect wants to keep the owner informed of all of the significant events of the project. However, the architect may not want to besiege the owner with superficial details or small issues that the architect, as the professional that the owner retained to perform the project, should handle. Another key consideration in deciding the type and volume of paperwork to generate is that, as the project architect, it is critical that an architect manage the expectations of the owner and others on the project. The architect should generate paperwork that enables other parties to understand his position and what may be expected in the future. Managing expectations goes a long way toward mitigating or eliminating problems on construction projects. Proper management of expectations can be accomplished in a variety of ways; it is important that the architect finds a style that works best for him and his firm. • PA R T 2 : F I R M M A N A G E M E N T • • • • • Number and/or date pages sequentially (no gaps). • Keep contemporaneous records: The purpose of the project diary is to identify and discuss key events on the project at the time they occur for reference at some time in the future. Electronic devices: Establish an office protocol for contemporaneously accumulating in one location all notes taken in the field. Photographs/videos. Correspondence. Status letters: As part of efforts to manage expectations, your client should be updated on a regular basis. “Issue” letters. Flag significant changes or potential problems, because no one likes surprises: • Confirm issues that can later become subject to debate; for instance, changes to scope of work or determining owner’s desires for project (such as owner identifying on a certain date that he wanted to accomplish X). • Letter sent to confirm owner’s position can serve to lock him in said position. • Letter sent to question owner’s position if contractor or others (with whom you have no contractual ties) dictate • • • • • • • • • • • • • certain changes and indicate that owner has represented that it is to be done. • When writing letters, do not assume that the owner knows everything or is doing certain tasks. If your response to the issue or recommended actions are based on assumptions, let the owner know each and every assumption in the letter. Minutes of meetings. Memos of telephone conversations. Project scheduling information. Change order logs. Shop drawing logs. Progress payment logs (both from owner and to consultants). Payroll records. Equipment use records. Accounting records/cost reports. Estimates. Bids. Material invoice files. Claim reports. BACKGROUNDER COPYR IGHT LAW FOR ARC HI T E C T S Joseph H . Jon es Jr., Esq. , AI A Original creative expression is an intrinsic part of an architect’s professional services. An understanding of copyright law and how it applies to an architect’s professional service is an important part of any successful architectural practice. Joe Jones is a risk management attorney and director of Schinnerer’s risk management services. He provides risk management advice to Schinnerer and CNA insureds, and is a resource on evolving areas of professional liability exposure for both design professionals and contractors U.S. copyright law protects the creativity captured in the architect’s instruments of service, such as design and construction drawings, models, and other design representations, as well as the built structure. To protect themselves from copyright infringement, architects should be familiar with their rights under the law. Architects need to understand the intellectual property rights intrinsic in their professional services. With some clients viewing professional services as a commodity and the plans, specifications, reports, and other documents that architects produce as products, architects should understand the 180 Organizational Development business and liability issues relating to the use, ownership, and control of their designs and instruments of service. As clients look for more ways to reduce the costs of design and construction, many view the “reuse” of designs as a way to eliminate the need to hire another architect and save money. Actions like this may put the architect at risk for professional liability from any problems that develop from subsequent uses of the same plans. In addition, the architect may lose fees if the client neglects to acquire the copyright to a design. Maintaining the copyright to their designs gives architects a level of control over their creative and professional endeavors. Clients will have to retain them for future projects, which may help an individual architect or firm maintain a steady stream of new business. As well, surrendering copyright could lead to liability problems for the architect if that issue is not properly addressed in the professional services agreement. COPYR IGH T BASIC S Intellectual property rights fall into three main areas: trademarks, including service marks; patents; and copyrights. Trademarks and patents are registered by the U.S. Patent and Trademark Office, while copyrights are registered with the U.S. Copyright Office. Architects appear to have the W HAT CA N B E C OPYRIGHT ED In brief, the U.S. Copyright Act protects “original works of authorship fixed in a tangible medium of expression.” It does not extend to items such as procedures, processes, and systems, which are typically matters for patent law. Many instruments of service prepared by the architect qualify for copyright protection. Article 1 of AIA Document A201™-2007, General Conditions of the Contract or Construction, defines the architect’s instruments of service as “representations, in any medium of expression now known or later developed, of the tangible and intangible creative work performed by the Architect and the Architect’s consultants under their respective professional services agreements. Instruments of service may include, without limitation, studies, surveys, models, sketches, drawings, specifications, and other similar materials.” The words “other similar materials” may refer to renderings, reports, photos, models, and videos. The major requirement for defining such materials as an instrument of service is the same requirement for qualifying for protection under U.S. copyright law—they must be works “fixed in a tangible medium of expression.” Ideas, therefore, are not instruments of service. To be protected, the “original work” must have been set down on paper or in some other tangible form. U S E O F C OPYRIGHTE D MAT ERIAL A common misconception is that ownership of a thing is the same as copyright of that thing. The difference between ownership and copyright can be illustrated by what happens when you purchase a book, burn it, or give it as a gift, but you do not own the copyright. Copyright laws give the creator of an original work the exclusive right to reproduce or display that copyrighted work. Clients often believe that since they paid the architect and have a set of drawings in their possession, they own the copyright to these materials. However, this is not true. As in the example above, the fact of purchase does not give the client the copyright to the architect’s instruments of service. For the client to own the copyright, the architect must assign and transfer ownership of the copyright to the client in a written document. This document must be signed by the architect or the architect’s duly authorized agent. Clients who fail to realize that the architect’s designs and instruments of service are copyrighted may duplicate a set of drawings and specifications with the intention of using them for future projects. This misuse of the architect’s materials opens the client to a possible copyright infringement claim and may cause liability problems for the architect because the project may not be properly designed for another site. The requirements of a different set of codes, the soil-bearing capacity of the site, and other site conditions are just a few of the concerns that make reusing an original set of drawings and specifications for other projects highly risky. If, despite these issues, a client desires to reuse an architect’s design, it is important for the architect to understand his or her rights as the creator of copyrighted material. CAT EG ORI ES OF C OPY R IGHT PR OT ECTI ON Copyright protection covers a variety of ways in which creative works can be expressed. U.S. copyright law identifies these within the following categories: • • • • • • • • Literary works Musical works Dramatic works Pantomimes and choreographic works Motion pictures and other audiovisual works Sound recordings Pictorial, graphic, and sculptural works Architectural works The architectural works category is an obvious choice for protection of designs and instruments of service produced by architects, but the pictorial, graphic, and sculptural works category also affords architects some protection. These types of work, also termed “visual works,” include two-dimensional and three-dimensional works of fine, graphic, and applied art. Examples include technical drawings, architectural plans, diagrams, and models. In 1990 the Architectural Works Copyright Protection Act (AWCPA) became effective. Prior to that, only instruments of service identified as “pictorial and graphic” works were protected under the Copyright Act. The AWCPA specifically added “architectural works” as a protected category of original expression. 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.” (continued) 5.1 Architects and the Law 181 PA R T 2 : F I R M M A N A G E M E N T greatest exposure to copyright issues, which are the focus of this discussion. According to statistics from the CNA/Schinnerer design professional liability program, 44 percent of intellectual property claims against architects and engineers from 2002 to 2011 involved allegations of copyright infringement. Of those claims, 66 percent involved architects and 55 percent involved residential projects. Interestingly, these statistics show that design professionals brought more than 57 percent of all claims for copyright violation. It is a common misconception that copyright is a subject of interest only to the creators of copyrighted material. Both users and creators of copyrighted material must understand the limits of copyright protection as well as what constitutes fair use of copyrighted material. PA R T 2 : F I R M M A N A G E M E N T The AWCPA does not define “building.” However, U.S. Copyright Office Information Circular 41, “Copyright Claims in Architectural Work” (available at www.copyright.gov), states that the AWCPA protects “structures that are habitable by humans and intended to be both permanent and stationary, such as houses and office buildings and other permanent and stationary structures designed for human occupancy, including but not limited to churches, museums, gazebos, and garden pavilions.” Equally important are the items the AWCPA does not protect. Among these are “structures other than buildings, such as bridges, cloverleafs, dams, walkways, tents, recreational vehicles, mobile homes and boats.” Although the AWCPA does not define “building,” several courts have attempted to interpret the provisions of the act. In Yankee Candle Company, Inc. v. New England Candle Company, Inc., 14 F.Supp.2d 154, the plaintiff, holder of a copyright and trademark on the design of a colonial-style candle store, sued a competitor for copyright infringement after the competitor opened a retail store in a mall that the plaintiff claimed was substantially similar to the design of its own retail store. The court had difficulty concluding that a “room” within a retail mall fit the definition of a “building” within the meaning of the AWCPA. The court noted that to hold that a mall store constituted a “building” would distort the plain meaning of the term, and “surely Congress did not intend for individual offices in an office building, though elaborately designed, to qualify as ‘buildings’ themselves.” In another case, a court ruled that buildings had to be built after AWCPA went into effect to be protected under the act. In Richard J. Zitz, Inc. v. Dos Santos Pereira, 232 F.3d 290, an architecture firm brought a copyright infringement action against builders of a townhouse it alleged infringed on its copyright. The court first noted that for an architectural work to qualify for protection under the AWCPA, the subject of the infringement must have been constructed or otherwise published after December 1, 1990. The court rejected the plaintiff’s argument that “constructed” means “finished,” or at least finished to the point of being habitable. Since the plaintiff’s townhouse was not finished until after December 1, 1990, the plaintiff argued its design was eligible for protection under the AWCPA. The defendant argued that “constructed” means “substantially constructed,” and that therefore the plaintiff’s townhouse was not eligible for protection under the AWCPA. In agreeing with the defendant and the lower court, the appellate court held that “an architectural work that was substantially constructed as of December 1, 1990, is ineligible for copyright protection under the AWCPA.” The AWCPA does not prohibit protection of an architect’s drawings under the “pictorial and graphic” category, and in some circumstances protection under this category may be broader. Some attorneys who have used this approach believe the plaintiff generally has to prove only that the defendant had access to the instruments of service and that substantial similarity exists between the original and the alleged 182 Organizational Development copy. Since the AWCPA is meant to protect the “design,” and exceptions have been made for “unprotected elements,” proving copyright infringement under the architectural works category may be more challenging. COPYR IGH T INFR ING EMENT The question is often asked, “How much copying is copying? 50 percent? 75 percent? 90 percent?” Unfortunately, the answer is not that simple. Certain elements are required for a claim of copyright infringement to be successful. A plaintiff must prove ownership of a valid copyright and an infringement (copying) of the protected work. Registration with the U.S. Copyright Office is not required for a copyright to be valid, although it is prima facie evidence of such copyright, which shifts the burden to prove invalidity to the defendant. Registration is required before a claim of copyright infringement can be filed, however, and can be a factor in the award of damages and attorneys’ fees. More in-depth information on the requirements for registration, length of protection for copyrighted works, and damages available for copyright infringement can be found in information circulars available from the U.S. Copyright Office website at www.copyright.gov. Because this is a specialized area of law, consultation with an attorney who understands intellectual property law is advisable. Ownership of a copyright is vested with the creator of the work, except in the case of “works made for hire.” Under U.S. copyright law, “works made for hire include work prepared by an employee in the scope of employment,” as well as works “specially ordered or commissioned.” Architectural works, however, are generally not considered “works made for hire” unless the agreement between the parties explicitly states so. Article 7 of AIA Document B101-2007 explicitly states, “The Architect and the Architect’s consultants shall be deemed the authors and owners of their respective instruments of Service, including the Drawings and Specifications, and shall retain all common law, statutory and other reserved rights, including copyrights.” The duration of a copyright depends on several factors, including whether the creator is an individual or corporation or the work was produced in a work-for-hire arrangement. The general rule is that a copyright lasts for the life of the author plus 70 years. As previously noted, proof that the defendant had access to the copyrighted work is another required element of a copyright infringement claim. Generally, this is not difficult to prove. All that is required is evidence that the protected expression, such as a set of plans, was published or otherwise in the public domain where the defendant could have seen it. On the other hand, if only one set of plans was created and this was never published, proof of access is more difficult. Once ownership of a valid copyright has been established and access has been demonstrated, the next step in an infringement claim requires proof that portions of a copyrighted C O PYRIGHT LICE NSE AN D TRANSFER I SS UES The discussion in this section on copyright license and transfer issues and license termination assumes the parties will use AIA Document B101–2007 as their agreement for professional services. For architects who may use their own professional services agreement or one offered by their client, the B101–2007 can serve as a model for addressing these issues contractually. Although architects hold the copyright to their instruments of service, the reality is that the client, contractor, and other parties will need to access and use the architect’s instruments of service for a particular project. To address this issue, the AIA has created in B101–2007 a series of licenses for those who will need to use the architect’s instruments of service to construct and use the project. The proper use of licenses is key to maintaining the architect’s copyright and at the same time meeting the owner’s needs—most often, the need to use the instruments of service for the construction, use, and maintenance of a project. In paragraph 7.3 of the B101, the architect grants the owner “a nonexclusive license to use the Architect’s Instruments of Service solely and exclusively for purposes of constructing, using, maintaining, altering and adding to the Project, provided that the Owner shall comply with all obligations, including prompt payment of all sums when due, under this Agreement.” It is important to remember that the license is contingent upon the owner meeting its obligations under the agreement. The same paragraph also requires the architect to “obtain similar nonexclusive licenses from the Architect’s consultants consistent with this Agreement.” This is necessary because architects can only grant a license for their own copyrighted materials. Architects have no copyright or control over the instruments of service of consultants such as structural and MEP engineers; these consultants have to grant their own licenses. Finally, paragraph 7.3 permits the owner to authorize contractors, subcontractors, and material suppliers to reproduce applicable portions of the architect’s instruments of service for their use in connection with construction activities. The license granted in paragraph 1.3.2.2 thus effectively meets the client’s and contractor’s needs while maintaining the architect’s copyright. The B101–2007, however, does limit the license granted to the client. Paragraph 7.4 prohibits the client from transferring, assigning, or granting the license to another party without the written permission of the architect. Should the client choose to reuse the instruments of service without retaining the architect or the architect’s consultant, paragraph 7.3.1 requires the client to release and indemnify the architect and the architect’s consultant from all claims arising from such use. A license is one way to meet the needs of the owner and other parties to have access to and use of the architect’s instruments of service. Transferring the copyright to another entity for a fee is also an option. However, certain issues that stem from this option should be carefully considered. First, what is the proper fee for such a transfer? In calculating such a fee, the architect should account for both the cost of producing the instruments of service and the loss of potential profits, because the entity holding the copyright will not have to retain the architect for future services. COPYR IGH T LIC ENSE T ER MI NATION As stated above, AIA Document B101–2007 grants the owner a limited license to reproduce instruments of service solely for purposes of construction, operation, and additions to a project. The document also states that a termination of the design contract due to the owner’s default automatically terminates the owner’s license and thus the owner’s permission to use those instruments to complete the project. If the owner terminates the contract for its convenience, or the architect terminates the contract due to the owner’s suspension of the project, and the owner later resumes the project with another architect, paragraph 11.9.1 allows the initial architect to receive compensation for the owner’s use of the instruments of service solely to complete, use, and maintain the project. COPYR IGH T TR ANS FER Through a contract, a copyright license to use the design documents can be granted or the copyright can be transferred to another party. However, it is important to note that such licenses and transfers do not completely absolve the architect from all liability of the professional services provided, even if such liabilities are expressly transferred in the contract. (continued) 5.1 Architects and the Law 183 PA R T 2 : F I R M M A N A G E M E N T work have been copied. In Sturdza v. United Arab Emirates, 281 F.3d 1287, a case involving allegations of infringement of an architectural design, the court concluded that to prove infringement the plaintiff must show that the defendant’s work is “substantially similar” to protected elements of the plaintiff’s work. The court noted that proof of substantial similarity requires identification of aspects of the author’s work, if any, that are protected and identification of the infringing elements that are “substantially similar” to the protected work. According to the court, “substantial similarity” exists when “the accused work is so similar to the plaintiff’s work that an ordinary reasonable person would conclude that the defendant unlawfully appropriated the plaintiff’s protectable expression by taking material of substance and value.” The Sturdza court took this precedent further, noting that substantial similarity requires a comparison of both individual elements of the two works in isolation and the “overall look and feel” of the work, even if the individual elements do not qualify for individual copyright protection. PA R T 2 : F I R M M A N A G E M E N T In most states, courts have held that it is against public policy to contractually allow one party to transfer all its liability to another party. Therefore, in most jurisdictions, architects will not be allowed to transfer all risk of professional liability. Architects will be held responsible for their negligence based on the original professional services provided, regardless of who holds a license or to whom the copyright has been transferred. If an architect chooses to transfer their copyrights, language similar to paragraph 7.3.1 of AIA B101-2007 should be included and effective the date of the transfer. This will not prevent future claims from third parties based on the original unmodified design, but does contractually require the party that has assumed the obligation and benefit of the transfer of copyright to also assume any liability that may flow from modification or unanticipated use of the design after the date of transfer. AV OID IN G C O P Y R IGH T I N FR IN G EMEN T Once architects understand the basics for protecting their copyright in their designs and instruments of service, they should consider the question of copyright from the other point of view: How does an architect manage the risk of infringing upon the protected work of another architect or design professional? A simple answer is, “do not copy someone else’s copyrighted material.” Unfortunately, a more realistic answer is not that simple. Architects often look to other creative works for inspiration or ideas about solving a particular problem, making the “perception of copying” a common issue in architectural services. Architects can take some steps, however, to minimize the risk of having to defend against a copyright infringement claim. In most cases, these suggestions are easily applied to “expressions” protected as “visual works” or “architectural works.” Maintain Copyright Increasingly, clients are asking architects to transfer ownership of the copyright in their design. Architects need to realize that once they have transferred copyright to a client or any other party, that party has acquired all the rights of the copyright holder, including the exclusive right to reproduce the architect’s original expression embodied in the design or instruments of service. In short, if an architect creates an original design, transfers the copyright for it to the client, then uses the same or similar design on a subsequent project, the architect has made it possible for the client to file a copyright infringement claim. Read Agreements Carefully Although the creator of an original work owns the copyright in that work from the moment of creation, copyright can be transferred to other parties unintentionally. Architects should carefully read their agreements with clients, 184 Organizational Development looking for provisions stating that the services they provide are works made for hire or that the architect assigns all rights in the instruments of service to the client. Services provided as works for hire automatically grant copyright to the entity engaging the architect’s services. If a client insists on a work-for-hire agreement, the architect should request an indemnity agreement for all claims that may arise from use of the instruments of service without the architect’s involvement. Project owners may require in the professional services agreement that the architect warrant that it has not infringed on another party’s copyrights. In addition to the warranty requirement, project owners may also require the architect to defend and indemnify them should a claim be made against them alleging copyright infringement. Warranties and defense obligations are excluded under professional liability policies, as are indemnity obligations beyond allegation of negligence. However, this is a risk that can be managed by obtaining proper licenses from other parties if copyrighted material is used in the design. Obtain Proof of Copyright Release or an Existing License Architects are often asked to provide services based on another architect’s efforts or to complete the services of another architect. In such instances, the “new” architect should request proof in writing from the client that the first architect has transferred copyright to the client or that the client has been granted a license to use the instruments of service. Proof of copyright release or an existing license can reduce the likelihood of claims of copyright infringement from other architects. Use the Copyright Notice and Register Your Material Although use of the copyright notice is no longer required under U.S. copyright law for drawings to be protected, placing the notice on the architect’s instruments of service offers some protection by warning that the materials are copyrighted and discouraging copyright infringers from claiming they were unaware of that fact. To protect a work further, however, registration of the copyright with the U.S. Copyright Office is highly recommended. Most important, registration is required before an infringement claim can be filed. In addition, remedies such as attorneys’ fees and statutory damages are available for protected works properly registered before an infringement occurs. Avoid “Substantial Similarity” As the court stated in Sturdza, infringement occurs when the defendant’s work is “substantially similar” to protected elements of the plaintiff’s work—that is, when an ordinary and reasonable person would conclude the defendant had appropriated the plaintiff’s original expression. If an architect sets 5.2 architects may want to download the following circulars: Circular 1: Copyright Basics Circular 9: Work-Made-for-Hire Under the 1976 Copyright Act Circular 40: Copyright Registration for Works of the Visual Arts Circular 41: Copyright Claims in Architectural Works For More Information Architect and Engineer Liability: Claims Against Design PA R T 2 : F I R M M A N A G E M E N T out to make a project look like that of another, a reasonable person would likely believe the architect copied the other work and therefore would hold the architect responsible for copyright infringement. Architects should also remember that substantial similarity requires not only comparison of the individual elements of the two works, but also of the “overall look and feel” of those works. The best way to manage the risks of a copyright infringement claim is for architects and their legal counsel to gain knowledge and understanding of the U.S. Copyright Act. Consultation with an intellectual property attorney is strongly recommended. However, it is a good idea to familiarize yourself with the information on the U.S. Copyright website (www.copyright.gov). In particular, Professionals, 3rd edition (Aspen, 2006), edited by Kevin R. Sido. Entrepreneurial Practice: Starting an Architecture Firm Derrick Choi, AIA, LEED AP, and Rena M. Klein, FAIA Twenty-first-century practice requires architects to adopt an entrepreneurial approach dependent on risk-tolerance, self-awareness, and comfort with unpredictability. Starting a firm gives architect’s opportunity to leverage talent and drive to create a work-life that is both personally satisfying and financially rewarding. T he Great Recession that began in 2008 has had significant impact on the American design and construction industry. Along with the new tools of twenty-first-century technology, the changing economy is creating irreversible industry transformation. While entrepreneurship has always been part of architectural practice, changes to the business environment have created a new normal, wherein entrepreneurial traits— business acumen, nimbleness, risk-taking, and the capacity to assess opportunities—are increasingly essential for success as an individual professional and as a design firm. The Freelancer’s Union of New York City estimates that nearly one-third of Americans are self-employed, adding up to almost 42 million people. As an advocate and insurance provider for the self-employed, the Freelancer’s Union sees entrepreneurial individuals as the true engine of economic growth in the United States. They dub the new normal “the gig economy.” For architects, engaging in the entrepreneurial economy is not new. The 2012 AIA Survey found that 81 percent of architectural firms have fewer than five members, and that these firms employ over one-quarter of all architectural staff. The design and Derrick K. Y. Choi is principal of XChange Architects. Founded in 2008, his Boston-based practice is committed to addressing architectural and urban design challenges in the public realm. Rena M. Klein is principal of RM Klein Consulting, author of The Architect’s Guide to Small Firm Management (Wiley, 2010), and executive editor of the AIA Architect’s Handbook of Professional Practice, 15th edition (Wiley, 2013). 5.2 Entrepreneurial Practice: Starting an Architecture Firm 185