Design Basics, LLC v. Kerstiens Homes & Designs, Inc.

341 F. Supp. 3d 920
CourtDistrict Court, S.D. Indiana
DecidedSeptember 19, 2018
DocketCase No. 1:16-cv-00726-TWP-DLP
StatusPublished

This text of 341 F. Supp. 3d 920 (Design Basics, LLC v. Kerstiens Homes & Designs, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Design Basics, LLC v. Kerstiens Homes & Designs, Inc., 341 F. Supp. 3d 920 (S.D. Ind. 2018).

Opinion

TANYA WALTON PRATT, JUDGE

This 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 ).1 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 *923because 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 copyrighted works.

Also 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.

I. BACKGROUND

The 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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Plaintiff 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 ).

Plaintiff 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. Id.

Since 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 *924across the country (Filing No. 147-20 at 3-4).

Since 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. at 5-9.

Design 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.

After 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.

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Bluebook (online)
341 F. Supp. 3d 920, Counsel Stack Legal Research, https://law.counselstack.com/opinion/design-basics-llc-v-kerstiens-homes-designs-inc-insd-2018.