Over the last decade, several companies holding copyrights on home plans have changed the legal landscape for home builders across the United States. Starting about 10 years ago, these companies have been bringing lawsuits against home builders and their principals / owners for copyright infringement in federal courts across the country. These lawsuits typically allege that a homebuilder either negligently or intentionally copied the plaintiff’s copyrighted plans and used them to construct homes. As a result, the plaintiffs seek to recover all the profits the homebuilders received from the sale of the homes, as well as attorneys’ fees and other damages that are provided for in the federal Copyright Act.

Unfortunately, the cost of the litigation vastly exceeds the cost of purchasing the plans at issue, had the home builder done so, since a single plan that might have cost $800 could create liability under the Copyright Act of $25,000 or more for the construction of a single infringing home, plus attorneys’ fees. Imagine the potential liability of a home builder that used an accused plan to build a subdivision with 100 tract homes, and you will begin to understand the magnitude of this problem in the homebuilding industry. Consider further, that the Copyright Act allows plaintiffs to sue not only the home building companies but their owners personally, and you will better appreciate the attention this litigation has been gaining across the country in the last decade. While not all homebuilders’ plans violate copyrights, of course, this litigation is so widespread that it has attracted the attention of homebuilders associations in several states.

Fortunately, in many cases, the home builder’s general liability insurance coverage will provide some level of coverage for this type of lawsuit, including paying the cost of defense for the suit, that will typically include hiring experts, such as architects and accountants. For this reason, it is important that any home builder who has been sued promptly send a copy of the suit to their general liability insurance companies, including their current insurer as well as their insurers going back to their company’s inception, since plaintiffs in these suits typically look for infringements going back 10-15 years or more.

Over the past several years, Attorneys Marc C. Gravino and Joel M. Huotari have been privileged to represent a number of home builders and their owners in many of these federal copyright suits throughout the Midwest.

Our law firm has developed a number of methods to assist our home builder clients in resolving these lawsuits. In this process, our firm’s clients have become better aware of the risks associated with building homes with plans without first obtaining a written license by the copyright owner to advertise and build the homes; and they have become aware of other legal steps they can take to try to minimize the risks associated with possible future suits. Marc Gravino can be contacted at mgravino@wilmac.com, and Joel Huotari can be contacted at jhuotari@wilmac.com.