Home Built With Infringing Architectural Plans Can Be Resold And Need Not Be Destroyed

Case: Christopher Phelps & Assocs. v. Galloway (4th Cir., No. 05-2266, 7/5/07)

The One Sentence Summary: A damages award awarding a $20,000 license fee for a house built with infringing architectural plans is affirmed, as is an order denying plaintiff's request that the home never be resold or that it be torn down.


Fourth Circuit Holdings:

• Plaintiff was entitled to protection for its entire home design as registered, even though the design incorporated aspects from an earlier unregistered design. The district court erred in characterizing the work as a derivative work of the earlier unregistered design, but the error in the jury instructions was harmless.
• A new trial on damages was not necessary. The district court did not err in admitting expense receipts for the home as business records, or admitting an appraisal used for taxes as a government record over objections that it was expert testimony.
• The district court erred in denying an injunction because the jury had awarded damages. Future infringement was possible and could be the basis of damages. However, under eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1839 (2006), an injunction was not automatic and should be considered by the trial court.
• The district court did not err in refusing to grant an injunction preventing sale of the house built with the infringing architectural plans or requiring it to be torn down.
• The district court should consider on remand plaintiff's demand for an injunction requiring that defendant be required to return the infringing plans.