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Koenig v. Dowdy

United States District Court, E.D. North Carolina, Western Division

September 28, 2017

John Steven Koenig, Plaintiff,
John W Dowdy, Jr., et al., Defendants.


          Robert T. Numbers, II United States Magistrate Judge

          Plaintiff John Steven Koenig alleges that the Defendants John W. Dowdy, Jr.; Culhain McDaniel; Fortress Homes, LLC; and All-American Homes, Inc. took advantage of his generosity and violated his rights when they made derivative copies of a home design he claims to have created. According to Koenig, he allowed Dowdy, McDaniel, and Fortress Homes to use his design, known as the JF1502 Plan, to build a house for someone who lost his home to a tornado. But, Koenig alleges, the Defendants went on to make derivative copies of the Plan without his permission, had copyright management information removed from the Plan, built several additional houses from the derivative plans, and distributed their derivative plans to other builders. Koenig claims that these plans violate various portions of the Copyright Act and North Carolina's statutory prohibition on unfair and deceptive trade practices (“UDTP”). He also alleges that the Defendants conspired to commit these bad acts.

         As you would expect, the Defendants disagree. After conducting discovery, they argue that Koenig lacks standing to pursue his copyright-based claims since he is not the author of the JF1502 Plan, and that there is insufficient evidence to go to trial on any of the other claims.

         After reviewing the record and the parties' arguments, the court has determined that although there is insufficient evidence to proceed to trial on Koenig's civil conspiracy and UDTP claims, the presence of genuine issues of material fact necessitates a trial on the copyright-related claims. As a result, Koenig's Motion to Dismiss will be denied without prejudice and his Motion for Summary Judgment will be granted in part and denied in part.

         I. Background

         A. Prestige Homes and John Koenig

         In the 1980s, Koenig began working as a salaried employee for Prestige Homes of Fayetteville, Inc., a licensed residential construction company owned by his father. Koenig Aff. ¶¶ 2, 3, D.E. 79-3; Koenig Dep. at 9:5-9, D.E. 79-16. Over the years, Koenig was responsible for a variety of tasks for the company, including “construction, construction oversight, lot selection, and plan selection[, ]” but, Koenig claims, he was not responsible for “building plan design[.]” Koenig Dep. at 61:1-7; Koenig Aff. ¶¶ 5, 8; see also Defs.' Statement of Undisputed Facts at #6, D.E. 77-1 (“Koenig built homes designed for Prestige Homes.”).

         Koenig eventually began learning how to design homes. Koenig Aff. ¶ 6. He would send his designs to Todd Tucker, a certified building designer, who would turn the design into a construction plan. Tucker Aff. ¶ 2, D.E. 79-4; Tucker Dep. at 7:11-14; 8:14-16; 43:4-12. Over time, the two worked together on 20-30 plans. Tucker Dep. at 12:7-9. Koenig allowed Prestige Homes to build houses based on his designs. Koenig Aff. ¶ 8; Koenig Dep. at 57:17-20. In 2008, Koenig created a separate company, JAFSIM, LLC, with the intention that it would build homes based on his designs. Koenig Aff. ¶ 9; Koenig Dep. at 17:14-25.

         B. Creation and Use of the JF1502 Plan

         Two years later, while working for Prestige Homes, Koenig began working on the plan at the heart of this case. Koenig Dep. at 57:21-24. Koenig used a computer-aided design (CAD) program to create a floorplan by “situat[ing]” and “position[ing]” the different features of a building design. Koenig Aff. ¶¶ 11-13; Tucker Dep. at 37:16-38:18; Defs.' Statement of Undisputed Facts ¶ 3-4 (stating that Koenig made “conceptual drawings” of “a two-dimensional floor plan”) (emphasis added). This “initial schematic of the plan” included precise dimensions and the placement of specific aspects of a home such as a linen closet. Tucker Dep. at 37:5-19; 41:6-43:3; 72:16-75:16, D.E. 79-18. It also “depicted the rooms, their relation to each other, and the placement of windows, doors, fixtures, and appliances.” Tucker Aff. ¶ 4.

         After completing approximately 75% of his plan, Koenig sent a PDF of the plan to Tucker. Tucker Aff. ¶ 2, 14; Tucker Dep. at 38:24-39:22; see also Defs.' Memo. at 5, D.E. 77. Tucker's job was to “clean up his plan” by making sure it met construction standards and providing “exterior elevations, a foundation plan, cross sections, electrical and lighting plan per John Koenig's direction, and any [other] necessary details and dimensions[.]” Tucker Dep. at 39:13-14; Tucker Aff. at ¶ 6.

         Koenig and Tucker met several times to discuss the Plan's development. Tucker Aff. at ¶ 12. Koenig was particular about the design and would have Tucker undo any major changes, even if Tucker thought it led to a better layout. Tucker Dep. at 76:21-77:5. Tucker made the requested additions and changed certain dimensions by a few inches. Tucker Aff. at ¶ 9; Tucked Dep. at 39:6-11; 41:12-21; 72:16-74:25.

         Tucker spent between 15 and 20 hours working on the plan. Tucker Dep. at 81:13-17. He named the plan “JF1502, ” JF for JAFSIM and 1502 for the plan's total square footage. Tucker Dep. at 43:15-24. Per Koenig's request, Tucker included language on the Plan stating that Koenig was its sole owner. Tucker Dep. at 16:21-25. Tucker included both “JAFSIM” and “Prestige Homes” in the Plan's title block. Tucker Dep. at 23:14-24:10.

         According to Koenig and Tucker, they agreed orally that Koenig would own the copyright to the plan after he paid Tucker for his services. Koenig Aff. ¶14; Tucker Aff. ¶13; see also Tucker Dep. at 12:23-13:10. Tucker knows he received payment for the plan from a business, but he cannot remember if it he was paid by JAFSIM or Prestige Homes. Tucker Dep. at 10:1-7. As was his practice, Tucker deleted Koenig's original sketches. Tucker Dep. at 8:6-21. Shortly thereafter, Koenig registered the JF1502 Plan with the Copyright Office. Certificate of Registration, D.E. 79- 12.

         After Koenig registered the Plan, Prestige Homes built nine homes from the design. Defs.' Statement of Undisputed Facts at #31-33; Dowdy Aff. ¶ 44, D.E. 76-2 (quoting Pl.'s Resp. Def.'s First Interrog.). Koenig did not have a written agreement with Prestige Homes about the use of the plan. Defs.' Statement of Undisputed Facts at #5 & #35, D.E. 77-1. But he says that he allowed Prestige Homes to build houses using his designs because it was his father's company. Koenig Aff. ¶¶ 8, 15. He asserts that Prestige Homes never claimed to own the JF1502 Plan. Koenig Aff. ¶ 16.

         Neither Koenig nor JAFSIM built any homes based off of the JF1502 Plan. Defs.' Statement of Undisputed Facts at #31-33; Dowdy Aff. ¶ 44, D.E. 76-2 (quoting Pl.'s Resp. Def.'s First Interrog.).

         C. Defendants and Their Use of the Plan

         In 2007, Dowdy and McDaniel formed Fortress Homes, LLC, a construction company. Dowdy Aff. ¶¶ 30-33; see also McDaniel Aff. ¶¶ 2-6, D.E. 76-5. They served as vice president and president, respectively. Id. Dowdy and McDaniel would jointly decide which plans they would use to build homes. Dowdy Aff. ¶¶ 35-36.

         Four years later, a Fortress Homes customer who had lost their home to a tornado asked Dowdy to build a house using the JF1502 Plan. McDaniel Dep. at 75:8-25; Dowdy Aff. ¶¶ 37-38. Dowdy negotiated with Koenig to use the Plan, and McDaniel signed a letter agreeing to build only one home from it. Dowdy Dep. 54:8-55:8; 78:4-5; 79:8-12; McDaniel Dep. 39:1-16, D.E. 76-13; McDaniel Letter, D.E. 79-8. McDaniel claims that Fortress Homes built one home from the Plan and then never used it again. McDaniel Dep. at 75:8-14; McDaniel Aff. ¶ 13.

         Later that year, Dowdy contacted Charles Bass at Bass Built Homes, Inc. to create a plan for Fortress Homes. Dowdy Dep. at 75:23-76:22; Bass Aff. ¶ 5. Dowdy wanted Bass to make a plan combining his favorite aspects of the JF1502 Plan with aspects of at least one other plan. Dowdy Dep. at 76:8-12; see also Id. at 49:2-52:25; Dowdy Aff. ¶ 57.

         Bass claims that when Dowdy brought him the JF1502 Plan, he saw Koenig's name and copyright information on the Plan. Bass Dep. at 119:15-120:2, D.E. 79-13; Bass Aff. ¶ 6, D.E. 76-17. He then allegedly asked Dowdy if he had “permission to use this plan[, ]” to which he claims Dowdy said “yes.” Bass Dep. at 119:15-120:2; Bass Aff. ¶ 7. Bass said he took Dowdy at his word because builders often shared plans with each other. Bass Dep. at 121:10-24; Bass Aff. ¶ 8; see also Dowdy Dep. at 79:19-21. Believing that Dowdy had permission to use it, Bass did not include Koenig's copyright information on any of the 14 plans he designed for Dowdy from Koenig's JF1502 Plan. Bass Aff. ¶¶ 17-18. Dowdy denies these allegations, stating that Bass “never asked [him] about a copyright.” Dowdy Dep. at 77:9-78:11; Dowdy Aff. ¶ 60.

         Either way, Bass ultimately created four plans that the Defendants purchased. Dowdy Aff. ¶ 61. Bass claims that all of Dowdy's plans were “either a replica or a derivative” of the JF1502 Plan. Bass Aff. ¶ 19. The parties and their experts disagree on the differences between the JF1502 Plan and these four other plans. Compare Monroe Expert Report, D.E. 76-9; Smith Export Report, D.E. 76-10; Ferris Expert Report at 1, D.E. 76-11, with Bass Aff. ¶ 9-10; Bass Dep. at 138:13- 21; Tucker Expert Report, D.E. 79-19; Richey Export Report, D.E. 79-20. Defendants built at least three homes from these new plans. Dowdy Dep. at 104:16-105:20.

         Dowdy then gave some of these plans to other builders. Dowdy Dep. at 111:21-113:24; King Aff. ¶ 16-23, D.E. 76-4. Dowdy's company, All-American Homes, marketed and sold several homes that were allegedly built from these derivative plans. McDaniel Dep. Ex.'s 27, 29- 30, D.E. 79-9-79-11

         D. Koenig's Lawsuit

         Koenig learned about the derivative plans and filed suit in 2015 against Dowdy; All-American Homes; McDaniel; Fortress Homes; Bass Built Homes; Downwind Investments, LLC; and King Construction and Development Co., Inc. D.E. 1. He brought claims of copyright infringement, improper removal of copyright management information, a violation of the Lanham Act, civil conspiracy, and UDTP. Id.

         Three months later, Koenig dismissed his claims against Bass Built Homes. D.E. 54. The dismissal followed Bass's execution of an affidavit detailing his involvement in the creation of the four plans. D.E. 76-17. An attorney (it is unclear whether the attorney represented Bass or Koenig) drafted the affidavit as part of Bass's settlement agreement with Koenig. Bass Dep. at 107:11-25. Although Bass made some changes to the affidavit, he still felt like the end product was “a little bit stronger than [what he] really meant . . . ...

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