Texas Construction Law Blog

The Owner and Architect of a Project may sometimes strongly disagree on who should or does own the designs, plans, and specifications that the Owner pays the Architect and its consultants to produce. The meaning of “ownership” is a core part of this argument. This article provides a very basic overview of the ownership of and licenses in intellectual property rights in an Owner/Architect agreement. 

Concepts from the widely accepted contract forms published by the American Institute of Architects (AIA®) are used as an example. The issues reviewed can come up in many agreements including AIA® Document B101® - 2017, Standard Form of Agreement Between Owner and Architect (“B101®”). Division 7 of B101® addresses intellectual property ownership, copyrights, and licenses. Most other AIA® Owner/Architect forms have similar provisions.

1. What’s All the Fighting About?
   
   Section 7.2 of B101® essentially provides that the Architect and its consultants (collectively, the “Architect”) will be the authors and owners of their intellectual property related to the Project, including drawings, specifications, and other deliverables, and keep all legal rights, including the copyrights. Ownership of the copyrights is particularly important because of the control the copyright owner has over its copyrighted material.
   
   The works from an Architect’s services are covered by two different copyrights. The Architect gains a copyright in the drawings, specifications, and other deliverables it creates for the Project (including electronic versions), usually referred to as the Construction Documents or “CD’s.” The Architect also gains an Architectural Works copyright.  Architectural Works encompass the building designs reflected in the CD’s. This includes the appearance of the building and arrangements of rooms inside the building. The Architect firm gains ownership of these copyrights when and as the designs and drawings are created. The copyrights only concern or protect original designs and expressions (i.e., not copied), and purely functional or code-required building features such as fire exits are not protected as Architectural Works.
   
   Legal protection of copyrighted materials is broad and potent. No one besides the copyright owner may use copyrighted materials unless ownership of the copyright is transferred or the user has a license to use the copyrighted materials, and then only to the extent of the license. The copyright owner is free to use its copyrighted works for any lawful purpose. If the Architect gives notice of its copyrights on its plans and specifications [© ABC Architects, LLC 2024], and especially if it also registers the copyrights with the U.S. Copyright Office, there are stiff penalties for using – infringing on – the copyrighted materials. In other words, there could be serious legal consequences for using an Architect’s copyrighted drawings and designs to construct a knock-off building.
   
   So, what does the Owner get for the fees it pays? Under B101® Section 7.3, the Architect grants to the Owner an express written license to use the Architect’s CD’s and designs for the purposes of constructing, using, maintaining, altering, and adding to the Project. This license is contingent on the Owner performing its obligations under the Agreement, including timely payment.
2. Architects may have concerns about changing this ownership/license arrangement.
   
   Many Architects would contend that the B101® Section 7.3 license gives the Owner all it needs for the Project. The license gives the Owner the right to give the CD’s to a contractor to build the Project for which the Architect was hired. The Owner can also use the CD’s to use, maintain, alter and add to the Project. Architects would contend that the fees the Owner pays the Architect are commensurate with these rights provided in this license. The Owner can build, use and alter the Project for the fee paid.
   
   It is not just a matter of fees, though. Transferring the copyrights to the Owner could present significant additional risk to the Architect. For example, the Owner could, if it owns the copyright, build copies of the Project in other locations; for example an office building. If there is a slip and fall lawsuit in one of these copied projects, because the floor material the Architect specified for the original Project was changed, the Architect may also be named in the lawsuit. While the Architect may ultimately prove it had nothing to do with changing the floor material in the copied project, it will likely have to incur significant legal fees defending against the claims.  Some Architects will try to strike “altering and adding to” the Project from the license in B101® Section 7.3 for the same reason. The Architect might be named in a lawsuit over an alteration it had nothing to do with. Section 7.3.1 of B101® does say that the Owner must indemnify the Architect if the lawsuit is from a project for which the Architect was not hired, but in some circumstances the Owner may take the position that this indemnity by the owner is unenforceable. The Architect may also give up the right to require attribution or credit for its design by transferring the copyright.
3. Owners may have concerns about only getting a license.
   
   Many Owners would argue that it takes on too much risk if it only receives a license like the one provided by B101®. Section 7.3 says that if the Architect rightfully terminates the Agreement for cause, such as for non-payment, the license shall terminate. A dispute over whether fees are owed might arguably result in the Architect arguing that the Owner has no right to use the CD’s mid-Project. This B101® license does not permit the Owner to use the copyrighted CD’s and designs for other projects, but these terms do not prohibit the Architect from using the intellectual property on other projects. A Project lender may require an assignment of the license in connection with a construction loan, but Section 7.4 prohibits assignment without the Architect’s prior written consent. No consent would be necessary if the Owner owned the copyrights. The Owner may have other reasons for needing more control over use of the CD’s and designs for a particular type of project that requires copyright ownership, not just a license. For example, although not usually applicable for a B101®, the Owner or the design-builder that retained the Architect for a project with design-build delivery will likely have a critical need to use the Architect’s designs and deliverables if the Architect’s services are terminated.
   
   Owners and Architects can bargain for the ownership of the CD’s and designs, including the copyrights, to be transferred to the Owner at some point, or multiple points, in time as part of the commercial arrangements. Owners will sometimes insist that the parties’ agreement provides that the Architect’s CD’s and designs are “Works Made for Hire” instead of using the ownership/license arrangement in B101®. This means that the copyrights vest in the Owner, not the Architect, when the Architect creates the copyrighted material, and the Architect will not be considered the author and copyright owner. Alternatively, the parties may agree that ownership transfers with the payment of fees. Through these methods, the Owner would gain the copyright control and protection.
4. Give this issue some thought.
   
   The copyright, ownership, and license provisions in Division 7 of B101® are a widely accepted arrangement that has worked well for Owners and Architects for decades. When negotiating the Agreement, though, the parties should at least consider whether another arrangement is necessary for a particular Project.