Copyright Found Not Protectable in Holiday Inn Express Design Case – Nova Design Build v. Grace Hotels

An Illinois Appellate Court upheld a trial court’s ruling that a hotel chain did not infringe on a design firm’s design copyright when building its hotel; Nova Design Build, Inc. v. Grace Hotels, LLC, et al., No. 10-1738. However, while the trial court came to this conclusion based on its assessment that the design firm failed to comply with the copyright requirements, the appellate court concluded that the design was not truly original and thus not protectable under copyright laws.

In order to understand the outcome of the copyright lawsuit, some background information is required. In 2006, Nova Design Build submitted architectural plans to Grace Hotels to try and secure a bid to build a new Holiday Inn Express in Waukegan, Illinois. During the negotiation process, Grace Hotels and Nova Design agreed that even if Grace did not contract Nova Design to build the hotel, that it would pay Nova various fees and costs in order to use its design.

Grace Hotels eventually decided not to contract Nova and its builders to construct the new hotel. And while the contract called for Grace to pay $28,000 to Nova for design fees and the right to use the design, both parties agreed to reduce that amount to $18,000. However, the dispute did not end there. Nova went on to register its design with the US Copyright Office and then proceeded to sue Grace for violating that copyright and using Nova’s design without permission.

However, the trial court dismissed Nova’s claim, citing that Nova had failed to comply with the copyright registration requirements. The court’s summary judgment was based on its contention that Nova had failed to provide the copyright office with bona fide copies of its original design. This conclusion was based on the fact that Nova’s offices were broken into prior to its submittal of the Holiday Inn hotel designs to the US Copyright Office. Since its computers were stolen, Nova had to replicate its computer-aided design (CAD) files by referencing its hard copies in order to recreate the files to be copyrighted.

Nova appealed the trial court’s decision, arguing that it had properly applied for the design copyright and that the trial court erred in its decision to dismiss Nova’s case. Before reviewing the trial court’s decision, the Seventh Circuit Court of Appeals first reviewed the subject-matter jurisdiction of the business lawsuit, i.e. whether Nova’s allegations fell under the Copyright Act, 17 U.S.C. §§ 501 et seq. The court held that Count I of Nova’s complaint satisfied this requirement by stating that Nova “owns a valid and registered copyright” on its designs and that Grace unlawfully used these copyrighted materials.

Next, the court examined whether the trial court erred in dismissing Nova’s case. In its ruling, the Seventh Circuit agreed with Nova that the district court incorrectly concluded that it had not submitted a bona fide copy to the registry. The question of whether Nova resorted to memory to create the registry copies or whether it instead made the copy by referring directly to the original, was an issue of fact. Nevertheless, the court of appeals upheld the summary judgment order.

It was concluded that Nova Design Build failed to clear the hurdle of whether there was in fact any protectable element to Nova’s designs. “Protectable elements are those that possess originality, [which] requires that the elements be independently created and possess at least some minimal degree of creativity.” The designs in this matter were based almost entirely on a standard Holiday Inn plan. Nova added a floor, but the floor was exactly the same as the standard design. Nova did not add anything original and thus nothing that was copyrightable. So while the appellate court disagreed with the trial court’s reasoning, both courts reached the same conclusion, i.e. that Nova’s case should be dismissed.

Kreisman Law Offices has been handling Illinois commercial litigation matters for more than 35 years in and around Chicago, Cook County and surrounding areas, including Wheaton, Brookfield, Arlington Heights, Hoffman Estates, and Lincolnshire.

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