Arthur Rutenberg Homes, Inc. v. Drew Homes, Inc.

In 1987, Chrysalis Homes Associates (Chrysalis) hired an architectural firm, the Heise Group, Inc. (Heise) to create architectural drawings of single-family homes. Chrysalis and Heise verbally agreed that Chrysalis would own any resulting architectural drawings. Heise then created architectural drawings titled Verandah II, on which Heise placed a copyright notice identifying Chrysalis as the copyright owner. In March 1988, Chrysalis obtained a United States copyright registration for Verandah II, the registration identifying Chrysalis as not only the claimant but also the author pursuant to the work-for-hire doctrine. In 1990, however, the United States Court of Appeals for the Eleventh Circuit held in M.G.B. Homes, Inc. v. Ameron Homes, Inc. that the work-for-hire doctrine did not confer authorship of floor-plan copyrights upon the entity hiring an independent contractor. Shortly after that decision, Chrysalis secured a certificate of release from Heise, in which Heise confirmed that it had assigned all of its rights, interest, and ownership in the Verandah II copyright to Chrysalis. On February 19, 1990, Chrysalis, which by that time was winding up its business, executed a written assignment of its rights to the Verandah II copyright to Arthur Rutenberg Homes, Inc. (ARC) (plaintiff). Later, ARC sued Drew Homes, Inc. (defendant) for infringement of the Verandah II copyright. The parties tried their case by consent to a district court magistrate judge, who entered a judgment for Drew Homes on the ground that ARC did not own the copyright at the time of the alleged infringement. The judge reasoned that only a copyright owner can register a copyright and that Chrysalis, pursuant to M.G.B. Homes, did not own the Verandah II copyright through the work-for-hire doctrine and that Verandah II also lacked a written assignment at the time Chrysalis registered the copyright. Thus, the judge reasoned, the Verandah II copyright had been void from the beginning. ARC appealed.