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IP issues surfacing in construction sector

|Written By Bev Cline

In the past, intellectual property issues have not been a major concern in the construction sector. Recently, a slowly emerging awareness of intellectual property rights and their impact on construction projects is becoming a topic of discussion in the industry.

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At the same time, many architects and owners are not entering into proper written contracts, let alone the standard form of agreement as suggested by the Ontario Association of Architects, reports the OAA's executive director, Brian Watkinson.

As a result, the issues surrounding intellectual property often lie dormant until disputes crop up, which is increasingly likely in an electronic world where the ability of creative professionals to control the use of their creations is taking on new currency.

"In my experience, the most contentious intellectual property issue in the construction sector revolves around copyright of the drawings," says Lee Muirhead, a partner in the IP department at Osler Hoskin & Harcourt LLP in Toronto.

"In a nutshell the problem is this: oftentimes owners believe that once they pay an architect for drawings, then the copyright of those drawings belongs to them."

This misconception may stem from business dealings south of the border, she speculates.

"The owner may be used to U.S. law, for example, where work-for-hire generally means the person who commissions the drawings gets copyright for the drawings. In contrast, here in Canada, generally the architect or engineer who prepared the drawings owns the copyright unless the agreement provides otherwise," explains Muirhead.

"Essentially the architect is granting a kind of limited permission for the owner to use the drawings for a specific purpose, i.e. to build or maintain a building.

"The owner cannot make copies of the drawings, or change the drawings, unless specified by contract. Also, if the owner sells the building, the new owner cannot make copies to give to other consultants or engineers or new architects, again unless specified in the contract. The owner needs to go back to the owner of the copyright and negotiate such uses."

Where this becomes an issue is if the owner and the architect have a falling out. Another scenario for possible disagreement can come later, suggests Muir-head, if the owner retains a second architect to make renovations or is brought in for consultation about maintenance work based on the original design.

For his part, the OAA's Watkinson, who is an architect, asks, "Why do lawyers think their clients need the copyright? Think of the architect as an artist. A building to us is like a sculpture. You wouldn't ask Henry Moore to give up the intellectual property rights to one of his sculptures. Why would you ask an architect to give them up on drawings?"

Architectural drawings form part of a service agreement of the intellectual content for the benefit of a single project, he continues. Otherwise, the owner could replicate the building forever. In a situation such as a franchise system, where a key component of the system is the easily recognized and identical building of its many outlets, the copyright/licensing can be handled in a contract, Watkinson suggests.

From a business perspective, there are potential liability issues for the architect deriving from the drawings, he adds.

"What if the client uses the design in a situation that does not reflect its original site? Let's say the drawings were commissioned for a flat site and now the owner wants to use them for a building on a sloping site," he says.

Ideally, construction lawyers acting for owners and developers should seek an assignment of copyright right off the bat, says Muirhead. Failing that, construction lawyers need to ensure the licence granted is broad enough to allow their client to be able to build but also maintain and renovate the building.

Even so, she points out, the architect will have some legitimate interest in what happens to the building. This relates to moral rights, another issue that doesn't crop up often but is becoming a talked-about issue in construction law circles.

The term may sound ambiguous but what it generally means is: "Moral rights [are] about doing something to a piece of art, the building, that negatively affects the integrity of the design and could potentially damage the reputation of the architect," says Watkinson.

And even if an architect has assigned copyright in the drawings to the owner, if he or she is disgruntled about changes made to the building ? perhaps some distinctive element is modified ? the architect could try to get an order to restrict or not permit the change, adds Muirhead. A waiver of moral rights could form part of the contract to alleviate this concern, she says.

While many construction contracts are silent on the issue of moral rights, the Ontario government has realized the potential implications, reports Watkinson.

"Disputes about moral rights are rare, but the Ontario government came to us [the OAA] to talk about language that defines and establishes some parameters for any changes to a building. Because the government is building, changing, and maintaining so many buildings, its representatives have come across this issue in the past.

"The reality is that moral rights are a pretty esoteric issue, but I think it's important for construction lawyers to bring this up with their owner and developer clients. Perhaps what's needed here is caution."

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