GUEST COLUMN
Construction Law:
Intellectual property for
the construction industry
By Jeffrey M. Reichard
Whether you realize it or not, contractors, subcon-
tractors, owners, design professionals and material
suppliers face a myriad of issues related to intellectual
property during a complex construction project, includ-
ing patents, copyrights, trademarks and trade secrets.
Intellectual property disputes can create substantial
economic risks and even completely shut down an oth-
erwise successful construction project.
While these issues often are misunderstood, the in-
tellectual property issues that arise most often in con-
struction can be easily recognized and managed via
contract negotiation or otherwise after educating your-
self on the various types of intellectual property and
how they may apply to construction projects as identi-
fied below.
Copyrights One of the most interesting intellectual property
concepts and most relevant to the construction indus-
try is architectural copyrights. Copyrights protect origi-
nal works of authorship fixed in a tangible medium. In
other words, they can cover architectural works,
blueprints, BIM models, technical design documents,
renderings, elevations, and even constructed buildings
themselves. Copyrights initially vest in the creator of
the work, which in the construction industry typically is
the architect or engineer, although they can be as-
signed or licensed through contracts, such as the AIA
B series agreements.
A copyright registration with the Copyright Office is
not required for copyrights to arise in a work, but regis-
tration provides additional benefits, such as statutory
damages and attorneys’ fees. It is important to note
that a defendant may infringe copyrights without in-
tending to do so because infringement can be shown
via (1) access to the copyrighted work and (2) substan-
tial similarity between the copyrighted work and the al-
leged infringing work. It also is important to
understand the difference between an idea and an ex-
pression. An expression fixed in a tangible medium is pro-
tectable under copyright law, but an idea is not. For
more on the idea versus expression dichotomy as it re-
lates to architectural copyrights, see Attia v. Society of
4 — March-April 2018 — The North Carolina Construction News
New York Hospital,201 F.3d 50 (2d Cir. 1999) regarding
the idea of constructing a project in a particular way
versus the expression of that idea in construction
plans. There are many other issues in copyright law that re-
late to architectural works and the construction indus-
try which are too intricate to discuss in this brief
article. Trademarks
Contractors, subcontractors, owners, design profes-
sionals and material suppliers also may face many is-
sues related to trademarks. Trademarks are source
identifiers, such as words, symbols, or logos, that are
used to identify the source of goods or services. Like
copyrights, a registration is not required for trademark
rights to arise, but registration with the U.S. Patent and
Trademark Office (“USPTO”) confers additional rights.
Trademark rights arise via use of the mark in com-
merce in association with goods or services. However,
unregistered use may limit the geographical reach of
the trademark rights.
Trademark infringement is determined by the “likeli-
hood of confusion” test. While different federal circuits
apply slightly different tests to determine a likelihood
of confusion, most circuits look at generally the same
eight or nine factors in making this determination. One
of those factors is the strength of the mark. Since con-
struction companies often use the last name of the
original owner, it is important to know that a trademark
which is “primarily merely a surname” is considered a
generally weak mark and additional proof may be re-
quired to register and/or enforce such a trademark. It
also is important to note that trademarks can be in-
fringed in many ways and that indirect infringement
can be established against third parties through con-
tributory, vicarious, or inducement of infringement.
Patents Unlike copyrights and trademarks, patents must be
granted by the USPTO before they become enforce-
able. A patent is similar to a temporary monopoly in
the United States (or other countries in which they are
granted) to make, use, or sell a patented machine, arti-
cle of manufacture, process, method or other
patentable invention. To obtain a utility patent, which is
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the most common type of patent, the invention must
be new, useful and nonobvious.
Nonobviousness usually is the most difficult require-
ment to establish during patent prosecution. There are
many patents related to the construction industry, in-
cluding construction processes, equipment, materials
and even business methods. Patent infringement litiga-
tion can be very expensive from both an attorneys’
fees perspective and a potential damages perspective.
Therefore, it is recommended that indemnification
and defense costs are handled contractually at the be-
ginning of the construction project. Note that the 2007
and 2017 versions of the AIA A102 and A103 provide
for the contractor to be reimbursed for costs associ-
ated with infringement in certain circumstances, but
the A101 does not.
Trade secrets
Trade secret issues also may arise in construction
projects and related business ventures. Trade secrets
can cover virtually any type of information that is not
generally known to the public, is economically valuable
to the owner, and is the subject of reasonable efforts
to maintain its secrecy. For example, trade secrets can
cover business or technical information, pricing infor-
mation, customer lists, construction methods, and pro-
cesses. Trade secrets are covered by state law, but most
states have generally similar laws. If you have informa-
tion of value that you want to protect under trade se-
cret law, it is recommended that you enter
confidentiality agreements and/or non-disclosure
agreements with each employee or entity who needs
to know the information. Once that information is pub-
licly known, trade secret protection ceases, and the
value of the previously-protected information dimin-
ishes. Jeff Reichard is a member of the
construction and intellectual property
practice groups in the Greensboro,
NC office of Nexsen Pruet, PLLC who
regularly practices at the intersection
of IP and construction. If you
have any questions about this
article, please email Jeff
at jreichard@nexsenpruet.com.
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nexsenpruet.com The North Carolina Construction News — March-April 2018 — 5