Chi. Bldg. Design, P.C. v. Mongolian House, Inc.

“The Copyright Act’s statute of limitations establishes a ‘separate accrual rule’ so that ‘each infringing act starts a new limitations period.’”

Opinion (Sykes): This case arose from a failed business relationship between a Chicago architectural firm and its client. Chicago Building Design, P.C. (“CBD”) specializes in the design and construction of restaurants; Mongolian House, Inc., wanted to renovate an upscale restaurant in Chicago and hired CBD. CBD designed the interior of the restaurant and filed blueprints with the City to obtain necessary permits for the project in June 2006. Renovations were completed the following year. In 2008, a CBD employee was in the City’s offices for other business and happened upon a set of blueprints for the restaurant that appeared to be copies of CBD’s designs but with another architect’s name labeled on them. CBD requested copies of the blueprints from the City, but the request was denied because the blueprints were exempt from disclosure. In the meantime, Mongolian House defaulted on payments to CBD. In May 2009, the City issued a new building permit for Plan B based on the 2008 blueprints; almost 3 years later, in February 2012, CBD sued Mongolian House, its owners, and its architect alleging copyright infringement and assorted state-law claims. The defendants moved to dismiss the copyright infringement claim as time-barred under the Copyright Act’s three-year statute of limitations. The district court granted the motion, holding that CD was on “inquiry notice” of a potential copyright violation when its employee saw the 2008 blueprints at the City’s office. The district court held that the limitations clock began to run on that date, even though CBD was unable to discover whether the 2008 blueprints infringed its copyright. The Court of Appeals for the Seventh Circuit reversed, citing a recent Supreme Court case that clarified that, “the Copyright Act’s statute of limitations establishes a ‘separate accrual rule’ so that ‘each infringing act starts a new limitations period.’” Therefore, CBD’s complaint alleged potentially infringing acts within the three-year look-back period from the date of the suit. The case was, therefore, REVERSED and REMANDED.