Ninety-third in a series—Each issue of this newsletter discusses important terms found in typical construction documents. This month, Andrew Balcar looks at who has rights to the architect’s work product.
An architect is an artist. The architect’s goal to is take the ordinary and make it extraordinary. Buildings are designed and built every day. It is, however, not very often that a building makes people look twice or stare in amazement at its beauty.
Architects are protective of their designs and models. In the December 2005 issue of BrickerConstruction- Law.com we discussed how architects can protect their design in Protecting Building Design From Theft: IP for Design Professionals 101.
But what about the owner’s right to use the design? Does the contractor have any rights to the architect’s work product? Who can use the design if the architect is terminated by the owner? Can the owner use the design if the owner breaches the owner-architect agreement? In this article we will look at these questions and hopefully shed some light on the rights of each party to use the work product produced by the architect.
Instruments of Service
The AIA A201-2007 General Conditions document defines the various forms of work product prepared by the architect as “Instruments of Service.” “Instruments of Service” are defined as “representations, in any medium of expression now known or later developed, of the tangible and intangible creative work performed by the Architect and the Architect’s consultants under their respective professional services agreements.” This broad definition likely covers any work product prepared by the architect.
These Instruments of Service, however, are used by the owner, various contractors, consultants, and others in the construction of a building. Each of these parties must be able to use the drawings, models, surveys, and other Instruments of Service, or it wouldn’t be possible to finish any construction project.
The owner’s rights to use the Instruments of Service are set forth in AIA Document B101-2007, standard form of agreement between owner and architect. In Section 7.3 of that document, the owner is granted a nonexclusive license to use the Instruments of Service for constructing, maintaining, and altering the project. This license permits the owner to hire contractors and material and equipment suppliers to use the Instruments of Service in order to complete the project.
What happens if the owner terminates the architect for cause? If the owner rightfully terminates the architect for cause, and the owner has substantially performed its obligations, then the owner may continue to use the Instruments of Service.
The owner may also terminate the architect for convenience. Section 9.5 of the AIA Document B201-2007 permits the owner to terminate the architect for convenience upon 7 days written notice, for the owner’s convenience, and without cause. Under this scenario, the owner’s license to use the Instruments of Service is terminated.
If the owner terminates for convenience the owner can, based upon the standard language in the document, continue to use the license if the owner pays a licensing fee to the architect. This fee is agreed upon by the owner and architect and made part of the owner-architect agreement in Section 11.9. An owner would also face other costs including the architect’s termination expenses.
According to the AIA Commentary to the AIA Document B101-2007, these expenses may include “costs of terminating consultants’ contracts, reducing staff and even terminating leases on office space and equipment. In addition, the architect’s inducement for entering the agreement, which is profit, is expected to be fully paid.” The Commentary contains no legal force between the parties to the contract, but it does provide some insight into what the AIA intended with this form agreement. The owner and architect can, if they choose to do so, set forth the specific termination expenses in the agreement. This way both parties know what to expect if the architect is terminated.
The owner’s license to use the Instruments of Service may be terminated if the architect “rightfully terminates” the agreement under section 9.4 of the AIA Document B101-2007. If the owner fails to perform its obligations under the agreement, and the architect is not at fault for the owner’s failure to perform, then the architect may terminate the agreement, and the license is automatically terminated.
In addition, the architect can terminate the agreement if the owner suspends the project for “more than 90 cumulative days for reasons other than the fault of the Architect.” In this scenario, the owner can continue to use the license if the owner pays a licensing fee to the architect.
Contractors’ rights to use the Instruments of Service are set forth in Section 1.5.2 of the AIA Document A201- 2007. Contractors are limited to using the documents for execution of each individual contractor’s scope of work as defined in each contractor’s agreement with the owner. The contractor may not use the Instruments of Service on other projects or for work outside its scope of work on the project unless the owner and architect provide written consent of such use.
The owner, architect, and contractor must take care to review these provisions before the documents are signed. An owner may want to have more rights to the building design. This would be especially true if an owner intends to complete similar buildings in various locations without hiring the same architect for each building. Some specific elements of the design may need to be changed slightly for each building, but the general design would likely remain the same.
The owner and architect should set forth the specific termination costs in the owner-architect agreement. The owner will know those additional costs before terminating the architect for convenience and can consider that amount in its decision.
Finally, the complexity of the project may mean that certain elements of the design belong to the owner, while the remaining elements remain the property of the architect. Under this scenario the elements retained by each party should be specifically listed in the agreement between the owner and architect.