CYBER SECURITY INSURANCE AND DESIGN PROFESSIONALS

shutterstock_553414534Cyber security insurance is a relatively new insurance product that has probably become more popular and important in today’s digital age.  Think about it.  Almost everything is created, transmitted, shared, and stored digitally.  Companies utilize cloud-based platforms to store documents, share documents, and transmit documents.  Documents are transmitted via e-mail. Documents are created electronically with various software programs.   And, finally, technology has made it convenient to create, access, store, share, and transmit documentation digitally through smartphones, tablets, or laptops (and various applications) – so technology enables things to be done remotely in the moment to maximize efficiency and production. 

 

I recently did a presentation relating to design professional’s liability exposure in today’s digital age that includes more collaborative and sophisticated project delivery methods.  One of the topics mentioned was, of course, cyber security insurance as a means to insure an important risk for design professionals (particularly, engineering and architectural firms).  Depending on the insurer, cyber security insurance can be added as an endorsement to a professional liability / errors and omissions policy.

 

From a design professional’s standpoint, there are numerous reasons to consider this insurance based on how documentation is created, stored, and transmitted and it is an insurance product that should NOT be overlooked:

 

  • Losses due to the mismanagement or failure to protect confidential business information and proprietary information the design professional receives;

 

  • Losses due to inadvertently transmitting malware (a virus) through digital transmission;

 

  • Data breaches (or theft) and the losses and costs associated with such breaches including the response, restoration, and remediation of the breach (which can be costly); and

 

  • Losses due to violating any laws/regulations relating to a data breach.

 

Notably, cyber security insurance is becoming an important insurance product for many, many industries.  Design Professionals, for purposes of this article, would be remiss not to explore and seriously consider cyber security insurance in today’s digital age.  As a design professional, consult your insurance broker as there are insurers that are insuring this important risk based on your business’ needs.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

EVOLVING PROJECT DELIVERY METHODS AND RISK CONCERNS FROM A DESIGN PROFESSIONAL’S STANDPOINT

I recently posted a presentation I put on regarding project delivery methods.  In that presentation I discussed evolving project delivery methods such as Integrated Project Delivery and Public-Private-Partnerships and even sustainability / green building as a focus of certain delivery methods.   I also discussed how BIM (building information modeling) and emerging, collaborative technology is utilized during the course of construction.

 

With evolving delivery methods (and the use of emerging technology) comes RISK concerns and issues that are different than the risk concerns and issues with more conventional project delivery methods.  Below is a portion of a presentation I did addressing risk concerns and issues from a design professional’s standpoint, with the focus on evolving project delivery methods and emerging technology such as BIM. 

 

[gview file=”http://www.floridaconstructionlegalupdates.com/wp-content/uploads/2016/03/dP-risk.pdf”]

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

A DESIGN PROFESSIONAL OR ARCHITECT’S COPYRIGHT INFRINGEMENT CLAIM…DON’T THINK SO…

imagesA design professional or architectural firm has an uphill battle proving a copyright infringement claim.   Why? Because it is hard…very hard…for a design firm to show that another’s design is substantially similar to their original copyrighted design to warrant a finding of copyright infringement.

 

This uphill burden has been reaffirmed by the Northern District of Florida in Home Design Services, Inc. v. Turner Heritage Homes, Inc., 2015 WL 1482301 (N.D.Fla. 2015).  In this case, a residential design was copyrighted. The design firm that owned the copyright for the residential design sued a homebuilder for copyright infringement alleging that the homebuilder built 165 custom homes based on the design firm’s copyrighted design.  The jury returned a jury verdict in favor of the design firm for copyright infringement; however, the trial court entered judgment for the homebuilder finding that the design firm failed to prove a copyright infringement claim.  That’s right—the jury returned a verdict finding copyright infringement and the trial court entered a judgment for the homebuilder notwithstanding the verdict.

 

A leading issue in this case was whether the design firm’s copyrighted design was an original design and whether there were differences between the copyrighted design and the homebuilder’s allegedly infringing design.  The reason being is that in order to prove a copyright infringement claim of an architectural design:

 

For copyright infringement, a plaintiff must prove: (1) ownership of a valid copyright, and (2) copying of protectable elements. In order to establish ownership of a valid copyright, the plaintiff must prove, among other things, that the work is original.  Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity. To establish copying, the plaintiff must show as a factual matter that the defendant copied the protected work, and, as a mixed question of law and fact, that the protected expression itself was copied. In the absence of direct proof of copying, a plaintiff may prove copying by demonstrating that the defendants had access to the copyrighted work and that the works are substantially similar. To show access, the plaintiff need not prove actual viewing and knowledge but simply a reasonable opportunity to view the work.  The test for substantial similarity for architectural works is whether a reasonable jury could find the competing designs substantially similar at the level of protected expression. [S]pacial depictions of rooms, doors, windows, walls, etc. are not protected. [O]nly the original, and thus protected arrangement and coordination of spaces, elements and other staple building components should be compared. Moreover, given the subtle distinction between protected and unprotected expression, the Eleventh Circuit has recognized that judges, rather than juries, are usually better equipped to resolve questions of infringement. The Eleventh Circuit has further instructed that copyright protection in a compilation is thin, and that modest dissimilarities are more significant than they may be in other types of art works.

Home Design Services, supra, at *6.

 

Focusing on whether the design firm’s copyrighted design was substantially similar to the homebuilder’s home design, the trial court found dissimilarities between the designs including, but not limited to, the porches were different, fireplaces were in different locations, elevations were different, hallways had different dimensions and openings, toilets were positioned differently, the nooks had different windows, master bathrooms contained differences, etc. (you get the point…there were differences).  Although the design differences were slight when comparing architectural designs, the fact remained that there were dissimilarities to preclude a copyright infringement claim.  No matter how modest the dissimilarities truly were, that fact that there were dissimilarities precluded a finding for copyright infringement.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DESIGN PROFESSIONAL’S DUTY OF CARE NOT EXTENDED TO SUBCONTRACTORS

images3M3BYH2WIn construction defect lawsuits, subcontractors responsible for the alleged deficient work or damage are third-partied into the lawsuit by the general contractor that hired them.  And, sometimes, an owner (or association) tries to assert a claim directly against responsible subcontractors.   There are times where subcontractors have the defense that the deficiencies and damages complained of are the result of design errors and omissions.  A question becomes whether a subcontractor can assert a negligence claim directly against that design professional as a way to flow any potential exposure to the design professional.

 

Unfortunately, there is case law that says that a supervising design professional does NOT owe any duty of care to a subcontractorSee Spancrete, Inc. v. Ronald E. Frazier & Associates, P.A., 630 So.2d 1197 (Fla. 3d DCA 1994) (duty of care that supervising architect owed to general contractor did not extend to subcontractors); McElvy, Jennewein, Stefany, Howard, Inc. v. Arlington Electric, Inc., 582 So.2d 47 (Fla. 2d DCA 1991) (trial court erred in allowing case to go to jury because architect’s duty of care could not have been extended to subcontractors); E.C. Goldman, Inc. v. A/R/C Associates, Inc., 543 So.2d 1268 (Fla. 5th DCA 1989) (consulting engineering/expert firm hired by owner to inspect and advise owner about roof owed no duty of care to roofing subcontractor).  Without this duty of care, a subcontractor would NOT be able to pursue a negligence claim against the design professional because this duty of care is the very first element required to prove a negligence claim.  (In order to prove a negligence claim, a plaintiff needs to prove that 1) the defendant owed the plaintiff a duty of care, 2) the defendant breached that duty of care, 3) that breach proximately caused damages/injuries to the plaintiff, and 4) the plaintiff was damaged/injured.)  This does mean the subcontractor cannot assert the design professional’s errors and omissions as a defense, it just means that it will be an uphill battle for a subcontractor to assert an affirmative claim against the design professional.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.