Copyrights for Building Codes: What the Supreme Court's Refusal to Decide Means Now and Prospects for the Future


May 17, 2004

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At one level, the Supreme Court's refusal is surprising: The 5th Circuit's opinion conflicted with a number of other circuits, presented an important nationwide question and drew an unusual six dissenting votes from en banc panelists. The Supreme Court had signaled its interest in the matter by asking the Solicitor General for the U.S. government's views.

The Solicitor General, however, faced a sharply divided government, with some agencies favoring reversal and others favoring keeping the Supreme Court out of the issue. This latter group included the Copyright Office, in particular its General Counsel. Lacking consensus, the Solicitor General took the tack of describing Veeck as a "narrow" decision and urging the Supreme Court to permit further development in the lower courts. It is unlikely the Court will be able to stay above the fray forever, though, as the lack of uniformity in different courts leads to different results depending on where a suit is brought. In the meantime, though, those effected by the present disarray in the law require some guidance.

(The en banc decision of the 5th U.S. Circuit Court of Appeals is at 293 F.3d 791. The U.S. Supreme Court's denial of SBCCI's petition for writ of certiorari is at 123 S.Ct. 2636, 156 L.Ed.2d 674.)

The Problem

Whether a privately developed code that is otherwise eligible for copyright protection (that is, it contains a sufficient amount of original material) forfeits that protection by virtue of the code's adoption by a governmental entity raises important public policy issues upon which reasonable people disagree.

On one hand, by urging that a private work be adopted and thereby become a part of the "law," the code developer should not object to the public's need to have access to (including the right to copy) that law. Democracy thrives on an informed public, and as a matter of due process, if a government asserts the power to punish those who do not obey the law, ready and free access to that law is essential.

On the other hand, governments increasingly outsource governmental functions in order to save money and resources. Private entities that perform these functions require payment for their efforts in order to cover their costs. There are two basic models for such payment: (1) a flat fee, pursuant to which the author sells all rights to the government; or (2) royalties generated by a continuing right to charge for exploitation of the work (such as selling copies of it). The first model requires a substantial upfront payment, something budget-strapped governments often cannot afford. This second model is copyright: Leaving copyright in private hands avoids payment by government but allows the copyright owner to recoup its costs from payments made by third parties for the right to copy or use the code.

But without those payments -- as when a court like Veeck holds that no payments are required -- the copyright model falls apart.

Absent one of the two methods of payment or some variant thereof, there is no incentive for the private sector to create and, therefore, no one to whom the government will be able to outsource.

Because governments are increasingly outsourcing and will not pay one-time fees to acquire all rights in a work (because such payments would, after all defeat the whole purpose of outsourcing), it has fallen, by default, on copyright law to resolve the competing policy and economic issues. And, because Congress has not addressed the tensions raised by private assertion of copyright in codes, by default this means the courts have had to. Courts, though, are nothing more than collections of people, and as people, they have different perspectives. Thus, there have been different rulings, and thus, there is the need for the Supreme Court to ultimately decide the matter.

The Veeck Opinion

Regardless of what one believes about the policy issues raised by copyright in privately developed codes, the majority opinion in Veeck leaves much to be desired. The codes in Veeck were adopted by the two small towns of Savoy and Anna, Texas. Defendant Veeck did not live in either town, did not do business there, and was in no way bound by or affected by the codes as adopted in those towns. He ran a regional Web site, posting information of interest for people in that region, particularly around his hometown of Dennison.

Veeck purchased copies of Southern Building Code Congress International's work on a floppy disk, deleted the copyright notices and then posted the entire Standard Building Code on his Web site. There was no evidence any resident of Savoy or Anna had been deprived of access to the codes. Copies of the codes were available for inspection in the government offices that adopted the codes and were available for purchase through SBCCI.

The en banc majority's legal analysis is flawed. Conceding that SBCCI had a copyright in its model codes as model codes, the majority held that once adopted, the codes entered the public domain. The majority's first ground was the most inexplicable, merger. The merger doctrine in copyright law states that when there is only one or a few ways of expressing an idea or fact, there is no copyright in the work because to grant copyright in such circumstances would impermissibly extend copyright to ideas or facts. Finding that the codes were "facts" and that the "unique, unalterable expression of the (idea)... constitutes local law," the court brushed aside the obvious reality that the model code as a model code was not a fact or an idea and that there were many different ways to express the subject matter contained in the codes. Moreover, how a work which is admittedly not "merged" in its model code form can be "merged" in its adopted form is a mystery: The identical work apparently exists simultaneously in both a merged and an unmerged state, sort of like being and not being.

The other ground advanced by the majority was not based on the Copyright Act but on the policy argument that the code became "law" when adopted. Two flaws are apparent in this argument. First, despite the democratic political theory attributes of the argument, the majority ignored a critical policy consideration: The democratically elected governments of Savoy and Anna had entered into a contract with SBCCI that set forth the terms of the "adoption," one provision of which was not requiring SBCCI to forfeit its copyright. Quite the contrary, the contract acknowledged that SBCCI retained its copyright. In a surprising lack of respect for federalism, the majority of a federal Court of Appeals in an opinion by a very conservative judge set aside the decision of an arm of a state to respect private property. As Judge Higginbotham wrote in dissent:

The cities could have hired counsel and engineers to draft a code, recouping its expense either from all taxpayers or by charging a fee to users for a copy of its ordinance. A city could also decide, on behalf of the citizens, to license a finished and copyrighted work. Either is a decision by elected representatives. Against a refrain that "the law" belongs to the people, Veeck asked us to conclude, as a matter of federal common law, that the choice made by the voters of this municipality was not available to it. Its utility as a decisional norm aside, the refrain passes by the fact that it was legislators who chose what they thought was the most practical path, to adopt a technical code developed at the expense of others under a licensing agreement.

As a matter of copyright law, the majority also brushed off a determinative statutory provision, 17 USC §201 (e), which provides: "[N]o action by any governmental body or other official or organization purporting to seize, expropriate, transfer, or exercise rights of ownership with respect to the copyright, or any of the exclusive rights under a copyright shall be given effect under this title, except as provided under title 11 [bankruptcy]."

SBCCI never voluntarily transferred any rights to Savoy or Anna. Savoy and Anna did not seize or expropriate SBCCI's copyright. Yet, for every jurisdiction within the 5th Circuit, the 5th Circuit has effectively seized and annulled SBCCI's copyright. Such a seizure also constitutes an unconstitutional taking: There was no notice of the proposed taking and no compensation for it.

Given the practice of governments to adopt ready-made codes developed by private organizations, there likely will be more such copyright cases. So long as the public is not denied access (thereby eliminating due process concerns), the public will benefit from the lower costs made possible by private code development. Copyright in such works should be upheld. Rules developed in the 19th Century no longer fit when the increased budgetary pressures on government and the wide dissemination of unprotected codes made possible by the Internet are considered. Private organizations play a significant role in creating and disseminating a wide variety of materials used by governments with the consent of those governments. Those creative efforts are deserving of protection, absent compelling evidence that the public is being denied access by virtue of a copyright.

Questions After Veeck

Following Veeck, a number of common, but important questions arise, including:

	Can I copy and distribute copies of copyrighted building codes without incurring copyright liability? A perplexing part of the 5th Circuit's Veeck opinion is its statement that "as law, the model codes enter the public domain and are not subject to the copyright holder's exclusive prerogatives. As model codes, however, the organization's works retain their protected status." Presumably, this means that in jurisdictions covered by the court's ruling, one may copy a code posted on a Web site as law but may not copy a document posted (or sold in hard copy) as a model code.
	What effect will the Veeck opinion have in other cases? If one takes the Solicitor General at his word that the Veeck case was narrow, one could answer that it applies only to its particular facts or closely similar ones. This construction is unlikely, though. It is very rare for a Court of Appeals to hear a copyright case en banc, and clearly the 5th Circuit is sharply divided. It is unlikely to revisit the issue, and lower courts are likely to apply it without a lot of nuances. At worst (or best), though, the opinion is binding only on federal courts in Texas, Louisiana and Mississippi.
	What effect does the decision have when building codes incorporate other codes and standards by reference? This issue was not presented in Veeck, but one may doubt that the majority would distinguish between an entirely written code and one that incorporates portions from another code written by a third party. The rationale would be the same: By being adopted through incorporation, a code or standard is law and, therefore, is not copyrightable as law.
	Can code-writing organizations protect themselves by contract? If a code-writing organization contractually prohibits governmental entities from further copying or distributing the work, is there a breach of contract claim if the government entity does so? Whether there is a right against the governmental entity probably is not the real problem; the real problem is how to stop third parties like Veeck. The Veecks of the world are not parties to the contract, though, and thus cannot be sued for breach of contract. Actions against third parties are the job of the Copyright Act.

Unless and until the Supreme Court acts, there is not much hope for code-writing organizations within the states covered by the Veeck opinion. But, there are 47 other states and the District of Columbia that are not subject to the Veeck decision, and in the two most important federal appellate circuits for copyright law, the 2nd and 9th Circuits, the law is much more favorable to creators of works.

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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.

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