the determination of the issue was essential to the final judgment. Jd.

The Court finds that this affirmative defense has been inadequately pleaded under the
requirements of Rule 8. It is unclear which issues defendants seeks to preclude, This makes it
impossible to determine whether the issues sought to be precluded in the instant action are the same
as those in the prior action and whether the determination of those issues was essential to the final
judgment. Accordingly, the Court grants plaintiff's motion to strike this defense and Affirmative

Defense XII is stricken without prejudice to enable defendants to correct this technical deficiency.

I, Cambridge & Pugsley’s Affirmative Defense XIII & Cowhey’s Affirmative Defense XII:
Independent Creation

Defendants allege as an affirmative defense that the works said to infringe on Ocean Atlantic
Woodland’s copyrighted works were independently created. (Def. Cambridge’s Affirm. Defenses {¥]
78-79; Def. Pugsley’s Affirm. Defenses {J 62-63; Def. Cowhey’s Affirm Defenses J 50-51. But see
Defs.’ Joint Resp., at 35 (addressing defense jointly as Affirmative Defense XII).) Plaintiff argues
that this affirmative defense lacks merit and credibility.

The manufacture, distribution and/or sale of an unauthorized copy which is substantially
similar to a protected work infringes on the copyright in the work. Ty, Inc. v. GMA Accessories, Inc.,
959 F. Supp. 936, 939 (N.D. Ill. 1997), aff'd, 132 F.3d 1167 (7th Cir. 1997). In order to establish
copyright infringement, a plaintiff must demonstrate that it owns a valid copyright, and that the
defendant copied the protected work. Jd. The copying inquiry entails questions of access, substantial
similarity, and independent creation. Ty, Inc. v. W. Highland Publ'g, Inc., No. 98 C 4091, 1998 WL
698922, at *7 (N.D. Ill. Oct. 5, 1998). When the plaintiff makes a showing of access and substantial

similarity, a presumption of copying is raised. LZT7/Filliung P'shp, LLP v. Cody/Braun & Assocs.,

19


and the proposed housing development plans on the Arnhold/Byzantio property and that the plans
attached to the Annexation Agreement are, by law, required to be followed by the developer of the
property. (Def. Cambridge’s Affirmative Defenses J 25-38.) These allegations are sufficient to
state a defense that the plans at issue were in the public domain.

In sum, although the Court finds that Affirmative Defense II is mistitled, the defense that
public domain documents cannot be copyrighted is an affirmative defense and that defendants’
allegations properly state this defense. Accordingly, the Court denies plaintiff's motion to strike this

defense.

D. Affirmative Defense [V: Laches, Estoppel, and Waiver

Defendants’ claim as their fourth affirmative defense that Ocean Atlantic’s claims are
defeated under the doctrines of laches, estoppel, and waiver. Plaintiff argues that the defendant has
simply listed these affirmative defenses without separately alleging their required elements.
1. Laches

Laches is an affirmative defense under Rule 8(c). Laches bars a party’s rights when: (1)
unreasonable delay by plaintiff in seeking redress for the alleged infringement, which (2) results in
harm or prejudice to the defendant. Ty, Inc. v. W. Highland Publ’g, Inc., No. 98 C 4091, 1998 WL
698922, at *10 (N.D. Ill. Oct. 5, 1998). Traditionally, plaintiff bears the burden of explaining the
delay in bringing suit and, if the explanation is not sufficient, the defendant must show prejudice in
the delay, Zelazny v. Lyng, 853 F.2d 540, 541 (7th Cir. 1988), This is generally considered a factual
inquiry and discouraged from being decided on a motion to strike. Warrior Ins. Group, Inc. v.
Insureon.com, Inc., No. 00 C 3619, 2000 WL 1898867, at *1 (N.D. Ill. Dec. 29, 2000).

In Fleet Business Credit Corp. v. National City Leasing Corp., 191 F.R.D. 568, 569-70 (N.D.

13



25.) During this time, Cambridge received from Ocean Atlantic Woodland certain design and
engineering documents related to the proposed development for their review. (Def. Cambridge’s
Answer 26.) However, after the Ocean Atlantic’s failure to acquire the property, Cambridge
independently entered into an agreement on April 12, 2001 to acquire the property and ultimately
purchased the Byzantio/Amhold Property on July 19, 2001 with the intent to develop the land for
residential use. (/d. {{] 28-29.) Cambridge then hired Cowhey, an Illinois engineering firm, and
Pugsley, an Illinois landscape architecture firm, for the engineering plans and plats of their
development of the Amhold/Byzantio Property. (See id. ff] 32-33; Def. Cambridge’s Affirmative
Defenses {J 20-24.) On November 14, 2001 and October 21, 2001, Cambridge submitted a
preliminary engineering plan and development design and engineering plan to the Village, listing

Pugsley and Cowhey as the drafters. (Def. Cambridge’s Answer {ff 37-38.)

Ocean Atlantic Woodland’s Acquisition of the Roake/Lannert Plans’ Copyright

In February 2002, Roake and Lannert assigned to Ocean Atlantic Woodland all right, title,
and interest, including the copyright, in the plans for the Byzantio/Amhold Property (landscape
plans, development design, engineering plans and schematics). (Def. Cambridge’s Answer { 30.)
Also in February 2002, Ocean Atlantic Woodland registered the engineering and landscape plans it

was assigned by Roake and Lannert with the Copyright Office. (Def. Cambridge’s Answer { 30.)

DISCUSSION
In a motion to strike, pursuant to Rule 12(f), “the court may order stricken from any pleading
any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” FED. R.
Civ. P. 12(f). “A movant bears the burden of demonstrating that the challenged allegations are so
4



Inc., 117 F. Supp. 2d 745, 753 (N.D. Ill. 2000), However, while copying is forbidden, an
independent creation resulting in an identical work, is permissible. Ty, Inc., 132 F.3d at 1169. An
inference of copying may be rebutted by evidence of independent creation. Ellis v. Diffie, 177 F.3d
503, 507 (6th Cir. 1999).

Therefore, plaintiff's argues that the affirmative defense of independent creation should be
stricken because; (1) there is an admission by defendants that they looked at the Roake/Lannert plans
and (2) the Pugsley/Cowhey plans closely resemble the Roake/Lannert plans. Defendants do not
deny having access to the Lannert/Roake plans or that substantial similarity exists between the
Pugsley/Cowhey plans to the Lannert/Roake plans. (Def. Cambridge’s Answer { 26A; Def.
Cambridge’s Affirm. Defenses ff 22-35; Defs.’ Joint Resp., at 35.) Instead, defendants argue that
they did their own work and created their own plans based on the characteristics of the land and the
requirements as set by law in the Annexation Agreement.

The Northern District of Illinois and the Court of Appeals for the Seventh Circuit have held
that if an alleged infringer creates the accused work independently or both works were copied from a
common source in the public domain, then there is no infringement. LZ7/Filliung P’shp, 117 F.
Supp. 2d at 752-53; Selle v. Gibb, 741 F.2d 896, 901 (7th Cir. 1984). In Ty, Inc. v. GMA Access.,
Inc. II, the Seventh Circuit reasoned that two items could be strikingly similar, even identical, not
because one is copied from another but because both are copies of the same thing in the public
domain, 132 F.3d at 1170. Defendants have alleged that Cowhey, and Pugsley based their plans on
inherent characteristics of the land and that the land was subject to the Annexation Agreement which
they allege was publicly available. Thus, both the land and the Annexation Agreement are claimed to

be in the public domain. Therefore, the motion to strike Affirmative Defense XII is denied.

20



substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of
the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107.
“[Al]lthough affirmative defenses may be raised in a motion to dismiss, defenses such as the fair use
doctrine involve a more detailed analysis of the facts at issue and are best resolved by summary
judgment motions or adjudication at trial.” Chicago Sch. Reform Bd. of Trs. v. Substance, Inc., 79 F.
Supp. 2d 919, 930-32 (N.D. Ill. 2000) (internal quotation omitted).

This Court finds that it is not impossible for defendants to prove a set of facts in support of
the affirmative defense of fair use that would defeat the complaint. As discussed above, certain
issues remain as to the nature of the copyrighted work that require factual inquiry and discovery, e.g.,
whether the Roake/Lannert plans were in the public domain and to what extent the plans were
dictated by the characteristics of the land and the Annexation Agreement.

Defendants have provided sufficient facts to provide plaintiff notice of this affirmative
defense, and it would be premature to strike this defense at this stage of the litigation. Therefore,

plaintiff's motion to strike Affirmative Defense VII is denied.

G. Affirmative Defense XI: No Expectation of Further Payment

Defendants allege in Affirmative Defense XI that, under copyright law, the authors of the
works in the complaint had been paid in full for the creation of the works which were submitted to
the Village of Plainfield and/or are attached to and part of the Annexation Agreement with the
Village of Plainfield and said authors had and have no expectation of further payment. Plaintiff
argues that this is not an affirmative defense, but the Court disagrees.

The Court finds that defendants’ affirmative defense XI is sufficient to put plaintiff on notice
of defendants’ theory that the authors of the plan, Roake and Lannert, conducted themselves in such a

17



B. Affirmative Defense II: Unclean Hands

Defendants claim as their second affirmative defense that Ocean Atlantic Woodland’s claims
are defeated by the doctrine of unclean hands, Ocean Atlantic Woodland moves to strike this defense
for failure to meet the requirements of Rule 9(b).

The doctrine of unclean hands is a properly designated and frequently raised affirmative
defense, though not enumerated in Rule 8(c). See Long v. Kemper Life Ins. Co., 553 N.E.2d 439,
440-41 (IL App. Ct. 1990); see also Tome Engenharia E Transporrtes, Ltd. v. Malki, No. 94 C 7427,
1996 WL 172286, at *11 (N.D. Ill. Apr. 11, 1996). “Under Illinois law, misconduct on the part of a
plaintiff which will defeat a recovery in a court of equity under the doctrine of ‘unclean hands’ must
have been conduct in connection with the very transaction being considered or complained of, and
must have been misconduct, fraud or bad faith toward the defendant making the contention.” Baal v.
McDonald's Corp., 422 N.E.2d 1166, 1171 (ill. App. Ct. 1981); see also Energetec Sys., Inc. v.
Kayser, No. 84 C 10611, 1986 WL 8058, at *2 (N.D. Il. July 17, 1986) (“The defense of unclean
hands is shown by misconduct by the plaintiff involving the transaction complained of, which
amounts to fraud, misconduct or bad faith toward the defendant making the contention.”).

If fraud is alleged under the doctrine of unclean hands, Rule 9(b) requires that allegations of
fraud include the particular circumstances involved, including the time, place, and specific contents
of the alleged false representations or omissions. FED. R. Civ. P. 9(b). In other words, the party
claiming fraud must place the opposing party on notice of the “who, what, where and when of the
alleged fraud.” Ackerman v. Northwestern Mut. Life. Ins., 172 F.3d 467, 469 (7th Cir. 1999).

Ocean Atlantic Woodland admits that defendants satisfy this standard of “who, what, where
and when” but then contends that the alleged conduct fails to put plaintiff on specific notice of how it
might be characterized as fraudulent in accordance with Fed. R. Civ. P. 9(b). (Ocean Atlantic

9



Comercializacion Agricola v. Cont’l Ill. Nat'l Bank & Trust Co., 576 F. Supp. 985, 989 (N.D. IIL.
1983) (emphasis in original).

Second, affirmative defenses are subject to all the pleading requirements of the Federal Rules
of Civil Procedure. FED. R. Civ. P. 8(c); Renalds v. S.R.G. Rest. Group, 119 F. Supp. 2d 800, 802
(N.D. Ill. 2000). However, even under the liberal notice pleading standard of the Federal Rules of
Civil Procedure, an allegation must include either direct or inferential allegations respecting all
material elernents of the claim asserted. MAN Roland Inc. v. Quantum Color Corp., 57 F. Supp. 2d
576, 578 (N.D. Ill. 1999).

Last, under Rule 12(b)(6), the court must accept all factual allegations as true and draw all
reasonable inferences in favor of the pleader. FED. R. Civ. P. 12(b)(6); Renalds, 119 F, Supp. 2d at
802 (citing Gomez v. Ill. St. Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987)). As a general rule, a
court will strike an affirmative defense only if it is insufficient on the face of the pleadings. Heller

Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989).

A. Affirmative Defenses I, V, VII, IX, and X

Plaintiff has moved to strike Affirmative Defenses I (Adequate Remedy at Law), V (Failure
to State a Claim), VII (innocent Infringement), DX (Lack of Standing), and X (Failure to
Satisfactorily Allege Causation). The Court grants the motion to strike these purported defenses.

First, with regard to Affirmative Defense I, defendants argue that plaintiff has an “adequate
remedy at law” in response to Ocean Atlantic Woodland’s claim for injunctive relief in its complaint.
In considering a preliminary or temporary injunction, the burden of proof is normally on the moving
party to prove they are entitled to injunctive relief as demonstrated by four factors: (1) likelihood of
prevailing on the merits; (2) an inadequate remedy at law; (3) the irreparable harm the nonmovant

6



unrelated to plaintiff's claim as to be devoid of merit, unworthy of consideration and unduly
prejudicial.” Vakharia v. Little Co. of Mary Hosp. & Health Care Ctrs., 2 F. Supp. 2d 1028, 1033
(N.D. Ill. 1998).

Courts in this district, following Bobbitt v. Victorian House, Inc., have traditionally utilized a
three-part inquiry when examining affirmative defenses subject to a motion to strike: (1) whether the
matter is appropriately pleaded as an affirmative defense - only matters that deserve a clear “no”
answer will be stricken to make the pleadings more concise; (2) if it is adequately pleaded under the
requirements of Rules 8 and 9 - if inadequately pleaded, the affirmative defense will be dismissed
without prejudice to enable defendants to correct that technical deficiency; (3) whether the
affirmative defense meets the Rule 12(b)(6) standard - if it is impossible for defendants to prove a set
of facts in support of the affirmative defense that would defeat the complaint, the matter will be
stricken as legally insufficient. 532 F. Supp. 734, 737 (N.D. il. 1982); see H.R.R. Zimmerman Co. v.
Tecumseh Prods. Co., No. 99 C 5437, 2002 WL 31018302, at *2-3 (N.D. Ill. Sep. 9, 2002); Ocean
Ail. Dev. Corp. v. Willow Tree Farm, L.L.C., No. 01 C 5014, 2002 WL 485387, at *2 (N.D. Ill. Mar.
29, 2002).

First, Rule 8(c) lists nineteen named affirmative defenses but the list is not considered
exhaustive and includes a catch-all reference to “any other matter constituting an avoidance or
affirmative defense.” Fed. R. Civ. P. 8(c); see Ocean Atl. Dev. Corp. v. Willow Tree Farm, L.L.C.,
2002 WL 485387, at *2. It is therefore encouraged that pleaders allege affirmatively anything that
could be considered an affirmative defense because of the possibility of waiver. Ocean Atl. Dev.
Corp. v. Willow Tree Farm, 2002 WL 485387, at *2 (citing Bobbitt, 532 F. Supp. at 736). “[TJhe
basic concept of an affirmative defense is an admission of the facts alleged in the complaint, coupled
with the assertion of some other reason defendant is not liable.” Instituto Nacional de

5



way as to consent to the use of the plans without expectation of further payment. In response to this
affirmative defense, plaintiff argues that there can be no transfer of rights in the plans unless there is
an express, written transfer of said rights. However, plaintiff ignores that an exclusive or
nonexclusive license is an affirmative defense to a claim of copyright infringement, which is the
theory upon which Affirmative Defense XI is based. Accordingly, the Court denies plaintiff's

motion to strike Affirmative Defense XI.

H. Cambridge & Pugsley’s Affirmative Defense XII: Precluded by Prior Decision

Defendants Cambridge and Pugsley (but not Cowhey) claim “Precluded by Prior Decision” as
their twelfth affirmative defense - mistakenly referred to as Affirmative Defense XIII in the response
to the motion to strike. (Compare Def. Cambridge’s Affirm. Defenses [] 76-77; Def. Pugsley’s
Affirm. Defenses {J 60-61, with Defs.’ Joint Resp., at 36.) Affirmative Defense XII states that the
claims of Ocean Atlantic Woodland are precluded by Arnhold v. Ocean Atlantic Woodland Corp.,
284 F.3d 693 (7th Cir. 2002), aff’g, 132 F. Supp. 2d 662 (N.D. Ill. 2001). (Defs.’ Joint Resp., at 36.)
However, in their response to plaintiff's Motion to Strike, defendants seem to indicate that they are
relying on issue preclusion as an Affirmative Defense, rather than claim preclusion. (Defs.’ Joint
Resp., at 36.) Plaintiff moves to strike this affirmative defense as immaterial.

Issue preclusion is considered an affirmative defense. Adair v. Sherman, 230 F.3d 890, 894
(7th Cir. 2000). “Issue preclusion bars from relitigating issues of fact or law previously determined
by a valid final judgment in an action between the same parties.” Wsol v. Carr, No. 99 C 6834, 2001
WL 1104641, at *6 (N.D. Il. Sep. 18, 2001). An issue may not be litigated if the following
conditions are met: (1) plaintiff in this action was a party to the prior actions; (2) the issue sought to
be precluded is the same as that involved in the prior action; (3) the issue was actually litigated; (4)

18



infringement is actionable and will not constitute a defense to a finding of liability, though it may
bear upon the remedies available against such a defendant. See generally Columbia Pictures Indus.,
Inc. y. Zakarian, No. 90 C 4057, 1991 WL 938839, at *4 (ND. Ill. May 28, 1991); see also 3
MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT (hereinafter “NIMMER ON
CoPYRIGHT”’) § 13.08 (1983 & Supp. 2002), Therefore, the Court grants plaintiff's motion to strike
Affirmative Defense VI and strikes it with prejudice. However, defendants may raise the issue of
innocent infringement as it pertains to the limitation of damages either at the summary judgment
stage or at trial.

Fourth, with regard to Affirmative Defense IX (Lack of Standing), defendants argue that
Ocean Atlantic Woodland lacks standing to pursue the claims and damages alleged in the complaint.
Plaintiff argues that lack of standing is not an affirmative defense, and the Court agrees. Defendants’
contention that plaintiff lacks standing is merely a denial of plaintiff's jurisdictional allegation in
paragraph 5 of the Verified Complaint. Each defendant in its answer denies the factual averments in
paragraph 5, and that is sufficient to preserve the defense that Ocean Atlantic lacks standing.
According to defendants this is because (1) Roake and Lannert, who eventually transferred its
copyright interests in the plans to Ocean Atlantic, conducted itself in a manner such that neither
Roake and Lannert nor Ocean Atlantic would have standing to sue defendants; and/or (2) somehow
the contract to transfer the copyright interests was defective. Therefore, the Court strikes with
prejudice Affirmative Defense IX.

In sum, the Court grants plaintiff's motion to strike Affirmative Defenses I, V, VI, [X, and

X. These affirmative defenses are stricken with prejudice.



© fete Onder For (0687)

yo United States District Court, Northern District of Illinois
rameetasionticen | Ronald A. Guzman | Se ue woe
CASE NUMBER 02 C 2523 DATE 3/28/2003
CASE OCEAN ATLANTIC WOODLAND CORPORATION vs. DRH CAMBRIDGE
TITLE HOMES, INC., et al
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature.
MOTION: of the motion being presented.
DOCKET ENTRY:
(t) oO Filed motion of [ use listing in “Motion” box above.]
(2) oa Brief in support of motion due
(3) im Answer brief to motion due____. Reply to answer briefdue__.
(4) oO Ruling/Hearing on setfor___—at
(5) Oo Status hearing[held/continued to] [set for/re-set for] on setfor____at
(O) Oo Pretrial conference[held/continued to] [set for/re-set for]on__——ssetfor_—— at.
(oO) Oo Trial[set for/re-set for] on__at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to___at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OlLocal Rule 41.1 OFRCP41(a)(1) OO FRCP41(a\(2).
ao 4 (Other docket entry] | This Court grants in part and denies in part Plaintiff's motion to strike

Defendants’ affirmative defenses [26-1]. ENTER MEMORANDUM OPINION AND ORDER.

(il) @ [For further detail see order attached to the original minute order.]

'No notices required, advised in open cour.
No notices requited. sorter of votes
Notices mailed by judge's staf. .

Notified counsel by telephone. MAR 3 1 | 2003

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Mail AO 450 form. unos sors 0 BSS ey
Copy to judge/magistrate judge. uy

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pleaded which show the representation to be false but rather clearly the identity, time, place, content,
and method of the misrepresentation. Id. at 792-93 (citations omitted).

Plaintiff already acknowledges that it is on notice of the “who, what, where, and when” of the
alleged conduct, and this Court finds that plaintiff has been provided sufficient notice of how this
conduct constitutes fraud such that the affirmative defense satisfies Rule 9(b). Further, the doctrine
of unclean hands includes the standards of “misconduct” and “bad faith” as well as fraud, and
defendants’ factual allegations are clearly sufficient to state a claim of unclean hands under those

theories as well. See, e.g., Zic v. Italian Gov't Travel Office, 130 F. Supp. 2d 991, 999 n.8 (N.D. Il.
2001) (unclean hands is an equitable affirmative defense that need not be plead with particularity
unless fraud is alleged invoking Rule 9(b)). It is clear from the allegations supporting defendants’
affirmative defense that defendants rely on a copyright misuse defense, which is inextricably
intertwined with their unclean hands defense. Therefore, the Court denies plaintiff’ 's motion to strike

Affirmative Defense Hf (Unclean Hands).

C. Affirmative Defense III: Divestive Publication

Defendants’ third affirmative defense states that Ocean Atlantic Woodland’s claims are
defeated by the divestive publication of the plans which are the subject of this lawsuit. Plaintiff has
responded that 1) divestive publication is no longer an affirmative defense to copyright infringement
and 2) publication through placement in public files is not divestive publication.

The term “divestive publication” is primarily associated with works published prior to
January 1, 1978 - the date at which the common law copyright as to most works terminated due to
federal preemption. 1 NIMMER ON COPYRIGHT §§ 4.01[A]-[B] (discussing the nature of publication
prior and after January 1, 1978); see, e.g., Roy Export Co. Establishment of Vaduz, Liechtenstein v.

11



Woodland’s Reply Supp. Mot. Strike Affirmative Defenses, at 5.) In support of their claim of
“unclean hands,” defendants have alleged that: (1) Ocean Atlantic Woodland’s obtaining of the
copyright of the plans in February 2002 was a late “hedge” - impliedly a preparation to get around -
the District Court and Seventh Circuit’s rulings in Arnhold v. Ocean Atl. Woodland Corp., 132 F.
Supp. 2d 662 (N.D, Ill. 2001), aff'd, 284 F.3d 693 (7th Cir. 2002), which stated that Ocean Atlantic
Woodland had forfeited all rights to the Byzantio/Arnhold property; (2) Ocean Atlantic Woodland
did not pay anything for the February 2002 assignment; and (3) the Protected Plans are not original,
distinctive works but were derived from work done in 1994 and 1995 by Roake and Lannert for a
third party so that late purchase of these plans in February 2002 was for the purpose of creating and
filing this lawsuit as harassment after other previous failed litigation attempts. (Defs.’ Joint Resp.
Pl.’s Mot. Strike Affirmative Defenses, at 17-18 (“Defs.’ Joint Resp.”); see also Def. Cambridge’s
Affirm. Defs. ff 1-53.)

Defendants’ factual allegations have sufficiently put plaintiff on notice of the affirmative
defense of unclean hands and defendants have pleaded sufficient facts to satisfy the Rule 9(b)
standard of pleading with particularity for the claim of fraud, Whether the facts alleged by
defendants constitute fraudulent conduct remains to be seen, and it seems premature to strike this
defense at this stage in the litigation.’ See, e.g., Wausau Ins. Co. v. Woods Equip. Co., No. 01 C

8009, 2002 WL 398542, at *2 (N.D. Ill. Mar. 14, 2002), Rule 9(b) does not require that facts be

3 “Under Illinois law, the elements of common law fraud are: (1) a false statement of
material fact; (2) the party making the statement knew or believed it to be untrue; (3) the party to
whom the statement was made had a right to rely on the statement; (4) the party to whom the
statement was made did rely on the statement; (5) the statement was made for the purpose of
inducing the other party to act; and (6) the reliance by the person to whom the statement was
made led to that person's injury.” Cumis Ins. Soc’y v. Peters, 983 F. Supp. 787, 791-92 (N.D. Il.
1997).

10



will suffer if preliminary relief is granted, balanced against the irreparable harm to the movant if
relief is denied; and (4) the injunction is not inconsistent with the public interest. Erickson v. Trinity
Theatre, Inc., 13 F.3d 1061, 1067 (7th Cir. 1994).

The burden of proof is on plaintiff Ocean Atlantic Woodland to prove that no adequate
remedy at law exists in seeking injunctive relief. Accordingly, the argument that Ocean Atlantic
Woodland has an adequate remedy at law is merely a denial of one of the elements plaintiff is
required to prove. See, e.g., Household Fin. Servs., Inc. v. Northeastern Mortgage Inv. Co., No. 00 C
667, 2000 WL 816795, at *1 (N.D. Ill. June 22, 2000) (stating adequate remedy of law is not an
affirmative defense because it is an assertion that the party cannot establish a prima facie case, not a
negation or avoidance of a cause of action.) The Court holds that the purported defense of “adequate
remedy at law” is not an affirmative defense, and thus the Court strikes Affirmative Defense I with
prejudice,

Second, with regard to Affirmative Defenses V (Failure to State a Claim Under the Illinois
Consumer Fraud Act) and X (Failure to Satisfactorily Allege Causation), the Court holds that the
allegations supporting these claims are merely bare bones legal conclusions, and they are therefore
stricken with prejudice. If defendants truly want to challenge whether the complaint states a claim
under the Illinois Consumer Fraud Act or whether the complaint sufficiently alleges causation, they
may do so by filing a Rule 12(b)(6) motion.

Third, defendants raise as Affirmative Defense VII the theory that Ocean Atlantic
Woodland’s claims are defeated by way of innocent infringement under the Copyright Act.
Defendants incorrectly state that innocent infringement is an affirmative defense under 17 U.S.C. §
504(c), a section that instead refers to innocent infringement as a mitigating factor with regard to
damages for infringement. See 17 U.S.C. § 504(c). It is well-accepted law that innocent

7



J. Plaintiff’s Motion to Strike Sections of Cambridge’s Pleadings

Lastly, Ocean Atlantic Woodland asks the Court to strike the factual allegations in the
paragraphs preceding defendants’ affirmative defenses because the statements contain misleading
and improper accusations and legal conclusions relating to matters irrelevant to the plans at issue in
this case. (Pl.’s Mem. Supp. Mot. Strike, at 35-36; see, e.g., Def. Cambridge’s Affirm. Defenses Bh
1-16.) Ocean Atlantic Woodland claims that these allegations are immaterial, impertinent, and/or
scandalous. (Pl.’s Mem. Supp. Mot. Strike, at 35.) Plaintiff also argues that they are an attempt to
mislead the Court from the weakness of the defense and that these allegations improperly refer to
prior and completely different litigation. Id.

Contrary to plaintiff's belief otherwise, the Court is not so easily mislead and is capable of
separating the wheat from the chaff. None of the allegations in paragraphs 1-16 meet the standards

provided under Rule 12(f), and thus, the motion to strike these paragraphs is denied with prejudice.

CONCLUSION
For the foregoing reasons, this Court grants in part and denies in part Plaintiffs Motion to
Strike Defendants’ Affirmative Defenses [doc. no. 26-1]. The Court grants the motion as to Affirm.
Defenses I, V, VI, IX, and X and strikes them with prejudice and grants the motion as to Cambridge
~. and Pugsley’s Affirm. Defense XI and strikes it without prejudice. The Court denies the motion as.
to Affirm. Defenses Ui, W, IV, VI, VI, XI, Cambridge and Pugsley’s Affirm. Defense XII (i.e,
Cowhey’s Affirm. Defense XII), and paragraphs 1-16 of defendants’ affirmative defense pleadings.
SO ORDERED ENTERED: 3/23/ 03

United States Judge

21



Exhibit B-1. (/d.)

In November 1999, Amhold and Byzantio filed a lawsuit against Ocean Atlantic Woodland
secking to terminate its contract to sell the Byzantio/Amhold Property to Ocean Atlantic Woodland.
(Def. Cambridge’s Answer { 20.) On October 26, 2000, the parties entered into a settlement
agreement to proceed with the purchase and sale of the Byzantio/Amhold Property by January 25,
2001 (“Settlement Agreement”). (Id. 21.) However, Ocean Atlantic Woodland disastrously did not
close by January 25, 2001 and thus failed to follow the terms of the Settlement Agreement. (/d.)

Ambhold and Byzantio consequently terminated the contract. (/d. 4 22.) In response, Ocean Atlantic
moved on February 5, 2001 to enforce the Settlement Agreement. (/d.) On February 28, 2001, the
United States District Court for the Northern District of Hlinois denied Ocean Atlantic Woodland’s
motion and ruled that the corporation had breached the Settlement Agreement and thus the
Agreement was terminated and, on March 21, 2002, the Seventh Circuit affirmed the district court
ruling.” (Id. J] 23-24.) Pursuant to these rulings, Ocean Atlantic Woodland lost any and all rights to
purchase the Byzantio/Arnhold Property. (id. at §{] 6-7.) See Arnhold v. Ocean Atl. Woodland Corp.,

132 F. Supp. 2d 662, 674 (N.D. Dl. 2001), aff'd, 284 F.3d 693, 710 (7th Cir. 2002).

Cambridge’s Purchase and Proposed Development of the Byzantio/Arnhold Property
On December 29, 2000, Ocean Atlantic Woodland had entered into a contract with
Cambridge, a California developer, for the sale of a portion of the Byzantio/Amhold Property

contingent on Ocean Atlantic Woodland’s acquisition of the property. (Def. Cambridge’s Answer |

*See Arnhold v. Ocean Atl. Woodland Corp., 132 F. Supp. 2d 662 (N.D. Ill. 2001)
(“‘Arnhold I”), aff"d, 284 F.3d 693 (7th Cir. 2002) (“Arnhold IP’).



Tl. 1999), the court struck down the defense of laches as having been inadequately pleaded because
nothing in the complaint or answer indicated that plaintiffs were dilatory in bringing the action. In
contrast to Fleet Business, however, this Court finds that defendants clearly indicate what actions of
plaintiff they consider dilatory. Defendants allege the late acquirement of the copyright of the
Roake/Lannert Plans in February 2002, seven months after Cambridge closed on the
Amhold/Byzantio property, and the filing of the suit in April 2002 as detrimental to Cambridge in the
time line of its development project. (Def. Cambridge’s Affirm. Defenses {{ 17-19; Defs.’ Joint
Resp., at 23.) Thus, the motion to strike defendants’ fourth affirmative defense of laches is denied.
2. Estoppel

Estoppel is an affirmative defense under Rule 8(c). To plead estoppel, defendants must show
“that the copyright owner was aware of the infringing conduct and yet acted in a way that induced the
infringer to reasonably rely upon such action to his detriment.” Ty, Inc., 1998 WL 698922, at *32-
33; Codest Eng’g v. Hyatt Int'l Corp., 954 F. Supp. 1224, 1231 (N.D. Ill. 1996). Estoppel does not
have to be explicitly pleaded but may be reasonably inferred. Codest Eng'g v. Hyatt Int'l Cap., 954
F. Supp. 1224, 1231 (N.D. Il. 1996).

This Court finds that sufficient facts have been pleaded to give adequate notice to plaintiff as
to this affirmative defense. A court will strike an affirmative defense as legally insufficient only if it
is impossible for the defendant to prove a set of facts in support of the affirmative defense that would
defeat the complaint. Van Schouwen v. Connaught Corp., 782 F. Supp. 1240, 1245 (N.D. Ill. 1991).
Defendants have alleged that it relied on the placement of the Roake/Lannert plans in the Annexation
Agreement, which was allegedly enacted into law and made part of the public domain, when it
created its own Cowhey/Pugsley Plans. (Def. Cambridge’s Affirm. Defenses {J 20-37.) This
allegation is sufficient to give plaintiff notice of defendants’ affirmative defense of estoppel.

14



exclude the expression from the Copyright Act. See, e.g., Veeck v. S. Bldg. Code Cong. Int'l, 293
F.3d 791, 800-01 (Sth Cir. 2002). Giving copyright protection to the expression in those situations
“would confer a monopoly over the idea itself, in contravention of the statutory command.” Tensor
Group, 1998 WL 887081, at *3 (quoting Nimmer, Nimmer on Copyright § 13.03[B][3}). The
allegedly infringing party bears the burden of proof on issues relating to merger, as the merger
doctrine is an affirmative defense to infringement. Jd.

Defendants have pleaded that the alleged similarities between plaintiff and defendants’ plans
are the result of the Annexation Agreement and/or characteristics of the land that dictate engineering.
(Defs.’ Joint Resp., at 30.) Questions whether the engineering plans were strictly dictated by
characteristics of the land and/or by law may only be answered by further factual inquiry.

Accordingly, it would be premature to strike Affirmative Defense VI at this time.

F. Affirmative Defense VIII: Fair Use

Defendants claim as their eighth affirmative defense that their alleged use of the works in the
complaint constituted fair use, particularly in that such use was mandated by law and contract, i.e.,
the Annexation Agreement. Plaintiff responds that defendants cannot plead any facts that will
support this defense.

Fair use is a well-established affirmative defense of copyright law. 17 U.S.C. § 107. See
Midway Mfg. Co. v. Pub’ns Int'l, Ltd., No. 94 C 1005, 1994 WL 188531, at *2 (N.D. Ill. May 12,
1998). 17 U.S.C. § 107 provides a four factor test for fair use: “In determining whether the use
made of a work in any particular case is a fair use the factors to be considered shall include-- (1) the
purpose and character of the use, including whether such use is of a commercial nature or is for

nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and

16



BACKGR«\ !

Ocean Atlantic Woodland’s Development History of the Byzantio/Arnhold Property

On August 6, 1997, Ocean Atlantic Woodland, a Virginia real estate developer, entered into a
contract of purchase and sale for two adjoining farms (the “Byzantio/Amhold Property” or the
“Property”) respectively owned by Byzantio, L.L.C. (“Byzantio”) and Elda Amhold (“Amhold”)
located in unincorporated Will County, Illinois. (Def. DRH Cambridge Homes’ Verified Answer J
8A (“Def. Cambridge’s Answer”).) The Byzantio/Amhold Property was to be developed into a
residential subdivision incorporated into the neighboring Village of Plainfield (the “Village”). (Id.)

To assist in its development efforts, Ocean Atlantic Woodland retained the engineering firm
of Roake & Associates (“Roake”) (who had previously been preparing a plan for the
Byzantio/Amhold Property for another developer) and the Lannert Group (“Lannert”) to create a
preliminary plat, preliminary engineering and landscape plans, and some additional plans to be used
in the rezoning and annexation of the Byzantio/Arnhold Property (collectively, the “Roake/Lannert
plans”). (Def. Cambridge's Answer {J 11-13.) In November 1997, Ocean Atlantic Woodland began
submitting development proposals (which included preliminary versions of the Roake/Lannert plans)
to the Village for its review and suggested revisions. (Def. Cambridge’s Answer { 14.) On August
17, 1998, the Village executed an agreement to annex the Byzantio/Amhold Property to the Village
for the purpose of developing that property (the “Annexation Agreement”). (Id. | 16.) A preliminary

plat was attached to the Annexation Agreement as Exhibit B and a landscape plan was attached as

‘Though defendants each filed a separate Answer and Affirmative Defenses, all three
defendants filed a joint response to plaintiffs motion to strike the affirmative defenses and the
issues and facts in the joint response were essentially the same and taken from Defendant
Cambridge’s Answer and Affirmative Defenses. Therefore, the Court will use Cambridge’s
Answer and Affirmative Defenses for the factual background.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
OCEAN ATLANTIC WOODLAND
CORPORATION, a Virginia Corporation,
Plaintiff,
v. Judge Ronald A. Guzman

DRH CAMBRIDGE HOMES, INC.

a California Company, COWHEY,
GUDMUNDSON, LEDER, LTD.,

an Illinois Corporation, and PUGSLEY &
LAHAIE, LTD., an Illinois Corporation,

02 2523 DOCKETED

MAR 3 1 2003

Defendants.

ed

IEMORAND’ OPINIO) [1D ORDE:

Plaintiff, Ocean Atlantic Woodland Corp. (“Ocean Atlantic Woodland”) brought this action
against defendants DRH Cambridge Homes, Inc. (“Cambridge”), Cowhey, Gudmundson, Leder, Ltd.
(“Cowhey”), and Pugsley & LaHaie, Ltd. (“Pugsley”) for copyright infringement arising under the
Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., for unfair competition and deceptive trade practices
under the Illinois Uniform Deceptive Trade Practices Act, 815 ILL. Comp. STAT. 510/1 et seq., and
the Consumer Fraud and Deceptive Business Practices Act, 815 ILL. Comp. STAT. 505/1 et seq., for
false designation of origin under 15 U.S.C. § 1125(a), and for conversion and unjust enrichment.
Defendants Cambridge and Pugsley have raised Affirmative Defenses I-XII, defendant Cowhey has
raised Affirmative Defenses I-XII, and before the Court is Ocean Atlantic Woodland’s motion to
strike the affirmative defenses raised by defendants pursuant to Federal Rute of Civil Procedure
(“Rule”) 12(f). For the reasons provided in this Memorandum Opinion and Order, the motion is

granted in part and denied in part.

3



Columbia Broad. Sys., Inc., 672 F.2d 1095, 1101 (2d Cir. 1982). Prior to January 1, 1978, publishing
without appropriate copyright notice could divest the copyright owner of his/her rights and thrust the
work into the public domain.* See 2 NIMMER ON COPYRIGHT § 7.02; see generally Roy Export Co.,
672 F.2d at 1101-02. Under the current Copyright Act, however, copyright rights are no longer
divested by publication and the notice requirement was made optional under the Berne Convention
Implementation Act of 1988 (Pub. L. No. 100-568 (1988)) (stating lack of notice no longer consigns
a work to the public domain). 1 NIMMER ON COPYRIGHT § 4.13[A]; 2 id. § 7.02[C][3}.

Because the plans at issue in this case were created in the late 1990s, publication without
appropriate copyright notice may not divest the owner of the copyright of its rights in the plans.
However, the issue remains whether the plans were part of the public domain, for example, because
the plans were legislatively adopted. See, e.g., Veeck v. S. Bldg. Code Cong. Int'l, Inc., 293 F.3d
791, 793 (Sth Cir. 2002) (en banc). But see John G. Danielson, Inc. vy. Winchester-Conant Props.,
Inc., 186 F. Supp. 2d 1, 14-18 (D. Mass. 2002) (stating submission of proposed site plans to town
under particular facts before the court did not put them in public domain), aff'd in part, vacated in
part on other grounds, Nos. 02-1452, 02-1533, 2003 WL 834565 (1st Cir. Mar. 6, 2003).

Taking all the allegations in defendants’ affirmative defenses as true, as we must on a motion

to strike, defendants allege that the Village of Plainfield adopted into law the Annexation Agreement

‘Discussing works created under the 1909 Copyright Act, the Roy Export Co. court
stated: “Frequently, when courts speak of ‘publication’ they mean a distribution or other
occurrence that has the consequence of leaving an author with no copyright protection: the
publication divests him of his common-law copyright, and he secures no statutory protection
because he has not affixed a statutory notice in his name.... When such a ‘divestive’ publication
occurs, the author’s work enters the public domain.” Roy Export Co. Establishment of Vaduz,
Liechtenstein v. Columbia Broad. Sys., Inc., 672 F.2d 1095, 1101 (2d Cir. 1982); see, e.g., Bell v.
Combined Registry Co., 536 F.2d 164, 168 (7th Cir. 1976); Conner v. Mark I, Inc., 509 F. Supp.
1179, 1180-81 (N.D. Ill. 1981).

12



Accordingly, the motion to strike defendants’ affirmative defense of estoppel is denied.
3. Waiver

Waiver is an affirmative defense under Rule 8(c). For waiver to be asserted, defendants must
claim Ocean Atlantic Woodland made a “voluntary, intentional relinquishment of a known right.”
Int'l Ins. Co. v. Peabody Int'l Corp., No. 87 C 464, 1991 WL 23630, at *3 (N.D. Il. Jan. 23, 1991).
Cambridge has alleged that Ocean Atlantic Woodland was aware that the plans it submitted to the
Village of Plainfield were incorporated into the Annexation Agreement and enacted into law. (Def.
Cambridge’s Affirm. Defenses 4 22-35.) While plaintiff may dispute this, it is possible to infer that
there a voluntary or intentional relinquishment, if the facts are properly looked at in favor of the
pleader. See generally Household Fin. Servs., Inc. v. Northeastern Mortgage Inv. Co., No. 00 C 667,
2000 WL 816795 (N.D. Ill. June 22, 2000); Fleet Business Credit Corp., 191 F.R.D. at 570; Renalds
v. S.R.G. Rest. Group, 119 F. Supp. 2d 800, 802 (N.D. Ill. 2000). Plaintiff has therefore been
provided sufficient notice as to this affirmative defense. The motion to strike the affirmative defense

of waiver is denied.

E. Affirmative Defense VI: Merger

As a sixth affirmative defense, defendants allege that Ocean Atlantic Woodland’s claims are
defeated under the doctrine of merger under the copyright law. Plaintiff argues that this fails to meet
the pleading requirements of Rule 8.

“Copyright law only protects expressions, not ideas.” Tensor Group, Inc. v. Global Web Sys.,
Inc., No. 96 C 4606, 1998 WL 887081, at *3 (N.D. Ill. Dec. 11, 1998). However, there are situations
in which a “given idea is inseparably tied to a particular expression.” Jd. at *2. If an idea is
susceptible to only one form of expression, the merger doctrine applies and 17 U.S.C. § 102(b) would

15