On Thursday, October 12, 2023, the Fifth Circuit Court of Appeals denied rehearing en banc in Loeb v. Mako, L.L.C. d/b/a Padua Realty Company, setting critical precedent as to licensing, contracts, and copyright law. This victory for Jackson Walker clients not only addressed important legal principles, but it also ended a long journey defending against claims seeking billions of dollars in a relatively new area of copyright litigation.
The case was brought by an architect and her firm, Loeb Architects, L.L.C., against Padua Realty Company, a real estate development business, in connection with the development of a senior living facility. Jackson Walker defended the subsequent owners and operator of the senior living facility. The plaintiff sued for breach of contract, copyright infringement, and violations of the Digital Millennium Copyright Act (DMCA). Although the architect was hired only for two phases of a seven-phase project—and was paid for that work in exchange for a license to use her work on the project for which it was made—she claimed that she had an ongoing copyright interest in her work. She argued that the ultimate creation of the very project that was anticipated violated her copyright interest and misused her work, entitling her to huge sums of money.
Antonio Padua, who owns and operates Padua Realty, and his brother, Alejandro Padua, hired Appellate Practice Chair and Houston partner Jennifer Caughey to represent the companies Padua Realty agreed to indemnify in this high-stakes, precedent-setting lawsuit. Jennifer brought in copyright expert and fellow partner Robert P. Latham. Bob and Jennifer worked closely together, with Bob leading the trial court effort, and Jennifer leading the appellate court effort.
They were successful at all turns. First, after extensive discovery, Judge George Hanks of the United States District Court for the Southern District of Texas (Houston), granted summary judgment in favor of our clients. Then, the team won at the Fifth Circuit Court of Appeals, securing a unanimous opinion in their favor. That opinion 1) set precedent that contracts terms and licenses will be interpreted as written, and 2) rejected arguments that, contrary to the contract terms, precedent, and common sense, any project that involves another’s work can never be effectuated, sold, or built using the help of anyone other than the direct licensee. The Plaintiffs sought en banc review, and after reviewing the response of Padua Realty and its co-defendants, the en banc court quickly denied the Plaintiff’s effort.
Jennifer reported: “The Paduas and their indemnities did everything right here, and I’m thrilled to see them vindicated. They had a contractual license to do exactly what they were alleged to have done. They paid thousands of dollars to the plaintiff as consideration—not for drawings to go as art on the wall (or in the trash), but instead for the license to use them for the very project at issue. Contracts should be interpreted as they are written—and this result was an important one for the rule of law. Moreover, someone hired for a limited part of an extensive project should not be able to hold the project hostage, saying essentially that the person has to be hired for the rest (despite a clear contractual statement to the contrary) or that the money paid was basically for nothing. The consequences of an alternative ruling here would have been dire: Plaintiff’s position would have prevented anyone who buys from an architect to sell the property at a later date. We were proud to represent our clients here, and we are thrilled with this excellent result.”
“The Paduas and their indemnities did everything right here, and I’m thrilled to see them vindicated.”
“The Court’s decision is noteworthy for its finding of a valid license and its treatment of claims under the DMCA,” Bob said. “A ruling adverse to our clients in this case would have had a troubling effect on the industry, and so I am pleased that the District Court and the Court of Appeals applied both common contract construction and common sense in their respective rulings.”
The Jackson Walker team included Jennifer Caughey, Bob Latham, Justin V. Lee, and Maggie I. Burreson. Bob served as lead in the trial court, and Jennifer was the lead in the appellate court. Jackson Walker represented five parties in the dispute: Propero Seniors Housing Equity Fund LLC, Propero Conroe LLC, CPF Living Communities II – Woodhaven LLC, CPF Living Communities II Acquisitions, LLC, and Grace Management, Inc.
The case is Loeb-Defever v. Mako, No. 22-20362, in the Fifth Circuit Court of Appeals, on appeal from the U.S. District Court for the Southern District of Texas. For more information about the case, view the Law360 article “5th Circ. Backs Realty Co.’s IP Win Over Senior Living Project.”
Meet Our Team
Jennifer Caughey is a former Justice on Texas’s First Court of Appeals and the current chair of Jackson Walker’s appellate section. Justice Caughey leverages her diverse experience on both sides of the bench to litigate complex appeals. She has particular expertise in issues involving statutory and contractual interpretation, constitutional law, healthcare, insurance, energy, administrative law, and professional liability. Jennifer’s appellate practice has been recognized by Chambers USA: America’s Leading Lawyers for Business in the area of Litigation: Appellate – Texas, Lawdragon 500 Leading Litigators in America, Best Lawyers, and among Thomson Reuters’ Super Lawyers in the area of Appellate Law.
Robert P. Latham has developed nationally recognized experience in the areas of commercial litigation, intellectual property, and media law. He has been recognized among The Best Lawyers in America in the areas of Litigation – Intellectual Property, Commercial Litigation, and Litigation – First Amendment, among other categories. He is a member of the American Board of Trial Advocates.
Justin V. Lee represents a wide range of clients in partnership disputes, breach of contract claims, violations of federal and state regulations, product liability claims, and personal injury and wrongful death claims. He has been recognized among Best Lawyers: Ones to Watch since 2021 and as a Texas Rising Star by Thomson Reuters’ Super Lawyers in 2022.
Maggie I. Burreson focuses on handling media and entertainment disputes for journalists, news outlets, and other media organizations. She has helped author numerous amicus briefs in media and First Amendment matters in the Fifth Circuit. She also represents businesses in a variety of nonmedia matters, with a particular emphasis on class actions and appeals. In 2023, she was recognized as a “Texas Rising Star” by Thomson Reuters’ Super Lawyers.
About Our Trial & Appellate Experience
Jackson Walker’s trial group is one of the largest in the Southwest, comprising about 30% of the firm’s approximately 500 attorneys. A formidable opponent in the courtroom, our diverse experience covers a broad range of industry sectors and specialty practice areas, and takes us into courthouses across the state and nearly every Texas county. Our trial practice also spans the U.S., as we have litigated cases in all 50 states.
The Appellate team brings decades of appellate practice experience, gained in state and federal courts nationwide, to every client matter we work on. Working closely with trial counsel, our Appellate team provides strategic legal analysis and issue identification in order to craft and preserve the most persuasive legal arguments at every stage of litigation. Our Appellate team currently has or recently successfully handled complex, high-stakes, and varied appeals pending in the U.S. Courts of Appeals for the Fifth, Seventh, Eighth, Ninth, and Tenth Circuits, and in the U.S. Supreme Court.
To explore the firm’s experience representing clients in copyright litigation and real estate-related disputes, visit the Trial & Appellate Litigation practice page.