After R. Wayne Galloway began construction of his retirement home on Lake Wylie, near Charlotte, North Carolina, using architectural plans designed and copyrighted by Christopher Phelps & Associates, LLC ("Phelps & Associates"), without permission, Phelps & Associates commenced this action against Galloway for copyright infringement. Phelps & Associates sought damages, disgorgement of profits, and injunctive relief. A jury found that Galloway infringed Phelps & Associates’ copyright and awarded it $20,000 in damages, the fee that Phelps & Associates traditionally charged for such plans. The jury also found that Galloway had realized no profits to disgorge. The district court thereafter declined to enter an injunction, finding that the jury verdict had made Phelps & Associates "whole," and entered judgment in favor of Phelps & Associates for $20,000. From that judgment, Phelps & Associates appeals, requesting a new trial on damages and the entry of an injunction prohibiting the future lease or sale of the infringing house and mandating the destruction or return of the infringing plans.
We agree with Phelps & Associates that the district court erred
during the damages phase of trial in instructing the jury that Phelps
& Associates’ copyright was a derivative work. As we explain herein,
Phelps
& Associates held a copyright in the entire work manifested in
Galloway’s house. We conclude, however, that the error was harmless. We
also reject Phelps & Associates’ challenges to evidentiary rulings.
Accordingly, we affirm the judgment incorporating the jury’s verdict.
We agree with Galloway’s contention that the court in the circumstances presented here may not issue a permanent injunction, as requested by Phelps & Associates, prohibiting Galloway from ever leasing or selling the house. Not only would such an injunction unduly restrain the alienation of real property, it would violate the "first sale doctrine" in 17 U.S.C. § 109(a), which we hold authorizes Galloway to sell or otherwise dispose of the house as a copy for which the remedies in a copyright action have been paid. Other injunctive relief, however, might be available in applying the general principles of equity, as required by eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006), which was decided after the district court’s order denying relief in this case. Accordingly, we vacate portions of the district court’s order denying injunctive relief and remand for the limited purpose of reconsidering other equitable relief, such as an order requiring Galloway to destroy the infringing plans or return them to Phelps & Associates.
