Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Nos. 12-2102, 12-2432

Decided: July 17, 2013

American Home Realty Network (“AHRN”) and Metropolitan Regional Information Systems, Inc. (“MRIS”) both operate an online multiple listing service (“MLS”). MRIS brought suit against AHRN, arguing that AHRN’s unauthorized use of photographs on its MLS constituted infringement under the Copyright Act. The district court entered an injunction prohibiting AHRN from displaying MRIS’s photographs on its website. AHRN appealed the injunction, but the Fourth Circuit affirmed the district court.

MRIS operates an online MLS where it compiles property listings into a database for real estate brokers and agent subscribers. By paying an online subscription fee and assenting to terms of use, subscribers may upload their real estate listings to the MRIS database. If the listing contains photographs, subscribers must agree to irrevocably assign to MRIS the copyrights in each photograph by clicking a button to agree. In exchange, subscribers have access to all of the listings in the database and have a nonexclusive license to display those listing on their own brokerage or agency websites. MRIS affixes its mark and copyright notice to all photographs in the database. MRIS registers its copyrights to the photographs in quarterly registrations of the database as a compilation. AHRN, on the other hand, is a California real estate broker that operates a national real estate search engine. In the operation of its site, AHRN displayed listings containing copyrighted photographs from the MRIS database. The district court enjoined AHRN’s use of MRIS photographs only, and not the use of any textual elements that are considered part of the compilation. AHRN appealed the injunction.

On appeal, AHRN that the district court erred in granting a preliminary injunction for two reasons: (1) MRIS failed to properly register copyrights on the individual photographs when registering its database; and (2) MRIS does not possess a copyright interest in the photographs because MRIS’s electronic terms of use failed to adequately transfer the copyrights of the photograph from the subscribers to MRIS. The Fourth Circuit disagreed with AHRN’s first argument, finding that the registration of the database as a whole was sufficient to register the photographs contained in the compilation. The Fourth Circuit stated that courts have disagreed as to whether the failure to include the individual authors of the photographs in the copyright registration when the photographs are part of a collective work defeats copyright protection. The Fourth Circuit ultimately sided with those courts holding that the registration of a collective work is sufficient to permit an infringement action on behalf of the component works “as long as the registrant owns the rights to the component as well.” The court found that it would be “absurd and inefficient” to require the registrant of a collective work to list each author for “an extremely large number of component works.” Furthermore, the Copyright Act’s specific goal is to ease the burden on group registration.

Next, AHRN argued that MRIS failed to establish ownership in a valid copyright because the terms of use that a subscriber must assent to by clicking does not operate as a valid assignment of rights under the Copyright Act. The Fourth Circuit agreed with MRIS, however, finding that the E-Sign Act, which affirms the validity of electronic agreements, makes the click-through agreement a valid assignment, notwithstanding its electronic form. As a preliminary matter, the court noted that where, as in the present situation, the copyright author and the assignee have no dispute as to the validity of the assignment, courts typically do not allow a third party infringer to object to the validity of the assignment under the copyright act. More importantly, the court held that, under the E-Sign Act, “clicking yes” to terms of use that assign the copyrights to MRIS satisfies the assignment requirements under the Copyright Act. Although the E-Sign Act has several narrow limitations, none apply in the present case. Therefore, the court held that electronic agreements to assign copyrights are valid, and thus, MRIS is likely to succeed in establishing its ownership of copyright interests in the copied photographs.

Full Opinion

– Wesley B. Lambert

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