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Metropolitan Regional Information Systems v. American Home Realty Network

By Barry Werbin

Metropolitan Regional Information Systems v. American Home Realty Network (4th Cir. July 17, 2013) is an interesting and important decision involving compilation registrations and copyright protections in databases, here consisting of real estate multiple listing service (MLS) data and related photos. The case also addresses the novel but important question of the enforceability of online electronic transfers of copyright ownership interests under E-Sign.

Metropolitan Regional Information Systems (MRIS) offers an online fee-based MLS to real estate brokers and agents. Defendant American Home Realty Network (AHRN) "circumvents those brokers and agents by taking listing data from online database compilers like MRIS and making it directly available to consumers on its 'real estate referral' website." Brokers/agents subscribing to the MRIS service assign to MRIS their copyrights in photos submitted along with the listing data. MRIS also registers is databases with the Copyright Office under regulations covering automated computer databases, which include the photos, text and the collection and compilation of the MLS listings.

The District Court, which is affirmed by the 4th Cir., issued a preliminary injunction against AHRN based on copyright infringement but limited it pending the appeal to enjoining only AHRN's use of the MRIS photos, not the compilation itself or any textual elements. On appeal, the Fourth Circuit initially rejected AHRN's blanket argument that there was no copyright protection in the MLS database as a whole because of a lack of originality as a compilation, citing the Supreme Court's 1991 decision in Feist; however the Court did not rule on that issue in the context of the MRIS database because the scope of the preliminary injunction was limited to the photos.

AHRN made two arguments against the preliminary injunction: (1) when MRIS registered the database it failed to properly register its copyright in the individual photos; and (2) MRIS did not possess copyright interests in the photos because the subscribers' electronic acceptance of MRIS's terms of use failed to transfer those rights. The Court characterized these arguments as presenting "novel questions," but ruled in favor of MRIS.

The Court discusses the copyrightability of "compilations," noting that the "protection afforded to a compilation is independent of any protection that might be afforded to its individual components." However, "compilations made up of individual components which are themselves copyrightable are called 'collective works.'" Section 201(c) of the Copyright Act also provides "a default presumption that the author of a collective work does not own the copyright in any component part" in the absence of an express transfer of copyright.

With respect to the first question on scope of protection arising from the registration of the compilation, the Court held that Section 409, which provides for registration of compilations, "[a]s applied to a collective work whose author has also acquired the copyrights in individual component works, the text of Section 409 is ambiguous at best." The Register of Copyrights, however, has promulgated regulations on this process under 37 C.F.R. § 202.3(b)(5)-(10), "allowing for group registration of certain categories of collective works: automated databases..." "Under this provision, the author of an automated database may file a single application covering up to three months' worth of updates and revisions, so long as all of the updates or revisions (1) are owned by the same copyright claimant, (2) have the same general title,(3)have a similar general content,including their subject, and(4)are similar in their organization."

The Circuit noted that "courts have disagreed on how to apply the Copyright Act's registration requirement to collective works and their component parts," particularly as to whether the underlying "authors" of the components must be identified in a registration application as a precondition to bringing suit for infringement, as was the ruling in a 2010 SDNY case, Muench Photography, Inc. v. Houghton Mifflin Harcourt Publ'g Co., 712 F. Supp. 2d 84.

Here the Fourth Circuit adopts the view that such disclosure is not necessary and that "[t]he Copyright Office is optimistic that those decisions will be overturned on appeal." As MRIS owned the copyrights in the constituent photos that had been transferred prior to its database registration applications, and listed "photographs" as the basis for updating its database registration claims, "'it would be... [absurd and] inefficient to require the registrant to list each author for an extremely large number of component works to which the registrant has acquired an exclusive license.'" [Citation omitted] "Adding impediments to automated database authors' attempts to register their own component works conflicts with the general purpose of Section 409 to encourage prompt registration... and thwarts the specific goal embodied in Section 408 of easing the burden on group registrations."

[Note that there is a new Copyright Office regulation effective August 8, 2012, requiring that "when a registration is made for a database consisting predominantly of photographs, and the copyright claim extends to the individual photographs themselves, each of those photographs must be included as part of the deposit accompanying the application."]

With respect to the second issue, the Court upheld MRIS's argument "that an electronic transfer may satisfy Section 204's writing and signature requirements, particularly in light of the later-enacted Electronic Signatures in Global and National Commerce Act (the "E-Sign Act"), 15 U.S.C. § 7001 et seq...." The Court discusses this point in detail under E-Sign, particularly in the context of the enforceability of an online terms of use that are affirmatively "accepted" by subscribers. The Court found that none of the express exceptions to coverage in E-Sign applied to copyright transfers and emphasized it was not about to imply any such exception. It did note that there has been only one other case to date in the Southern District of Florida that has addressed electronic copyright transfers, where the court held that email conveyance of copyrights was sufficient. The Fourth Circuit thus concluded that "[t]o invalidate copyright transfer agreements solely because they were made electronically would thwart the clear congressional intent embodied in the E-Sign Act. We therefore hold that an electronic agreement may effect a valid transfer of copyright interests under Section 204 of the Copyright Act."

A copy of the Fourth Circuit decision is available here: MGIS decision (4th Cir ).pdf

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This page contains a single entry from the blog posted on August 19, 2013 7:28 AM.

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