Editor’s note: This story was updated on Oct. 4, 2012 to clarify that after MRIS requested and NAR approved funds to cover part of MRIS’ legal expenses in the suit against NeighborCity, MRIS decided not to accept the funds. NAR and NorthstarMLS have declined to comment on whether NorthstarMLS has accepted, or will accept, similar financial support approved by NAR.
The National Association of Realtors voted to cover a portion of the legal expenses incurred by two multiple listing services that have filed copyright lawsuits against real estate search portal and referral site NeighborCity.
At its midyear meeting in Washington, D.C., NAR’s board voted Saturday to provide Rockville, Md.-based Metropolitan Regional Information Services Inc. (MRIS) with up to $30,000 in legal assistance.
NAR also said it would provide an unspecified amount of financial support to St. Paul, Minn.-based Regional Multiple Listing Service of Minnesota Inc. (NorthstarMLS), for legal expenses it incurs in a separate copyright suit against NeighborCity, said Laurie Janik, NAR’s general counsel.
In a complaint filed March 28, MRIS alleged NeighborCity’s owner and operator, American Home Realty Network Inc., reproduced, displayed and distributed copyrighted listing content, including photographs, without the MLSs’ authorization and violated copyright laws through "the creation of unauthorized derivative works incorporating the MRIS database."
NorthstarMLS made similar allegations against American Home Realty Network in a complaint filed April 18.
The lawsuits were filed not long after NeighborCity published updated profile pages for 850,000 U.S. real estate agents featuring agent scores and performance metrics based on their transaction history.
Upon hearing of NAR’s approval of financial support of the cases, Jonathan Cardella, CEO of NeighborCity and a co-defendant in MRIS’ suit, accused NAR of "quarterbacking" the lawsuits, and alleged the trade group coordinated a wave of cease-and-desist letters that were sent to NeighborCity from brokers and MLSs just before and after NAR’s annual conference in Anaheim, Calif., in November.
In a legal filing opposing MRIS’ motion for a preliminary injunction in its case, NeighborCity said it had received a total of 20 cease-and-desist letters from brokers and MLSs, including letters from MRIS and NorthstarMLS. The letters "are substantially similar as to form and content, allege copyright infringement and threaten legal action," the filing said.
"Defendants have learned that the annual meeting featured discussions of the perceived threat AHRN Inc. poses to the industry and what the industry could do to shut down AHRN Inc.," the filing said.
"This isn’t about their copyrights, but an industrywide blackout on us doing what we’re doing, our business model," Cardella told Inman News.
"In the end, NAR with its deep pockets, (its) strategy is to bankrupt us and drive us out of business. It doesn’t surprise me and we’re prepared for that."
Cardella pointed to a Dec. 22, 2011, email that John Mosey, president of NorthstarMLS, sent to the MLS’s attorney, Mitchell Skinner of Larson/Sobotka PLLC. NeighborCity’s attorney, Chris Miller, received a copy of the email.
Mosey wrote: "How do we connect the dots between all of the MLSs that have been abused so that we can act collectively, either in cost sharing and/or strategically by taking an action against Mr. Cardella that has the desired outcomes of : 1. Getting all of our listings off of his site; 2. Discovering where he has been getting the listings; 3. Throwing a world of hurt on both; 4. Sending a message that our copyrights are enforceable, and we are serious about punishing anyone who doesn’t take us seriously."
Mosey, through attorney Brian Larson, also of Larson/Sobotka, declined to comment for this story.
Cardella said that he expected more lawsuits against NeighborCity to crop up.
"Obviously, when there’s nothing to lose and you’ve got one of the nation’s largest lobbying groups backing you, (it) wouldn’t surprise me. I imagine they’ll come in waves like any assaulting army would," he said.
NAR’s Janik said Cardella’s allegations were "baseless."
"NAR is aware of both suits, but did not orchestrate either of them. Nor did NAR coordinate the cease-and-desist letters," Janik said. "Many of those letters were sent before NAR was aware of the NeighborCity.com website. NAR has no desire to run American Home Realty Network out of business or to bankrupt the company."
Janik said that for more than 25 years, NAR has been instructing MLSs how to protect their members’ listings from unauthorized copying, "and supporting litigation brought by MLSs to stop unauthorized copying. Those cases date back to unauthorized copying of (printed) MLS books."
Janik said Cardella "presents himself as a victim, but based on what is known about the NeighborCity.com website, he would more appropriately be characterized as the villain. He has yet to identify the source of the listings that appear on the NeighborCity.com website, but I know of no MLS that has licensed listings to AHRN."
Many MLSs distribute their members’ listings to websites approved by the listing broker, Janik said, "but that distribution takes place pursuant to license agreements that serve to protect the members’ interests in their listings."
Cardella said NeighborCity awaits the court’s decision on MRIS’ motion for a preliminary injunction and plans to file a response to a similar motion from NorthstarMLS.
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