MRIS injunction against NeighborCity applies only to photographs

Judge: MLS may ultimately prove copyright interest in textual elements of listing database

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An order prohibiting the operator of referral site NeighborCity.com from using copyrighted content from the database of a large multiple listing service without permission has been revised to apply only to the database’s photographs.

In a complaint filed March 28, Rockville, Md.-based Metropolitan Regional Information Systems Inc. (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."

St. Paul, Minn.-based Regional Multiple Listing Service of Minnesota Inc. (NorthstarMLS) filed a similar suit against AHRN on April 18.

MRIS was granted a preliminary injunction against AHRN on Aug. 27 prohibiting the company, which does business as NeighborCity, from using copyrighted content from the MRIS database without authorization.

In a Nov. 13 order, U.S. District Judge Alexander Williams Jr. clarified that the injunction referred only to copyrighted photographs from the MRIS database.

"MRIS identified no textual elements of the MRIS database that it independently registered with the U.S. Copyright Office, identified no textual elements in which it otherwise claimed copyright ownership, and did not show that AHRN had engaged in unauthorized copying of textual elements of the MRIS database," Williams said.

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"Indeed, the court’s Aug. 24 opinion acknowledged the possibility that MRIS did not own the copyrights in the underlying textual elements, particularly listing information, but concluded that this did not affect its holding with respect to the photographs." 

He noted that it was unclear whether MRIS owned copyrights to the textual elements of the database given that its broker subscriber agreement suggests subscribers own those copyrights.

Nevertheless, he said the revised injunction "does not imply that MRIS’ copyright interests in the MRIS database end with the photographs. To the contrary, MRIS has demonstrated a likelihood of success on the merits that the MRIS database exhibits the requisite originality for copyright protection."

NeighborCity CEO Jonathan Cardella said the revised order was "a very significant ‘win’ for AHRN."

An attorney for the company, Richard S. Toikka of Farkas & Toikka LLP, said, "This can be seen as a significant defeat for MRIS, which has brought copyright infringement claims going far beyond the photographs and bolsters AHRN’s position that MRIS’ claims are sham claims."

In September, NeighborCity filed a counterclaim against MRIS, the National Association of Realtors, and 25 unnamed defendants "thought to be brokers" and MLSs, alleging they have engaged in a "concerted anti-competitive group boycott" of the company and have violated federal antitrust law and unfair competition laws in California and Maryland.

Both MRIS and NAR have responded to NeighborCity’s counterclaim with motions to dismiss.

Douglas Miller, executive director and attorney for Consumer Advocates in American Real Estate (CAARE), has filed a "friend of the court" brief in support of NeighborCity’s claims. In the brief, Miller said the driving force behind the MRIS lawsuit is the desire by brokers to collect double commissions through dual agency — representing both the buyer and seller in the same sale.

"(NeighborCity’s) business model reduces the risk of dual agency by intentionally directing buyers to real estate agents not associated with the listing firm," and is therefore perceived as a threat, Miller said

The court denied MRIS’ request to have CAARE’s "friend of the court" brief thrown out.

Earlier this month, NeighborCity answered NorthstarMLS’ complaint and filed a similar counterclaim against NorthstarMLS alleging violations of state and federal antitrust laws. NorthstarMLS has until Dec. 3 to respond to the counterclaim.

Brian Larson, counsel for NorthstarMLS, said the MLS believes NeighborCity’s counterclaims "to be entirely baseless and expects the court to dismiss them in due course."

On Sept. 27, NorthstarMLS was granted part of its request for a preliminary injunction against NeighborCity. The injunction prohibited the company from unauthorized copying, display, use or public distribution of "all current and future photographs and any current and future ‘agent remarks’ and ‘public remarks’ found on NorthstarMLS for which RMLS has a copyright."

Additionally, the court found that NorthstarMLS is likely to succeed in proving infringement of its copyrighted photographs and narrative descriptors (public remarks and agent remarks), but that NorthstarMLS "has not demonstrated a likelihood of success with regard to its other descriptors," particularly factual field descriptors listing property features such as "main floor full bath" and "whirlpool."

Last week, NorthstarMLS filed a motion to have the court hold NeighborCity in contempt of the preliminary injunction, alleging the company has continued to display NorthstarMLS’ copyrighted content.

Cardella said he thinks NeighborCity is complying with the order.

"We removed the registered photos within a day or two of being served with the suit originally, so those photos have been off for a long time. The real confusion here is that (NorthstarMLS) believes the injunction applies to (photos in) the entire compilation," not just those registered with the U.S. Copyright Office, Cardella said.

"We’ll see what the judge says," he added.

NorthstarMLS, through Larson, declined to comment on the motion, saying that the memorandum filed in support of the motion "states its position pretty clearly."

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