A group of real estate professionals and companies have settled an antitrust lawsuit filed last year against the Regional Multiple Listing Service of Minnesota over restrictions on the use of “MLS” and related terms in company names, Web addresses and marketing.

MLS officials have said that the rule change was intended to preserve the integrity of the MLS while preve

A group of real estate professionals and companies have settled an antitrust lawsuit filed last year against the Regional Multiple Listing Service of Minnesota over restrictions on the use of “MLS” and related terms in company names, Web addresses and marketing.

MLS officials have said that the rule change was intended to preserve the integrity of the MLS while preventing consumer confusion about access to MLS information. But opponents have said the rule punishes MLS members while giving a competitive advantage to third-party companies that are free to use MLS terms in marketing without any penalty, as U.S. Realtor groups and listing services do not own the trademarks for “MLS” and “multiple listing service.”

The settlement agreement does not change provisions in the rule that ban member companies from using the term “MLS” in their company name or Web address, and it extends until Dec. 31, 2008, the period in which companies can redirect their noncompliant Web addresses to another address. RMLS had required its members to shut down any Web site with the term MLS in the domain name by Dec. 31, 2006, or redirect that Web address to another address that does not use the term “MLS.”

The agreement provides a seven-day grace period in which members can respond to alleged violations of the rule and provides that members cannot be booted from the RMLS until a third willful violation is alleged and adjudicated or recorded. And it allows RMLS members to use printed advertising materials that were printed prior to the settlement agreement while preventing the printing of new advertising materials by members in violation of the rule.

There is no compensation, however, for those RMLS members who paid for Web sites and online advertising that violate the rule and settlement agreement.

All RMLS members’ Web sites that are a part of an online property data exchange network with other MLS members must “prominently and conspicuously” display a disclaimer that states that the broker or agent is a member of RMLS and “is not a multiple listing service (MLS),” according to the terms of the settlement agreement.

A handful of companies that already used the term “MLS” in their names prior to the rule’s adoption in March 2006 were grandfathered in with their existing names, while companies that have created names including “MLS” since then must change their names or face penalties that can eventually lead to dismissal from the RMLS.

“It’s not exactly what I wanted in the end,” said Steve Westmark of Counselor Realty in Wayzata, Minn., who resigned his position on the RMLS board prior to filing the lawsuit. He was joined in the lawsuit by Keith Castonguay, president and CEO of TheMLSOnline.com, a company that has a grandfathered name under the rule. Castonguay’s company and FishMLS Realty were also parties in the lawsuit against RMLS.

“I don’t think the (rule) ever should have been put in place,” Westmark said. Companies that are not members of RMLS “don’t have to say that we’re not an MLS. We have to say that we are not an MLS.”

John Mosey, RMLS president, said the MLS began to enforce the rule Jan. 1 and has already notified members about possible violations. So far, the problems have been fixed before any enforcement actions were necessary, he said.

“We have a staff member who either responds to snitching (by other members) or we go through a list of all known Web sites,” Mosey said, adding that there have been dozens of notices sent out for possible violations. “Typically they are informed that their ongoing access to (the MLS listings-exchange network) is at risk and we require they make these changes and they do.” In most of the cases it appears the violation was not willful and was a result of ignorance, he added. “We don’t even have a first strike — we are getting great cooperation.”

Most RMLS members welcomed the new rule, Mosey said. “(They) felt it was overdue — they felt people were taking advantage of the idea and the perception of what MLS is in the public’s eye and were using the assets of other brokers and agents to do that. And they didn’t like that.”

The MLS is working to educate MLS vendors about compliance with the rule, Mosey said, so that they can incorporate the changes into the online systems they build for member brokers and agents.

RMLS is not the first MLS in the country to adopt restrictions in the use of “MLS” and related terms, and RMLS actually chose language for its rule that is similar to an earlier rule adopted by the regional Northwest MLS in Washington.

Other MLSs in Minnesota have expressed interest in the RMLS rule, Mosey said, and there has been interest from other MLSs in other parts of the country, too. “Several of them around the country are in varying stages of doing this,” he said.

According to the RMLS rule, members cannot “indicate or imply in any manner that the member is a multiple listing service or that the public has access to or may search the multiple listing service,” citing examples of violations including “Search the MLS” and “Access RMLS.” A sample Google search of “Minneapolis MLS” and “St. Paul MLS” on Wednesday turned up several examples of RMLS-member Web sites that still have links stating that they offer MLS search capability, though this is considered a violation under the rule.

Mosey said the rule applies to paid keyword advertising online, as it can be considered a willful violation of the rule if an RMLS member is buying advertising for MLS terms. But the settlement agreement specifically exempts RMLS members from penalties based on the appearance of “MLS” or “multiple listing service” in the online text of a Web site or natural search-engine result, as this text is likely to show up in searches as a part of the disclaimer language.

Westmark this week issued a letter to members of the Minneapolis Association of Realtors discussing the settlement agreement and his resignation from the RMLS board. He said in the letter that there is no research to prove that the public was harmed by RMLS members’ use of MLS terms prior to the rule change.

“Yahoo.com, mlsonline.com, mls.com, mls.net and others are owned and operated by non-Realtor companies that sell leads back to agents and brokerages for a monthly fee, referral fees, pay for click or any profitable combination,” he stated in the letter. “What the RMLS board of governors has done is prohibit Realtors to use ‘MLS’ in our Web site names but allows those who do not belong to the local MLS to go after agents or brokerages to pay referral fees to them because (nonmembers) cannot be restricted from using the term ‘MLS,'” he stated.

He also called for the creation of a new term to describe MLSs that can be trademarked by Realtor groups.

Westmark told Inman News that he hopes other parts of the country do not consider similar MLS restrictions for members. There are real estate professionals in other areas who have contacted him about the RMLS restrictions, he said. “They’re hoping they’re not going to have to do the same type of thing as we have to do here,” he said.

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