Mid-Atlantic multiple listing service Metropolitan Regional Information Systems Inc. (MRIS) has decided not to accept financial support it requested from the National Association of Realtors for its copyright infringement suit against the operator of real estate search portal and referral site NeighborCity.com.
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 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) made similar allegations against San Francisco-based American Home Realty Network in a complaint filed April 18.
The lawsuits were filed not long after American Home Realty Network, which is licensed as a brokerage in California, updated profile pages for 850,000 agents on NeighborCity.com that feature agent scores and performance metrics based on their transaction history.
At its midyear meeting in May in Washington, D.C., NAR’s board voted to provide Rockville, Md.-based MRIS with up to $30,000 in legal assistance for its suit.
According to Laurie Janik, NAR’s general counsel, the trade group also decided to provide an unspecified amount of financial support to NorthstarMLS for legal expenses it incurs in its separate suit against NeighborCity.
John Heithaus, MRIS’ chief marketing officer, acknowledged NAR’s offer of support but told Inman News that MRIS has decided not to take it.
"We have not accepted any money from NAR nor do we anticipate doing so currently," Heithaus said.
"This is a matter of corporate strategy on our part. We’re moving 100 percent alone. We made a decision to pursue this litigation on its own merits and utilizing our own resources," he added.
Last week, NeighborCity filed a counterclaim against MRIS, NAR, 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 violated federal anti-trust law and unfair competition laws in California and Maryland.
MRIS had consistently declined to comment on the ongoing litigation. But after Inman News published a series of stories about the suits — the latest of which detailed the antitrust complaint — Heithaus said he felt the need to make a clarification about NAR’s financial support.
Inman News has since updated previous stories to clarify that although MRIS had requested financial assistance from NAR, and NAR agreed to cover a portion of the MLS’s legal expenses, MRIS never received that assistance.
Heithaus declined to say why or when MRIS had made the decision not to accept the funds.
Ralph Holmen, associate general council for NAR, confirmed that NAR had not given MRIS any funds to assist the MLS with the litigation. He also said MRIS had originally applied for the funds through NAR’s Legal Action Program.
"We agreed to provide them certain funding at their request. They have not asked us to disburse those funds to them so we haven’t," Holmen said.
Holmen declined to say whether NorthstarMLS has accepted funds from NAR. "That’s confidential," he said.
He declined to comment on the process by which NAR decided to help Northstar MLS cover litigation costs, but did say that Northstar MLS did not apply for the funds through the legal action program, which he said was the "normal" process and was set up to assist "in litigation that we think is important to the industry."
Brian Larson, an attorney for NorthstarMLS, declined to confirm whether or not NorthstarMLS had received, or was planning to accept, financial support from NAR.
Jonathan Cardella, NeighborCity’s CEO, said there was "no way of knowing" where MRIS or NorthstarMLS get their funding and that that would be determined in the pre-trial discovery phase of the litigation.
This is not the first high-profile litigation involving anti-competitiveness allegations against MLSs that NAR has backed. NAR provided $725,000 to Michigan MLS Realcomp II Ltd. to help cover more than $2.4 million in legal costs racked up in a nearly five year battle with the Federal Trade Commission over exclusive agency listings.
Last year, an appeals court ultimately found the MLS "unreasonably restrained competition" among real estate brokers by refusing to transmit exclusive agency property listings favored by discount brokers to Realtor.com and other public-facing websites.
On Thursday, NorthstarMLS announced it had been granted part of its request for a preliminary injunction against American Home Realty Network.
The injunction denied NeighborCity’s motion to dismiss the case on the basis of jurisdiction and 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 field descriptors listing property features such as "main floor full bath" and "whirlpool."
"The Court must further determine if RMLS’s selection of field descriptors in the NorthstarMLS compilation is copyrightable. The Court finds that RMLS has not established at this stage that it is likely to succeed in protecting the selection of these field descriptors, although the Court may reconsider this issue at a later stage in the litigation. The descriptors do not seem sufficiently creative to warrant protection, especially one-word descriptors such as ‘deck’ and ‘patio,’" wrote U.S. District Judge John R. Tunheim.
"There are limited ways of expressing the basic facts included in these field descriptors, suggesting these expressions by RMLS are not copyrightable."
The court further found that NorthstarMLS "has shown a significant threat of irreparable harm to its customer goodwill" because NeighborCity has detracted from the value of the MLS’s Internet Data Exchange (IDX) feed and because NeighborCity "violates expectations created by RMLS’s contracts, wherein RMLS has agreed not to distribute listing content without consent from listing brokers."
"When listing information is published in unauthorized places, especially if it causes NorthstarMLS participants to feel coerced into giving part of their commissions to AHRN, RMLs’s goodwill is very likely to be damaged," Tunheim said.
In a statement, NorthstarMLS president John W. Mosey said, "We are very pleased with the court’s ruling. We have no objection to other national websites that publish real estate listings, whatever their business models, provided that they obtain listing content legally by developing it themselves or through listing syndication, with the consent of the listing broker and agent.
"Whenever our valuable intellectual property rights are being violated, however, we will actively take steps to protect those rights."
In response to the injunction, NeighborCity’s Cardella said, "The ruling is quite a success for us and very significant to the industry because it demonstrates that all the MLS info they claim is copyrighted isn’t copyrighted," which means " they were grossly misrepresenting the nature and the scope of their copyrights."
Cardella noted that he is selling a building himself through his local MLS and that even though the images attached to that listing on the MLS are watermarked and the MLS claims copyright, "I can assure you that the person who uploaded them did not have proper copyright. They were from a previous broker."
"No one, not the broker, not the MLS, does anything to make sure there’s proper copyright (or) chain of assignment. I just gave my broker some photos; his assistant uploaded them," Cardella said.
"That’s how all this MLS data is. It’s a guise, it’s a ruse, it’s a scam. It’s really over the top, and eventually their malfeasance will be exposed."
Larson declined to comment on Cardella’s assertions.
"As long as the case is before the court, we have nothing to say in response to Mr. Cardella’s assertions or his hyperbole. We are confident that the court can separate fact from fiction," Larson said.
In the injunction, Tunheim noted that NeighborCity had not challenged NorthstarMLS’s copyright claims in its motion to dismiss.
"We decided to save our attack of copyrights for the response and countercomplaint which we’re going to do soon," perhaps at the end of this month, Cardella said.
"We believe that the (preliminary injunction) decision is very thoughtful and we respect the judge’s opinion and we believe that … we will prevail in this case," he added.
MRIS was granted a preliminary injunction against NeighborCity in late August. NorthstarMLS was granted its injunction on Sep. 27. Cardella said his company had removed property descriptions on listings on NeighborCity where both MLSs were concerned and replaced them with factual excerpts, removed all MRIS photographs from NeighborCity, and removed the 50 copyrighted images noted in NorthstarMLS’s suit.
"So until we get further clarification, we believe we’re in compliance with both of the orders," he said.
Both MRIS and NorthstarMLs declined to confirm whether or not NeighborCity was in compliance with the injunction orders from their perspective.