Brokerage

Brokers, beware: Online listing agreement could carry hidden consequences

Why copyrights and licensing matter in the shifting online landscape

If you’re in the brokerage business, you understand real estate law and property rights. Now, with more and more business moving online and everyone wanting access to your listings, you also need to be versed in intellectual property rights as well.

Content is king when it comes to the Internet. Real estate listings and their associated photographs and media are very valuable content (intellectual property). This content is so valuable that some websites have built pretty large kingdoms using other people’s content.

Real estate listings attract consumers and clicks, and in turn, this Web traffic delivers big advertising dollars for the websites that present this content. That’s why so many companies are asking brokers to sign agreements that get their listings online for free. What better way for them to get compelling, engaging content without having to pay for it? These agreements however, can cause unforeseen liability problems. The good news is that you can shield your brokerage with the simple stroke of a red pen.

Clauses for concern

It is routine to display listing data, photographs and other media to market your real estate listings. But brokers need to be aware that the agreements they sign to get exposure for their listings often include a complex array of terms or clauses that deal with intellectual property. At their simplest there are two key types of clauses you need to be aware of:

  1.  Verifies that you have the rights to use and/or own the intellectual property you are displaying on their site.
  2.  Asks you to extend or sublicense rights to the website owner for them to use the content.

The first type of clause is very standard, and if you have written agreements with your content creators/providers, you can have confidence in your use of that content. The second type of clause is almost entirely for the benefit of the other party, and rarely benefits you. In fact, it could create liabilities that you don’t want to have. Let’s look at that type of clause first.

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Extending or sublicensing intellectual property rights

This is the clause you really need to look out for in any listing display or syndication agreement you consider. This clause is important because the parties that want your photographs will slip it into their terms of use strictly for their benefit — not yours. It typically reads something like this:

You _____ grant ______ an irrevocable, perpetual, royalty-free worldwide license to (a) use, copy, distribute, transmit, publicly display, publicly perform, reproduce, edit, modify, prepare derivative works of or incorporate into other works, in any media, and (b) sublicense these rights, to the maximum extent permitted by applicable law.

There are a whole host of concerns you should have about a clause like this. This will not help — and might even harm — you, your agents or your agents’ clients.

The online listing syndicator might need to be able to “edit” photographs to make them fit their Web pages, but that’s the most you should allow them to do in an agreement that you sign.

Everything else in this clause allows the other party to use the photographs however they want, whenever they want and wherever they want, whether it benefits you, your agents and their clients or not. There are two parts of this clause that you need to understand.

  1. Part (a) of a clause like this states that with your consent the third party could possibly use the photographs for purposes other than selling your listing or promoting your company and your agents. They could show the photographs without any attribution to your company or your agents. They could even use the photographs to help promote the services of companies that you compete against.
  2. Part (b) of a clause like this states that this “sublicense” not only gives this third party intellectual property rights to the content, but it allows the third party to give these same rights to anyone else they choose. Those fourth parties could be competitors of yours or in completely different lines of business.

What a clause like this does for the other party is to give it the ability to use the content for their own purposes, on your say-so — essentially passing the responsibility onto you for copyright and licensing violations they might make. Indemnification clauses in other parts of the agreement pass all the financial and legal responsibility on to you as well. Again, this is very important to note: This type of clause enables them to use the content for purposes other than your intended purpose — selling a home or promoting your company/agents.

The best way to understand the extent of this type of clause is to imagine if, when you went to Kinko’s to make a copy, not only did they ask if you have the rights to copy that document but said that by making the copy, they were going to keep a copy for their own uses, which includes giving your document to other parties. Because these clauses are online and in terms that take time to read, they are often egregious.

Agreeing that you are allowing a third-party unlimited use of this intellectual property opens the door to all kinds of issues for you and your company. The homeowner that allowed your company and your agent to market their home most likely thought the photographs were for the purpose of selling the home, not other businesses. The new homebuyer would be even more concerned about how photographs of their home are being used because they now live in the bedrooms, bathrooms and living rooms featured in those images.

If it weren’t for the fact that displaying listings is normally “free” on these sites, most people would pay much more attention to what they are really giving away. Both the value and the liabilities it can create are worth much more scrutiny.

When another party wants you to sign an agreement that states they can help you promote your listings, make sure you understand the true costs and don’t give up your rights unwittingly. Also, make sure you aren’t making representations to this website of rights you don’t have. This creates even further risk when they ask you to indemnify them from all liabilities. There is a saying: “If a company is giving you a service for free, chances are you aren’t their customer, you are their product.”

Verifying that you have rights to use the content

If you work with a reputable photographer or photography company for your brokerage, you should have a written agreement from the provider that expressly grants you rights to use the photographs to market your listings. Such a limited right is called a license.

This license typically allows your agents and your brokerage to copy, duplicate and display the photographs at will. Securing this license protects you from legal and financial liabilities. With this written agreement and the correct verbiage in place, you can be confident in your ability to use those photographs in the normal course of your business.

These licenses are not boundless, however. As mentioned above, some typical restrictions you might see in these types of agreements include: the right to sell the images (assignment), the transfer of those rights (sublicensing) or the use of the images for purposes other than marketing a home for sale, an agent or your brokerage (licensing).

If you don’t have an agreement in writing from your photography provider, you should get one ASAP. Without this, you might not have all the rights you believe you have, and your capacity to use the images might be impaired.

If your agents are having their own photographs taken and you are using them, make sure they have secured rights from their photographers, and, more importantly, that the rights they have apply to your brokerage as well. If your agents take their own photographs, they should confirm for you in writing that they are giving you permission to use those photographs and should also clearly specify for which specific purposes they give you the rights to use the images. In a dispute — let’s say, for example, that an agent leaves your brokerage — this could become an area of contention.

Copyright law

A copyright differs from the artistic creation of the work. For example, if you buy an artist’s canvas, you generally do not secure the copyright. You cannot use the canvas you own to produce a hundred lithographs for sale in an art gallery. The same way, a real estate photographer (or his employer) owns the rights in the copyright even if they give you a license to use the digital image.

Just like any time you place an ad in a publication or make a copy at a copy store of that picture in your possession, the other party receiving the image needs to ensure that you actually have the rights to do what you are doing. Otherwise, the publication or the copy store will be equally liable for copyright infringement. Those rights will come in writing from the authors or creators of the content you are using. In the case of photographs, they will come from the photographer or his/her employer.

United States copyright law states that the author of a work (or his/her employer) is the owner of the copyright and has all rights unless they expressly (in writing) grant rights to someone else. If you don’t have an agreement in writing with anyone who has produced photographs that are displayed on your site, you should get them. Without that written consent, the owner of the copyrights could possibly take you to court for copyright infringement. U.S. copyright law stipulates that in some cases, you may be liable for very expensive statutory damages for copyright infringement; anywhere from $750 to over $30,000 per infringement. In some egregious cases, this damage can be further multiplied. Here are a few examples of this.

Remember, copyright law is designed to protect the author, or in the case of professional photography, the photographers themselves. The burden is often on the persons copying the image to prove they own or have secured the proper rights to the image. Using reputable photography studios is the best way to ensure this first protection.

What is a watermark?

Unlike listing data, images are instantly protected by a copyright, which befalls either on the photographer or the employer of the photographer on the day the image is shot.

Much like Picasso signed his paintings, copyright owners are entitled by law to include a notice of ownership of their own rights. This initial notice is called a “watermark.” Altering and cropping out these watermarks is prohibited by law. The use of the watermark ultimately protects you.

  1. A watermark assures you and any of your marketing partners and your brokerage that because you work with a professional studio you have the rights to use this image for marketing this home and your company.
  2. It conveys to others that the image is registered with the U.S. copyright office, and if someone uses it for unintended purposes they are subject to copyright infringement.

What now?

Contracts are two-way streets. If someone wants to use your content for purposes other than yours, make sure you understand the ramifications and negotiate from a position of knowledge. Sometimes it’s as simple as using a red pen to say “no.”

Brian Balduf has been actively involved in marketing, technology and media for over 30 years. He has built VHT Studios into the largest real estate photography, video and multimedia company in the country. A frequent speaker at industry events, Brian received his B.S. in marketing from the University of Illinois at Chicago and an MBA and master’s in information systems from Benedictine University.

Email Brian Balduf.