3 legal issues brokers and MLSs should act on now

Real estate listing data is in demand more than ever. That means brokers and MLSs need to be especially aware of who the data belongs to and how the data will be used — or risk landing in legal hot water.

That’s according to well-known real estate attorney Mitch Skinner of Minneapolis law firm Larson Skinner PLLC.

Skinner spoke at the Council of Multiple Listing Services (CMLS) annual conference in Kansas City earlier this month. Dozens of lawyers met for a seminar at the conference to discuss legal issues important to the industry.

After the event, Skinner provided Inman with a rundown of the top three takeaways from the lawyers’ meeting for brokers and MLSs:

1. The 1998 Digital Millennium Copyright Act (DMCA) can be a “fantastic tool” for limiting liability, Skinner said — but only if brokers and MLSs follow certain rules.

MLSs and brokers need to think of copyright as both a shield and a sword, he said. For the past few years, MLSs have illustrated the “sword” part of that analogy in their lawsuits against alleged copyright infringer NeighborCity.

This year, MLSs are focusing more on the defense side of the equation, Skinner said. There are more and more cases focusing on the use of listing photos, including a case brought against Zillow by real estate photography company VHT Inc. that could embroil brokers and MLSs.

“[The VHT case is] one to watch because it could be instructive to MLSs, brokers and agents. Obviously to portals too,” Skinner said.

In a world where listing photos can appear on any number of websites, including MLS public-facing sites and broker IDX (Internet data exchange) sites, it is important for brokers and MLSs to know about and utilize the DMCA, he said.

“The DMCA was designed to bring the 1976 Copyright Act into modern times,” he said.

Around the turn of the century, Web 2.0 sites such as YouTube became places where people could share their own works, but also the works of others, not always with their permission.

The DMCA included a safe harbor provision to limit liability for such sites, so long as certain requirements were met. Some of these include:

• Have a designated agent to receive notifications of claimed infringement, making the agent available to the public through your website, and provide that agent’s contact information to the U.S. Copyright Office.
• If the allegedly infringing content is taken down, the service provider qualifies for the safe harbor (with some exceptions).
• The service provider can’t directly benefit from the infringing act.
• The service provider can’t have foreknowledge that the content was infringing.

Click here for the full text of the DMCA safe harbor.

That said, brokers and MLSs should not rely on the DMCA to keep them out of trouble. Here’s Skinner’s second takeaway from the conference:

2. Be aware of the terms of inbound data licenses.

“MLSs should have a participant and a subscriber agreement with their participants and subscribers, respectively,” Skinner said.

“And within that agreement, there should either be an assignment of copyright or a license to the copyright that is broad enough so the MLS can use the content for its current purposes and potential future purposes,” such as the display of sold listing photos.

Realtor-affiliated MLSs should keep in mind that the National Association of Realtors’ MLS policy statement 7.85 prohibits MLSs from requiring brokers to transfer any rights in their listings or listing content to the MLS as a condition of MLS participation, Skinner said.

Some MLSs ask brokers whether they want to assign (transfer ownership of) the listing content to the MLS, or whether they want to license (give permission to use) the data to the MLS, he said.

For their part, brokers should make sure that they’re getting sufficient rights from professional photographers in regards to listing photos, Skinner said.

“They should work with a professional photographer and let them know ‘we’re going to use the photos for X, Y, Z,'” he said.

“The broker needs to have a license that’s at least as broad as the license it’s going to provide for all downstream uses.”

Inbound licenses aren’t limited to listing data, Skinner said. Many MLSs, for example, license public records.

“An MLS needs to have sufficient rights to auto-populate that data for downstream uses,” he said.

3. Be aware of the terms of outbound data licenses. This became a hot topic this year after Move Inc.-owned listing syndicator ListHub and rival Zillow terminated their syndication agreement and Zillow began more aggressively courting MLSs for direct listing feeds.

MLSs were becoming more aware of what they wanted out of agreements with portals before the ListHub-Zillow brouhaha, “but I think that really pushed the awareness along,” Skinner said.

Whether the outgoing data license is a direct syndication agreement with realtor.com or an agreement with ShowingTime 10K for market analytics, “the MLS needs to be very careful” that they are able to “provide the license grant they’re purporting to provide,” Skinner said.

“Companies are asking for more and more data for more uses,” he added — it’s up to MLSs to make sure they both approve of those uses and that they have the right to do so.

Other legal takeaways from the conference from Skinner and fellow attorneys Brad Bjelke and Chris Osborn, including the looming expiration of NAR’s settlement with the Department of Justice (DOJ), the need for MLSs to have policies around lockboxes, and what MLSs should do if they get a letter from a patent troll:

Legal Seminar Update w/Chris Osborn, Brad Bjelke, Mitch Skinner #CMLS2015 pic.twitter.com/v1pw8fRryX

— Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborne: NeighborCity cases confirmed ability to get copyright in certain situations, ability to assign copyright electronically — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: Failure of the MLS to get the rights to assign, there’s a risk that publishing photo on IDX site infringes someone’s copyright — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: Need for MLS to get a license to meet current needs AND anticipate members’ future needs #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: i.e. future use of off-market/sold data #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: Could be a future epidemic of photographers suing real estate biz for copyright #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: Many brokers don’t have insurance coverage for possible liability #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: Many of the license agreements received from photographers are unassignable. If MLSs merge, half of database could infringe — Andrea V. Brambila (@InmanAndrea) October 9, 2015

-@brianbjelke1: You have 3 yrs 1 month and 7 days until the DOJ-NAR settlement expires. What will that mean for the defn of “participant”?

— Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@bradbjelke1: Will we see new definitions of participant? Will MLSs stretch it? WIll NAR get involved? #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@bradbjelke1: Have a ton of lockbox problems. Many MLSs don’t have rules around lockboxes. #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@bradbjelke1: There are huge privacy, huge legal issues with a model that allows buyers to enter homes without an agent present. #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: The no. 1 thing to do when you have a patent troll claim is to let people know & get a joint defense group together. #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Chris Osborn: There’s a lot of legislation at state level that makes it harder and harder to make a patent claim. #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@bradbjelke1: Prior art is important. Someone may have innovated 15 yrs ago and we forgot about it. Give your product fliers to REDPLAN. — Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@MitchellSkinner: MLSs are much more sensitive as to the scope of the data that’s outbound, as they should be, bc there’s a lot of risk — Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@bradbjelke1: Growing movement toward consolidation in the industry. #CMLS2015

— Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@bradbjelke1: @MRIS_REal_News & @trendmls created a white paper about their effort. Recommend getting your message out, forces ppl to table — Andrea V. Brambila (@InmanAndrea) October 9, 2015

–@MitchellSkinner: Copyright between @UpstreamRE and MLSs will depend on the license agreement btwn them. #CMLS2015 — Andrea V. Brambila (@InmanAndrea) October 9, 2015

Email Andrea V. Brambila.