Real Estate Listing Services Use Questionable Copyright Claims In Attempt To Block Criticism Of Agents

from the i've-got-a-feist-to-show-you dept

We’ve noted in the past just how incredibly backwards facing the real estate industry is. Last year, I got to present at a real estate industry conference, where I compared how the MLS (multiple-listing service) players were similar to the record labels and music studios, acting as monopolist gatekeepers to information. And, just as the entertainment industry gatekeepers have attacked disruptive innovators with lawsuits, so too do the MLS operations. In the past we’ve discussed how they’ve attacked web upstarts like Zillow and Redfin. The latest is that they’ve gone after NeighborCity, an offering from a company called American Home Realty Network (AHRN), who dared to make use of real estate data to actually rate real estate agents on their performance. As you might imagine, the real estate agents don’t like that very much.

AHRN noticed that it suddenly received a flood of complaints and cease & desist letters conveniently timed exactly to the dates of the National Association of Realtors’s (NAR’s) annual meeting in November of 2011 — and each of the letter seemed to include similar language. After responding to all of the complaints, two separate MLS providers sued AHRN. Amusingly, prior to the lawsuit, an executive for one of the MLS’s (NorthStar, from Minnesota) appeared to accidentally cc AHRN on an email to its lawyer, complaining about “the bad fellow” (AHRN CEO Jonathan Cardella) not simply bending over and taking down NeighborCity in response to the complaints, and suggesting that filing copyright infringement lawsuits against AHRN/NeighborCity would be useful in bringing a “world of hurt” on the company. The email also discusses having various MLSs share the costs of litigation.

Indeed, NorthStar and a separate MLS, Metropolitan Regional Information Systems, Inc. (MRIS) appear to have followed through and sued for copyright infringement. You can see MRIS’s filing embedded below. MRIS repeatedly insists that it holds a copyright on its database, completely ignoring fairly well-established law that you can’t copyright facts, and that MRIS’s copyright (if there is one) is limited to the creative works it added to the process. Instead, MRIS repeatedly claims to hold a copyright on the entirety of the database. It also claims to hold the copyrights on the photos uploaded by individual agents, saying that as part of that process, the copyrights are assigned to MRIS.

NeighborCity has hit back with its response (also embedded below), arguing that MRIS has no such copyright, and citing the litany of cases that establish you cannot copyright factual information, relying heavily (of course) on the important Feist ruling in the Supreme Court, which rejected “sweat of the brow” arguments for copyright, and said you cannot copyright a collection of facts, such as a telephone book.

It seems that the chance of succeeding on such a claim is slim to none. MRIS and its lawyers should be slapped around by the judge for even trying such an argument. MRIS clearly seems to recognize this by trying to use the photographs to make a separate argument. It claims that every photograph that is uploaded has its copyright assigned to MRIS (I’m actually a bit surprised that real estate agents would agree to this…) and thus it also alleges infringement on the photos. AHRN, however, points out that MRIS failed to register the individual copyrights on the photos, instead only registering a copyright on the “catalog.” Here, AHRN notes (again) that there is widespread precedent limiting what sort of copyright can be applied to a catalog where little to no additional work was done by the party claiming copyright. Further, it points to the Muench case, which noted the “the registrant of a compilation copyright must list the names of the authors of the underlying works.” That’s just a district court ruling, so it’s not clear how big an impact it would have.

AHRN also questions the claim that anything it has done creates irreparable harm to MRIS is completely baseless. MRIS’s best argument is that outdated info on NeighborCity reflects poorly on MRIS, but AHRN points out that it would reflect much worse on NeighborCity itself.

The real issue, of course, is almost certainly that the real estate agents don’t like the fact that they’re being rated by the site. The fact that NeighborCity has operated for years without a problem… until it put up its agent rating service, makes that pretty clear.

The larger issue may be that AHRN is also alleging that the action confirms that real estate agents are violating the final judgment in the antitrust lawsuit the US government filed against the National Association of Realtors. The email that was sent to AHRN certainly seems to indicate plans for concerted action. Combined with the timing correlating to the NAR event… and there’s at least a reasonable case for the DOJ to look into the activity here by real estate agents and MLS services.

In the end, though, this is the same story we’ve seen over and over again. Gatekeepers don’t like being disintermediated by disruptive innovation. So, rather than adapt, they sue.

Filed Under: ,
Companies: ahrn, mls, nar, northstar

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Comments on “Real Estate Listing Services Use Questionable Copyright Claims In Attempt To Block Criticism Of Agents”

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DannyB (profile) says:

Gatekeepers are important to the economy

Everyone should stop producing cars, clothes, food, homes, computers and get into the intellectual property business. It doesn’t matter which one. Copyright. Patent. Trade Mark. Service Mark. Then sue everyone else.

Think of how much wealth this will generate. At one point the music industry estimated piracy as costing them some $74 TRILLION dollars. Just think if you could recover that amount by suing.

Realtors could actually stop showing homes and just fire off lawsuits — and probably get more money for it. Think of the time and trouble saved. Think of the judgements from IP lawsuits as new wealth generated into the economy.

With so much wealth, we’ll be drowning in IP lawsuit paper and nobody will need to produce homes, cars, clothes or food anymore.

It’s a great plan. Tell your congresscritter!

alanbleiweiss (profile) says:

dinosaurs do what they can to avoid extinction

16 years internet marketing experience with a good portion serving small mid-size and multi-billion dollar real estate solutions, so I’ve seen this myself over and over in different forms, and not surprisingly, from both MLS aggregators and Realtors at odds with each other, both at different times, taking different sides in the battle.

And yes, it does boil down to the issue that dinosaurs do what they can to avoid extinction, simply because they’re too stuck in their “time-proven” business model to innovate or compete fairly.

It’s also not surprising to me that the Real Estate industry specifically is rife with this nonsense. The only reason I got into the web business was in the early 90s I managed a Real Estate firm, and the 1st day I saw the Internet, I knew I had to get them online. Back in those days, managing 30+ agents, it was a daily routine of babysitting ego-driven children in adult bodies, repeatedly hand-holding them as I showed them how to do even the most basic computing tasks they refused to learn, and educating them on the concept that they had to be involved in their own marketing efforts.

The whole MLS model grew out of that reality. Except it was run by Realtors themselves. So the MLS system (and it’s subsequent off-shoot regional data aggregation partners who “owned” the aggregation technology) was doomed to eventually be out-maneuvered by “outsiders” who could actually innovate. And now they just continue to hope they can avoid the inevitable asteroid that’s on a collision course with their “home turf”.

PlagueSD says:

I have an idea…You don’t want a bad review written about you? Don’t be a bad Real Estate rep!!!

This goes for everyone else in the “service” industry. Treat your customers with respect and they’ll more than likely write a good review. Treat them like crap, and that’s what you’ll get in the review.

We really need to come up with a punishment for false infringment charges. That’ll stop a lot of these patent trolls in thier tracks

DinDaddy (profile) says:

Value of realtors

Realtors seem to be largely deluded as to the service they actually provide. While I can see the utility in engaging one if you are moving to a new city where you are unfamiliar with the various neighborhoods, or entrusting one with wrapping up all the details if you’re new to home buying (inspections, etc.), in large part they no longer provide any useful service.

Even more mystifying, they market themselves by proudly listing how many houses they flip how quickly, where higher numbers should be a warning that they intend to get you to sell your house for as little as possible and that they intend to spend as little time as possible helping you do so.

I am mildly surprised their industry has not been more disrupted already, especially in light of the current downturn in the profitability of home sales.

Anonymous Coward says:

Value of realtors

As near as I can tell, the only real service real estate agents provide to sellers in listing their house on the MLS. The actual “marketing” and “salesmanship”is a joke. Most people check out listings on the MLS themselves, look at the pictures gather other pertinent information about schools, public transportation, shopping and crime- all from readily available online sources. Why? Because they want the facts, not the bullshit story the realtor makes up to get the sale. As far as handling the contract and closing goes, standard sale contracts are available everywhere and any decent attorney can handle the closing for $1-2000. So what are you paying 5-7% commission for?…. the MLS. While I have no interest in it, one service seems to emerged to bring some sense to this: allows you to have a real estate company front for you. All they do is list the house in their company name and refer all calls to the owner. I’m sure there are others like it, but I know I’ve paid my last commission.

Hak Foo (profile) says:

I always saw this as an obsiouc Google step-in situation. “Use our new platform for free or nominally cheap, and incidentally, since we host the data, we can provide halfway-decent search services on top of it”.

House search is dreck. And the entire MLS structure doesn’t help (arbitrary borders between territories mean you won’t necessarily find every house without going between several listing sites). The integration facilities provided are either expensive and huge hassles (store the entire MLS and sort it out on your system) or limited (iframe in this box and have little to no SEO or presentational control). There also tend to be obnoxious or downright crippling usage rules (must show all listings, must include irrelevant disclaimers, cannot allow this or that, etc.)

teka (profile) says:

Value of realtors

Realtors have held onto their “market” by using the same methods as any other industry.

There is a wonderful amount of legal capture and what i call “standards capture”, where things may technically be legal to do by oneself except for the incredible amount of insider knowledge required. Unfortunately the pitfalls of the industry are mostly unknown to anyone not trying to navigate it and anyone trying to navigate it is either pressured to accept as-is (home buyers and sellers) or they profit from the current arrangement.

Anonymous Coward says:

While I don’t necessarily disagree with the theme of the article, it does contain some inaccuracies. It is true that facts cannot be copyrighted, but an MLS database contains more than just facts. However, courts have held that the presentation and arrangement of information in an MLS database IS subject to copyright protection.

Thus, when an MLS submits its data for copyright with the US Copyright Office, the “marketing puffery” (as identified by the Maryland courts) and arrangement of facts is what is actually copyrighted.

The Devil's Coachman (profile) says:

I liked my realtor when I sold my last house.

If I had the opportunity to post a positive comment, I certainly would. But then, if I felt that my realtor did not do a good job, as the one I used to sell my first house demonstrated, then I should have the right to complain about them, and warn others off using the lazy SOB. It isn’t slander or libel to say that you think your realtor sucked. Any abuse of copyright law in these cases is illegitimate, and should be punished by the courts.

Shane Roach (profile) says:

Score is Indecipherable

I have a friend in real estate, so I went to find his score. He is a top seller in the Katy, TX are. His score was low. There was absolutely no explanation for why his score was low on the site. There is, however, a link for the agent to “claim their profile”.

I am not a fan of how MLS services work. I agree they are gatekeeper organizations, and I do not like them. The entire real estate market is a gatekeeping organization designed from the ground up to make it harder for people to get the straight scoop on a piece of property, its history, and its value. That is no excuse though for a site like “NeighborCity”. Putting scores on people that imply good or bad performance without any explanation for the scoring, then trying to get the agents to come in and do something about that, possibly eventually trying to get them to pay for a “Service” of getting them a better score, is just idiotic.

FS says:

Re: Score is Indecipherable

Scoring on most site is bogus. It too easy for bogus users to post bogus reviews. This includes reviews by users who never even met or worked with a Realtor. How handy is it for your competition to go in and post a bad review on you to lower your score? Unfortunately, there are very, very few reviews sites that accurately reflect performance.

Regarding the MLS being a gatekeeper, the MLS was designed for the Realtor network to connect with each other and get homes sold. The Internet has changed everything and the integrity of the data has been diminished by 3rd party real estate websites that do not seem to be concerned about confusing consumers. Many continue to try to oversimplify the process of buying and selling a home. The most important service that Realtors bring to the transaction is their negotiating skills. Buyers and Sellers do not negotiate well with one another in the majority of cases due to the emotional aspect of the decision. Realtors serve as a conduit for negotiating and bringing the parties together for a successful closing. If you want access to the most up to date MLS data, check with a local Realtor. Most of them will get you connected with a service that is far superior than Zillow and Trulia, and all the other 3rd party real estate websites that have outdated and confusing listing information.

Just some thoughts says:

Just some thoughts


Your original analogy on gatekeeping is flawed and because you appear to have a preconceived notion that gatekeeping is always bad and/or old fashion, you’re ignoring the fact that it benefits consumers.

To start, you compared real estate to the music industry, but the music industry’s product IS the data in question. Each record company typically owns the data they’re selling and the fight was about limiting consumer rights to the product after the consumer purchased it.

That, however, doesn’t translate to real estate MLS data.

The real estate industry’s product is NOT the data- and consumers don’t buy or license it. The data is simply marketing for the actual product (i.e. real property).

The websites in question also aren’t consumers; They’re businesses who want to use other company’s marketing data for their own personal gain. Unfortunately it’s one thing to try and innovate and push the industry forward; it’s another to use the industry’s data for the exploitation of consumers.

And that brings me to the first problem with your music industry analogy. Real estate agents typically have no ownership rights to the actual product being sold. So regardless of how important the buyer is, the listing agent’s LEGAL obligation is to the product’s owner (the seller)- even if the seller’s wishes hinder the property selling.

That difference means the agent MUST maintain control of the marketing data during the sales process should the seller make changes to the product (take if off the market, change the price, update photos if the seller paints a room, etc). Failure to do so is a breakdown of the agent’s legal fiduciary responsibilities to the seller.

When a rogue website decides to use real estate data without regard for the agent who posted it online, the person who is ultimately harmed is the consumer.

Internally the industry has a need for gatekeeping as well. Real estate agents (and their marketing data) are regulated by state and federal agencies that can levy fines, suspend an agent’s state license to do business and even jail an agent (See HUD’s Fair Housing) while an investigation over marketing violations is being investigated. Even if innocent, an agent can be temporarily unable to earn income and be on the hook for legal representation while they defend themselves for actions taken by others who have taken liberties with their marketing data.

But back to the consumer…

Unlike the music industry, after real estate is sold or taken off the market the data in question becomes a legal liability to all parties involved should the original agent not have control to change the sales status or outright delete it.

What do I mean by this?

When real estate marketing data continues to be used after a property is no longer for sale, consumers looking to buy a home are deceived. The property owners may have consumers who wrongly believe a property is still for sale trespassing on their property to look at it (and have their privacy invaded or be legally liable for injuries to that person while on their property).

But with all that said, in your music industry analogy the buyer of a CD, regardless of their rights to the music they buy, still has no legal rights to take the record company’s marketing for that CD and use it for their own personal gain without the record company’s authorization to do so- and that’s exactly what a lot of websites are doing to real estate agents AND their sellers.

Bottom line, real estate marketing databases are content rich and interesting to consumers- so there’s a lot of revenue to be made by SEO savvy websites who can gain access to it. Unfortunately when it comes to SEO, more content is better so deleting old records isn’t in the best interest of websites seeking to maximize content to place advertising or capture and sell real estate leads back to agents. That’s a problem.

If you believe what’s in the best interest of consumers is for online marketing data to be accurate and honest, then there MUST be gatekeeping to make it happen because there’s too much money to be made by being inaccurate and dishonest.

It’s sad that these conversations forget that each record in a real estate database contains personal and private information about someone’s most personal space- their home.

And regardless of what anyone thinks about real estate agents, no one EVER has to hire one to sell their home. It’s a choice. So when a property owner decides to do it, they absolute have a right to assume their agent is in total control over their property’s individual marketing.

Switching topics to your actual post…

As far as rating agents go, Angie’s List has been doing it for years and I know of no legal action taken by a realtor organization against them.

What you need to ask yourself is if the rating website is legitimately trying to provide a valuable service to consumers and is taking measures to keep the ratings honest and factual while giving all sides the ability to share their viewpoint, or is it just a content grab for SEO purposes so the site operator can rake in Google Ad revenue or trick consumers into giving them their information with the intent on selling it back to agents.

In my opinion, this is really about shutting down the latter, not the former.

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