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Electronic Agreements Can Effect Copyright Transfers: Fourth Circuit
Practical Law Legal Update 6-534-9025 (Approx. 4 pages)
Electronic Agreements Can Effect Copyright Transfers: Fourth Circuit
by Practical Law Intellectual Property & Technology
| Published on 19 Jul 2013 • USA (National/Federal) |
In Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc. the US Court of Appeals for the Fourth Circuit held that registration of a photograph database satisfied the pre-suit registration requirement for the component photographs even though the application did not identify the photographs' titles or authors. The court also held that under the Electronic Signatures in Global and National Commerce Act (E-Sign Act), an online click-through agreement satisfied the signed writing requirement to effectively transfer copyright ownership under Section 204 of the Copyright Act.
On July 17, 2013, the US Court of Appeals for the Fourth Circuit issued an opinion in Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc. affirming the district court's entry of a preliminary injunction order prohibiting American Home Realty Network (AHRN) from displaying Metropolitan Regional Information Systems' (MRIS) photographs on AHRN's website. Two noteworthy aspects of the decision were the court's determination that:
- Metropolitan Regional Information Systems' (MRIS) copyright registration in its online database also covered the database's component photographs, where MRIS indicated on its copyright applications that the database consisted of pre-existing photographic works but did not identify each photograph's title and author.
- Subscribers' click-through assent to MRIS's Terms of Use that, among other things, provided for subscribers' assignment of the copyrights in uploaded photographs satisfied the signed writing requirement for an effective assignment under Section 204 of the Copyright Act.
Background
American Home Realty Network and MRIS are both in the real estate listing business. MRIS offers an online fee-based multiple listing service to real estate brokers and agents that includes property listings and other information in MRIS's database (MRIS Database). When MRIS subscribers upload real estate listings to the MRIS Database, they must click on a button to assent to the MRIS Terms of Use. The Terms of Use, among other things, provide for assignment of the copyrights in uploaded photographs to MRIS. To protect its copyright ownership claims in the MRIS Database, MRIS:
- Includes a copyright notice on all photographs published in the MRIS Database.
- Registers the MRIS Database with the Copyright Office quarterly under procedures for automated databases.
MRIS's copyright applications indicate that the MRIS Database includes preexisting images, text or photographs. However, they do not identify the title or author of individual photographs.
AHRN owns and operates neighborcity.com, a website that provides a national real estate search engine and referral business. AHRN populates neighborcity.com with data taken from many sources, including multiple listing services like the MRIS Database.
After learning that neighborcity.com displayed listings and photographs from the MRIS Database, MRIS sued AHRN for copyright infringement in the US District Court for the District of Maryland and sought a preliminary injunction. The district court issued a preliminary injunction prohibiting AHRN from displaying MRIS's photographs on AHRN's website. AHRN appealed.
Outcome
On appeal, the Fourth Circuit affirmed the district court's preliminary injunction order against AHRN. AHRN argued that MRIS failed to show a likelihood of success on its copyright infringement claim because:
- MRIS failed to properly register its copyright in the individual photographs when it registered the MRIS Database and therefore cannot sue for copyright infringement.
- MRIS does not have copyright interests in the photographs because the subscribers' electronic agreement to MRIS's Terms of Use did not effectively transfer those rights as required by Section 204 of the Copyright Act.
After rejecting both of AHRN's arguments and determining that MRSI had a valid copyright interest in the MRIS Database photographs, the Fourth Circuit affirmed the district court's grant of the preliminary injunction against AHRN.
MRIS Satisfied the Registration Requirement
The Fourth Circuit found that MRIS satisfied the Copyright Act's pre-suit registration requirement by registering the copyright in the MRIS Database and indicating in the application that the MRIS Database consists of pre-existing photographic works. The court rejected AHRN's argument that that MRIS's failure to identify the authors' names and titles of each individual work afforded only the MRIS Database protection, reasoning that:
- There is no specific statutory or regulatory requirement that an automated database registration must list the names and authors of the individual works.
- To require the registrant of an automated database to list each author for the component works would conflict with:
- the general purpose under Section 409 of the Copyright Act to encourage prompt registration; and
- the specific goal of Section 408 of the Copyright Act of easing the burden on group registrations.
Section 409 of the Copyright Act provides for registration of compilations. Section 408 allows the Register of Copyrights to issue regulations allowing single registration for certain groups of related works to ease the burden on claimants for collective works.
The Fourth Circuit briefly noted a final rule enacted in 2012, requiring a deposit for databases primarily composed of photographs. Because this rule was not in effect when MRIS registered, this later-added requirement did not affect MRIS's registration.
Click-Through Agreement Satisfied Signed Written Requirement
The Fourth Circuit also found that MRIS subscribers' click-through assent to MRIS's Terms of Use effectively transferred the copyright in the uploaded photographs to MRIS, holding that an electronic agreement may effect a transfer under Section 204 of the Copyright Act. Section 204 provides that to be effective, an assignment or exclusive license of one or more of copyright's exclusive rights must be in writing and signed.
Noting that the Copyright Act does not define "signed" or "writing," or specifically address whether click-through assent satisfies the requirement, the court found guidance in the Electronic Signatures in Global and National Commerce Act (E-Sign Act), which:
- Aims to bring uniformity to legislation governing electronic signatures and records.
- Prohibits signatures from being denied legal effect because they are in electronic form.
Supporting its conclusion that copyright interests may be transferred by electronic agreement, the court noted that:
- Agreements to transfer copyright interests are not among the types of agreements specifically excluded from the E-Sign Act's scope.
- Invalidating copyright transfer agreements solely because they were made electronically would thwart the congressional intent of the E-Sign Act.
- While there is little authority addressing the application of e-signatures to copyright transfers, courts have held electronic agreements valid under analogous statutory requirements.
Practical Implications
This case is notable for its holding that the E-Sign Act allows an electronic agreement to effect a valid transfer of copyright interests under Section 204 of the Copyright Act. Assignees and assignors should be mindful that, in the Fourth Circuit, click-through agreements will effectively transfer copyright interests.