Metro. Reg'l Info. Sys., Inc. v. Am. Home Realty Network, Inc.

722 F.3d 591

METROPOLITAN REGIONAL INFORMATION SYSTEMS, INC., Plaintiff–Appellee,

v.AMERICAN HOME REALTY NETWORK, INC., Defendant–Appellant,andJonathan J. Cardella; National Association of Realtors, Defendants.

Consumer Advocates in American Real Estate, Amicus Supporting Appellant.

Metropolitan Regional Information Systems, Inc., Plaintiff–Appellee,

v.American Home Realty Network, Inc., Defendant–Appellant,andJonathan J. Cardella; National Association of Realtors, Defendants.

Consumer Advocates in American Real Estate, Amicus Supporting Appellant.

Nos. 12–2102, 12–2432.

United States Court of Appeals, Fourth Circuit.

Argued: May 15, 2013.

Decided: July 17, 2013.

ARGUED:Peter Farkas, Farkas & Toikka LLP, Washington, D.C., for Appellant. Margaret Aldona Esquenet, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, D.C., for Appellee. ON BRIEF:Richard S. Toikka, Farkas & Toikka LLP, Washington, D.C.; Christopher R. Miller, Chief Legal Officer and General Counsel, American Home Realty Network, Inc., San Francisco, California, for Appellant. John T. Westermeier, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Reston, Virginia, for Appellee. Douglas R. Miller, Executive Director and Attorney, Consumer Advocates in American Real Estate, Navarre, Minnesota, for Amicus Supporting Appellant.

Before TRAXLER, Chief Judge, and GREGORY and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Chief Judge TRAXLER and Judge GREGORY joined.

DUNCAN, Circuit Judge:

Appellant American Home Realty Network, Inc. (“AHRN”) and Appellee Metropolitan Regional Information Systems, Inc. (“MRIS”) are competitors in the real estate listing business. MRIS offers an online fee-based “multiple listing service” to real estate brokers and agents, while AHRN circumvents those brokers and agents by taking listing data from online database compilers like MRIS and making it directly available to consumers on its “real estate referral” website.

In this action, MRIS contends that AHRN's unauthorized use of its copyrighted material constitutes infringement under the Copyright Act. The district court entered a preliminary injunction order prohibiting AHRN's display of MRIS's photographs on AHRN's referral website, and AHRN appealed. For the reasons that follow, we affirm.

I.

A.

MRIS operates an online multiple listing service, commonly known as an “MLS,” in which it compiles property listings and related informational content (the “MRIS Database”). MRIS offers this service to real estate broker and agent subscribers in Maryland, Virginia, the District of Columbia, and parts of Delaware, West Virginia, and Pennsylvania.

Upon payment of a subscription fee to MRIS and assent to terms, subscribers upload their real estate listings to the MRIS Database and agree to assign to MRIS the copyrights in each photograph included in those listings. In relevant part, the MRIS Terms of Use Agreement (“TOU”) reads as follows:

All images submitted to the MRIS Service become the exclusive property of [MRIS]. By submitting an image, you hereby irrevocably assign (and agree to assign) to MRIS, free and clear of any restrictions or encumbrances, all of your rights, title and interest in and to the image submitted. This assignment includes, without limitation, all worldwide copyrights in and to the image, and the right to sue for past and future infringements.

J.A. 464 ¹ (emphasis added). In order to submit photographs to the MRIS Database, the subscriber must click a button to assent to the TOU. ² In exchange, subscribers are granted access to all of the real estate listings in the MRIS Database (including competitors' listings) and a nonexclusive license to display those listings on their own brokerage and/or agency websites via data feed.

To protect its claims of copyright ownership in the MRIS Database, MRIS affixes its mark and copyright notice—e.g., “©2012 MRIS”—to all photographs published in the MRIS Database, and registers the MRIS Database with the Copyright Office each quarter under the registration procedures applicable to automated databases. See J.A. 460.³ For example, one application from 2008 reads, in pertinent part:

Type of Work: Computer File

Application Title: Group registration for automated database titled Metropolitan Regional Information Systems, Inc. MRIS Database; unpublished updates from September 1, 2007 to December 31, 2007.

Authorship on Application: [MRIS], employer for hire[.]

Pre-existing Material: Previous versions of unpublished automated database updated and revised from September 1, 2007 to December 31, 2007.

Basis of Claim: Daily updated and revised text and images and new text and images.

Copyright Note: Regarding deposit: Application states that ID material (database records) from representative date December 31, 2007.J.A. 426. Other applications list “text,” or “text, photographs,” as pre-existing material or the basis of the claim. See, e.g., J.A. 428–30. According to MRIS, its quarterly registrations of the MRIS Database “extend to the collection and compilation of the real estate listings in the MRIS Database and to expressive contributions created by MRIS or acquired by MRIS, including the photographs included in the listings.” J.A. 460.

AHRN is a California real estate broker that owns and operates the website NeighborCity.com, a national real estate search engine and referral business. Among other sources, AHRN acquires the data displayed on NeighborCity.com from real estate brokers and agents, county tax assessors' offices and other public records, foreclosure data providers, and multiple listing services such as the MRIS Database. AHRN expressly disclaims any role in the creation of the data it makes available: the terms of use for NeighborCity.com provide that the user understands “all the data on properties available for sale or rent is maintained by various ... MLSs” and that AHRN “does not alter or add to this information on the properties in any way.” J.A. 360. That AHRN has displayed on NeighborCity.com real estate listings containing copyrighted photographs taken from the MRIS Database is not presently disputed.

B.

On November 18, 2011, MRIS sent AHRN a cease and desist letter. In response, AHRN suggested the parties develop a “custom license” whereby AHRN could continue to use the listing data to which MRIS claimed a proprietary interest. MRIS rejected that idea and, on March 28, 2012, filed suit against AHRN and its CEO, Jonathan Cardella,⁴ alleging various claims related to copyright infringement. A few days later, MRIS sought a preliminary injunction under the Copyright Act, which authorizes a federal court to “grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a). AHRN moved to dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim. The district court denied AHRN's motion to dismiss, and granted MRIS's motion for preliminary injunction. See888 F.Supp.2d 691 (D.Md.2012). AHRN timely appealed.

In response to motions filed by the parties, the district court revised its preliminary injunction order while the appeal was still pending.⁵ The revised order specifies that the court enjoins only AHRN's use of MRIS's photographs—not the compilation itself or any textual elements that might be considered part of the compilation—and also renders the injunction's effect conditional upon MRIS's posting of security. See904 F.Supp.2d 530 (D.Md.2012). AHRN again appealed, and the two appeals were consolidated. We thus review AHRN's remaining challenges to the district court's revised preliminary injunction order.⁶

II.

We review the district court's decision to grant a preliminary injunction for abuse of discretion, assessing its factual determinations for clear error and its legal conclusions de novo. Pashby v. Delia, 709 F.3d 307, 319 (4th Cir.2013) (citing Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 366 (4th Cir.2012)). Parties seeking a preliminary injunction must demonstrate that (1) they are likely to succeed on the merits, (2) they are likely to suffer irreparable harm, (3) the balance of hardships tips in their favor, and (4) the injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008).

AHRN argues that MRIS has failed to show a likelihood of success on its copyright infringement claim primarily for two reasons: (1) when MRIS registered its Database it failed to properly register its copyright in the individual photographs; and (2) MRIS does not possess copyright interests in the photographs because the subscribers' electronic agreement to MRIS's terms of use failed to transfer those rights.⁷

We note at the outset that our consideration of the parties' arguments is complicated by their conflation of copyright protection and copyright registration. These are two entirely distinct matters, governed by separate sections of the Copyright Act. Compare17 U.S.C. § 102, with17 U.S.C. §§ 408–412. Unlike registration, which we discuss at length below, the scope of copyright protection is not at issue in this appeal. The district court's revised order enjoins only the use of photographs uploaded by MRIS's subscribers, and AHRN does not contest that these photographs of homes and apartments are worthy of copyright protection.⁸ To the extent AHRN argues that the MRIS Database itself fails to merit copyright protection in its originality as a compilation, we reject this contention as well.⁹

In the following discussion, we first set forth the necessary statutory framework, and then consider each of AHRN's arguments in turn. Although the arguments present novel questions, we ultimately reject both.

A.

In general, the Copyright Act protects “original works of authorship fixed in any tangible medium of expression.” 17 U.S.C. § 102. This protection commences as soon...