Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc.

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2102
METROPOLITAN REGIONAL INFORMATION SYSTEMS, INC.,
Plaintiff - Appellee,
v.
AMERICAN HOME REALTY NETWORK, INC.,
Defendant – Appellant,
and
JONATHAN J. CARDELLA; NATIONAL ASSOCIATION OF REALTORS,
Defendants.
-------------------------
CONSUMER ADVOCATES IN AMERICAN REAL ESTATE,
Amicus Supporting Appellant.
No. 12-2432
METROPOLITAN REGIONAL INFORMATION SYSTEMS, INC.,
Plaintiff – Appellee,
v.
AMERICAN HOME REALTY NETWORK, INC.,
Defendant – Appellant,
and
JONATHAN J. CARDELLA; NATIONAL ASSOCIATION OF REALTORS,
Defendants.
-------------------------
CONSUMER ADVOCATES IN AMERICAN REAL ESTATE,
Amicus Supporting Appellant.
Appeals from the United States District Court for the District
of Maryland, at Greenbelt. Alexander Williams, Jr., District
Judge. (8:12-cv-00954-AW)
Argued: May 15, 2013 Decided: July 17, 2013
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.
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.
2
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.
3
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., “©
1
Citations to “J.A.” throughout this opinion refer to the
Joint Appendix filed in the initial appeal, while “S.J.A.”
refers to the Supplemental Joint Appendix filed in the second,
consolidated appeal.
2
The record is not clear as to the precise manner in which
the TOU appears to subscribers.
4
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
3
See also J.A. 158-67, 426-30 (copies of registration
applications spanning the period from October 1, 2003 to
December 31, 2011); J.A. 406-25, 431-58 (corresponding
certificates of registration). As AHRN notes, these
registration certificates do not identify the names of any of
the authors or titles of individual photographs. See
Appellant’s Br. at 42.
5
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
6
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. See 888 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.
4
The district court dismissed Cardella from the action for
lack of personal jurisdiction. He is not party to this appeal.
5
Specifically, the district court granted AHRN’s motion for
clarification, granted in part MRIS’s motion for modification,
and denied AHRN’s motion for reconsideration or suspension.
7
See 904 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 (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
6
Following the district court’s entry of the revised order,
AHRN withdrew the objections raised in its first appeal to the
order’s lack of specificity and failure to require security.
See Appellant’s Supp. Br. at 2.
8
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. Compare 17 U.S.C. § 102, with 17 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
7
AHRN also challenges the district court’s evaluation of
the second, third, and fourth prongs of the preliminary
injunction analysis. Because we find AHRN’s arguments in this
regard to be without merit, and because they are largely factual
inquiries to which we afford substantial deference to the
district court, we reject them without further discussion here.
8
Nor could it reasonably do so. “For more than a century
photographs have been held to be copyrightable ‘writings’ under
Article I, § 8 of the Constitution.” Rogers v. Koons, 960 F.2d
301, 306 (2d Cir. 1992) (citation omitted). This is so even
when they are largely “factual,” rather than artistic, in
nature. See Burrow-Giles Lithographic Co. v. Sarony, 111 U.S.
53, 60-61 (1884) (recognizing wide copyright protection over
photographs in holding that a photograph of Oscar Wilde was an
(Continued)
9
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 as the original
work is created and fixed in some tangible form, becoming the
original work of art because the author was required to make
such creative decisions as placement of Oscar Wilde in front of
the camera, selection of the angle, light and shade, etc.).
9
As the Supreme Court has made clear, it is only a “narrow
category of works in which the creative spark is utterly lacking
or so trivial as to be virtually nonexistent” so as to render
the work “incapable of sustaining a valid copyright.” Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 359 (1991).
Furthermore, originality is usually considered a question of
fact, Craigslist, Inc. v. 3Taps Inc., 2013 WL 1819999, at *6
n.11 (N.D. Cal. April 30, 2013) (citations omitted); thus, we
may reverse the district court’s finding here only if it is
clearly erroneous--which it is not.
We also question the relevance of this issue to our present
inquiry. Our review is limited by the scope of the revised
preliminary injunction order, which reaches the issue of
copyright infringement only as to the photographs contained in
the database.
10
author’s property immediately upon fixation. See id. § 201(a).
Copyright ownership takes the form of several exclusive rights,
such as the right to reproduce the work. Id. § 106. Although
ownership vests initially with the author of the work, the
author may transfer any of the exclusive rights attendant to
copyright ownership by granting an assignment or exclusive
license. Id. § 201(d). A copyright owner may seek judicial
enforcement of his property rights against subsequent
infringers, so long as he has registered the work with the
Copyright Office prior to filing the copyright infringement
action. Id. § 411(a).
One type of “original work of authorship” protected under
the Copyright Act is a “compilation,” which is “formed by the
collection and assembling of preexisting materials or of data
that are selected, coordinated, or arranged in such a way that
the resulting work as a whole constitutes an original work of
authorship.” Id. § 101. The protection afforded to a
compilation is independent of any protection that might be
afforded to its individual components. Thus, ownership of the
copyright in a compilation, standing alone, “extends only to the
material contributed by the [compilation’s author] . . . and
does not imply any exclusive right in the preexisting material.”
Id. § 103(b).
11
As relevant here, compilations made up of individual
components which are themselves copyrightable are called
“collective works.” A collective work is:
a work, such as a periodical issue, anthology, or
encyclopedia, in which a number of contributions
constituting separate and independent works in
themselves, are assembled into a collective whole.
Id. § 101. The copyright in individual component works need not
be owned by the author of the collective work. See id. § 201(c)
(“Copyright in each separate contribution to a collective work
is distinct from copyright in the collective work as a whole,
and vests initially in the author of the contribution.”).
Indeed, the Copyright Act establishes a default presumption that
the author of a collective work does not own the copyright in
any component part:
In the absence of an express transfer of the copyright
or of any rights under it, the owner of copyright in
the collective work is presumed to have acquired only
the privilege of reproducing and distributing the
contribution as part of that particular collective
work, any revision of that collective work, and any
later collective work in the same series.
Id. § 201(c) (emphasis added). However, this statutory language
clearly states that where, as MRIS alleges here, the author of a
collective work has obtained the express transfer of the
copyrights in each separate contribution to that collective
work, Section 201(c)’s presumption of distinct ownership in the
collection’s component works does not apply.
12
B.
We turn now to the first question presented: whether MRIS
has failed to register its interest in the individual
photographs with the Copyright Office prior to filing suit for
copyright infringement as required by the Copyright Act. If
AHRN is correct, and the registrations obtained by MRIS do not
cover the photographs themselves, MRIS may not assert
infringement of those photographs by AHRN in this action. See
17 U.S.C. §§ 409, 411(a); Reed Elsevier, Inc. v. Muchnick, 559
U.S. 154, 157-58 (2010).
It is uncontested that MRIS filed registration applications
with the Copyright Office for the copyrighted material in the
Database under the regulations governing automated databases,
and attained corresponding certificates of registration.
However, the parties dispute the scope of those registrations.
AHRN argues that MRIS’s “failure to identify names of creators
and titles of individual works as required by 17 U.S.C. § 409(2)
and (6) limits the registration[s] to the Database itself” and
therefore that “the registration[s] do[] not extend to the
individual elements in the Database.” Appellant’s Br. at 42.
MRIS disagrees, pointing to its indication on the registration
applications that its Database consists of pre-existing
photographic works, and emphasizing the lack of any specific
statutory requirement that an automated database registration
13
list the names and authors of component works in order to
effectively register copyright ownership in those component
works. For the reasons that follow, we agree with MRIS.
Section 409 of the Copyright Act provides that an
application for registration of a compilation “shall be made on
a form prescribed by the Register of Copyrights and shall
include,” as relevant here, the name of the author or authors,
the title of the work, and “an identification of any preexisting
work or works that it is based on or incorporates, and a brief,
general statement of the additional material covered by the
copyright claim being registered.” 17 U.S.C. § 409. As applied
to a collective work whose author has also acquired the
copyrights in individual component works, the text of Section
409 is ambiguous at best. Some additional guidance is provided
in Section 408, which permits the Register of Copyrights to ease
the burden on claimants of collective works by promulgating
regulations to allow “for particular classes . . . a single
registration for a group of related works.” Id. § 408(c)(1);
see also Kay Berry, Inc. v. Taylor Gifts, Inc., 421 F.3d 199,
205 (3d Cir. 2005) (explaining that the Copyright Act’s
provision for group registration is “based on Congress’s desire
to liberalize the registration process”) (citing H.R. Rep. No.
94-1476, at 154 (1976), reprinted in 1976 U.S.C.C.A.N. 5659,
5770).
14
Pursuant to its authority under Section 408(c)(1), the
Register has promulgated rules allowing for group registration
of certain categories of collective works: automated databases,
related serials, daily newspapers, contributions to periodicals,
daily newsletters, and published photographs. 37 C.F.R. §
202.3(b)(5)-(10). The provision utilized by MRIS for its
quarterly registrations of the MRIS Database permits a single
registration to be made “for automated databases and their
updates or other derivative versions that are original works of
authorship.” Id. § 202.3(b)(5)(i). Under this provision, the
author of an automated database may file a single application
covering up to three months’ worth of updates and revisions, so
long as all of the updates or revisions (1) are owned by the
same copyright claimant, (2) have the same general title, (3)
have a similar general content, including their subject, and (4)
are similar in their organization. Id. Each registration must
also comply with certain notice, publication, and deposit
formalities. Id. As in the text of the statute, nothing in 37
C.F.R. § 202.3(b)(5) or any related regulation specifically
requires MRIS to list the name and author of every component
photograph it wishes to register as part of an automated
database registration.
Lacking clear statutory guidance on the matter, courts have
disagreed on how to apply the Copyright Act’s registration
15
requirement to collective works and their component parts. Some
courts have barred infringement suits to protect copyrighted
component works for failure to comply with Section 409’s pre-
suit registration requirement where the authors of those
component works were not listed in the application to register
the collective work. See, e.g., Muench Photography, Inc. v.
Houghton Mifflin Harcourt Publ’g Co., 712 F. Supp. 2d 84, 94
(S.D.N.Y. 2010) (“[A]sking the Court flatly to ignore the
requirement that the authors’ names be listed . . . goes a
bridge too far” in the context of automated databases); Bean v.
Houghton Mifflin Harcourt Publ’g Co., 2010 WL 3168624, at *4 (D.
Ariz. Aug. 10, 2010) (holding that registrations of collective
works containing numerous photographs by different
photographers, all of whom assigned their rights to the
collective work author prior to his registration, were
insufficient to permit each photographer to sue for copyright
infringement); Alaska Stock, LLC v. Houghton Mifflin Harcourt
Publ’g Co., 2010 WL 3785720, at *4 (D. Ala. Sept. 21, 2010)
(adopting approach taken in Bean and Muench in holding that
registration of CD-ROMS as automated databases did not effect
registration of the copyrights in the individual images that
comprise the databases).
On the other hand, some courts have recognized collective
work registrations as sufficient to permit an infringement
16
action on behalf of component works, at least so long as the
registrant owns the rights to the component works as well. See,
e.g., Craigslist v. 3Taps, 2013 WL 1819999, at *9 (“Craigslist’s
registration of the collective work (the overall Craigslist
website and database) served to register component works to
which Craigslist has an exclusive license, despite the omission
of individual authors from the registration application.”); Am.
Inst. of Physics v. Schwegman Lundberg & Woessner, P.A., 2012 WL
3799647, at *2 (D. Minn. July 2, 2012) (concluding that
plaintiffs’ registration of journals as collective works was
sufficient to satisfy the pre-suit registration requirement
vis-à-vis the individual articles contained in the journals,
where the plaintiffs also owned (or exclusively licensed) the
copyrights to those articles); Pac. Stock, Inc. v. Pearson
Educ., Inc., 2012 WL 93182, at *5 (D. Haw. Jan. 11, 2012)
(concluding that defendant failed to show plaintiff had not
validly registered its copyright interest in component works,
given the lack of specificity in the Copyright Act); Masterfile
Corp. v. Gale, 2011 WL 4702862, at *2 (D. Utah Oct. 4, 2011)
(finding that “[b]ecause [plaintiff] owns the constituent parts
of the collection the registration of the collection extends
copyright protection to the constituent parts”) (citation
omitted).
17
We find this latter approach more consistent with the
statutory and regulatory scheme. 10 Indeed, as for the trend
embodied in the former group of cases, “[t]he Copyright Office
is optimistic that those decisions will be overturned on
appeal.” Final Rule, Deposit Requirements for Registration of
Automated Databases That Predominantly Consist of Photographs,
77 Fed. Reg. 40268, 40270 (July 9, 2012). Bean, in particular,
is factually inapposite because it addresses the distinct issue
of whether individual photographers may use a third party’s
collective work registration to satisfy their pre-suit
registration requirement against subsequent infringers.
Here, MRIS owned the copyright in each of the thousands of
component photographs that had been transferred to MRIS prior to
10
Notably, the government’s amicus brief in the appeal of
Bean currently pending before the Ninth Circuit explains the
Department of Justice’s position that, “if the author of a
collective work is also the author of the component works, or if
the authors of the component works transfer all rights in the
works to him, the author of the collective work may claim a
copyright in the component works that make up the collective
work,” even where the registration for the collective work fails
to identify the author and title of each component work. See
J.A. 378 (citing 17 U.S.C. § 201(d)). The amicus brief points
to Circulars issued by the Copyright Office, in which “the
Copyright Office has consistently taken the position that the
registration of a collective work also registers any
independently copyrightable works within the collective work--
referred to here as ‘component works’--in which the claimant
owns all rights, even if the registration application does not
specify the titles and authors of the component works.” Id. at
380.
18
its automated database registrations--as we will discuss further
in Part C. In each registration, MRIS listed photographs as the
basis for its updated claim. As the court articulated in
Craigslist v. 3Taps, “it would be . . . [absurd and] inefficient
to require the registrant to list each author for an extremely
large number of component works to which the registrant has
acquired an exclusive license.” 2013 WL 1819999, at *10
(internal citation and quotation marks omitted). Adding
impediments to automated database authors’ attempts to register
their own component works conflicts with the general purpose of
Section 409 to encourage prompt registration, see U.S. Copyright
Office, Circular No. 1, 7: Copyright Basics (2012), and thwarts
the specific goal embodied in Section 408 of easing the burden
on group registrations, see Kay Berry, 421 F.3d at 204.
Before concluding our analysis, we discuss one recent
regulatory change, though the parties did not clearly address
it. In 2012 the Copyright Office promulgated, after notice and
comment, a final rule amending the regulations governing the
deposit requirement applicable to databases primarily composed
of photographs. See Final Rule, Deposit Requirements for
Registration of Automated Databases That Predominantly Consist
of Photographs, 77 Fed. Reg. 40268 (July 9, 2012). Under the
new rule, effective August 8, 2012, “when a registration is made
for a database consisting predominantly of photographs, and the
19
copyright claim extends to the individual photographs
themselves, each of those photographs must be included as part
of the deposit accompanying the application.” Id. at 40270.
“Identifying portions and a descriptive statement will no longer
constitute a sufficient deposit.” Id. 11 However, this amended
regulation was not in effect at the time of MRIS’s registrations
in this case, at which point no such requirement existed for
group registration of photographic component works. We will not
find MRIS’s compilation registrations inadequate for failing to
comply with later-added requirements. Furthermore, we note that
neither the Copyright Office nor the district court has
determined that the MRIS Database consists predominantly of
photographs, and we decline to undertake that decision here.
For these reasons, we endorse the district court’s
conclusion that “MRIS’s identification of ‘photographs’ . . . as
preexisting material and the basis of the copyright claims in
its copyright registrations” satisfied Section 409’s pre-suit
registration requirement. See 888 F. Supp. 2d at 706-07.
Consequently, MRIS is not barred from asserting infringement of
11
The final rule implements this change by adding
“automated databases that consist predominantly of photographs”
to the list of applications for which registrants are required
to provide all photographs covered by a registration as part of
the deposit. See 37 C.F.R. § 202.20(c)(2)(xx) (as amended August
8, 2012).
20
its copyrighted photographs, which were registered as component
works in its automated database registrations, in the present
action.
C.
Having determined that MRIS satisfied its pre-suit
registration requirement, we turn finally to AHRN’s challenge to
the merits of MRIS’s copyright infringement claim. MRIS must
prove two elements to establish copyright infringement: (1)
ownership of a valid copyright; and (2) AHRN’s copying of
constituent elements of the work that are original. See Feist,
499 U.S. at 361. As AHRN does not dispute the second element on
appeal, we need address only copyright ownership. Specifically,
AHRN argues that a subscriber’s electronic agreement to MRIS’s
TOU does not operate as an assignment of rights under Section
204 of the Copyright Act. MRIS responds that an electronic
transfer may satisfy Section 204’s writing and signature
requirements, particularly in light of the later-enacted
Electronic Signatures in Global and National Commerce Act (the
“E-Sign Act”), 15 U.S.C. § 7001 et seq., effective October 1,
2000. We agree.
A transfer of one or more of the exclusive rights of
copyright ownership by assignment or exclusive license “is not
valid unless an instrument of conveyance, or a note or
memorandum of the transfer, is in writing and signed by the
21
owner of the rights conveyed or such owner’s duly authorized
agent.” 17 U.S.C. § 204(a) (emphasis added); see also 3 Nimmer
on Copyright § 10.03[A][1]. Section 204(a) is intended “‘to
protect copyright holders from persons mistakenly or
fraudulently claiming oral licenses [or transfers].’” SCO
Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1211 (10th Cir.
2009) (quoting Eden Toys, Inc. v. Florelee Undergarment Co., 697
F.2d 27, 36 (2d Cir. 1982)). The signed writing requirement
also serves the purpose of “enhanc[ing] predictability and
certainty of ownership--Congress’s paramount goal when it
revised the Act in 1976.” Effects Assocs., Inc. v. Cohen, 908
F.2d 555, 557 (9th Cir. 1990) (internal quotation marks
omitted); cf. Schiller & Schmidt, Inc. v. Nordisco Corp., 969
F.2d 410, 412 (7th Cir. 1992) (Copyright Act “make[s] the
ownership of property rights in intellectual property clear and
definite, so that such property will be readily marketable”).
Significantly, Section 204(a)’s signed writing requirement
“is in fact different from a statute of frauds.” Lyrick
Studios, Inc. v. Big Idea Prods., Inc., 420 F.3d 388, 391 (5th
Cir. 2005) (citing Konigsberg Int’l, Inc. v. Rice, 16 F.3d 355,
357 (9th Cir. 1994)). “Rather than serving an evidentiary
function and making otherwise valid agreements unenforceable,
under § 204(a) a transfer of copyright is simply not valid
without a writing.” Id. (citation and internal quotation marks
22
omitted). Courts have elaborated that a qualifying writing
under Section 204(a) need not contain an elaborate explanation
nor any particular “magic words,” Radio Television Espanola S.A.
v. New World Entm’t, Ltd., 183 F.3d 922, 927 (9th Cir. 1999),
but must simply “show an agreement to transfer copyright.”
Lyrick Studios, 420 F.3d at 392 (citation omitted).
Before delving into the E-Sign Act and the sufficiency of
the transfer here, we note one initial consideration deriving
from the particular relationship of these parties. Courts have
held that, in situations where “the copyright [author] appears
to have no dispute with its [assignee] on this matter, it would
be anomalous to permit a third party infringer to invoke
[Section 204(a)’s signed writing requirement] against the
[assignee].” Eden Toys, 697 F.2d at 36; see also Radio
Television, 183 F.3d at 929 (adopting the rule of Eden Toys, and
listing other cases to do so). Put another way, Section 204(a)
“was intended to resolve disputes between owners and alleged
transferee[s], and was not intended to operate for the benefit
of a third-party infringer when there is no dispute between the
owner and transferee.” Kindergartners Count, Inc. v. Demoulin,
249 F. Supp. 2d 1214, 1221 n.22 (D. Kan. 2003) (internal
quotation marks omitted). Although MRIS did not raise this
argument, we nevertheless feel compelled to note the anomaly of
allowing AHRN to fabricate for its own benefit a dispute between
23
MRIS and its subscribers over copyright ownership in the
photographs.
The issue we must yet resolve is whether a subscriber, who
“clicks yes” in response to MRIS’s electronic TOU prior to
uploading copyrighted photographs, has signed a written transfer
of the exclusive rights of copyright ownership in those
photographs consistent with Section 204(a). Although the
Copyright Act itself does not contain a definition of a writing
or a signature, much less address our specific inquiry, Congress
has provided clear guidance on this point elsewhere, in the E-
Sign Act.
The E-Sign Act, aiming to bring uniformity to patchwork
state legislation governing electronic signatures and records,
mandates that no signature be denied legal effect simply because
it is in electronic form. 15 U.S.C. § 7001(a)(1).
Additionally, “a contract relating to such transaction may not
be denied legal effect, validity, or enforceability solely
because an electronic signature or electronic record was used in
its formation.” Id. § 7001(a)(2). The E-Sign Act in turn
defines “electronic signature” as “an electronic sound, symbol,
or process, attached to or logically associated with a contract
or other record and executed or adopted by a person with the
intent to sign the record.” Id. § 7006(5).
24
Although the E-Sign Act states several explicit
limitations, none apply here. The Act provides that it “does
not . . . limit, alter, or otherwise affect any requirement
imposed by a statute, regulation, or rule of law . . . other
than a requirement that contracts or other records be written,
signed, or in nonelectric form[.]” Id. § 7001(b). Because
Section 204(a) requires transfers be “written” and “signed,” a
plain reading of Section 7001(b) indicates that Congress
intended the provisions of the E-Sign Act to “limit, alter, or
otherwise affect” Section 204(a).
Furthermore, 15 U.S.C. § 7003 specifies types of contracts
or records to which the provisions of Section 7001 shall not
apply. See id. § 7003(a)-(b) (excepting, inter alia, “statutes
. . . governing the creation and execution of wills, codicils,
or testamentary trusts”; “adoption, divorce, or other matters of
family law”; “court orders or notices, or official court
documents”; and “any notice of . . . the cancellation or
termination of health insurance or benefits or life insurance
benefits”). Agreements to transfer exclusive rights of
copyright ownership are not included in these exceptions. 12 Nor
12
Section 7003 also explains that these exceptions are
meant to be phased out over time as consumer protections
surrounding e-signatures are bolstered. 15 U.S.C. § 7003(c)(i)
(“The Secretary of Commerce . . . shall review the operation of
the exceptions in subsections (a) and (b) of this section to
(Continued)
25
does the enumerated list contain any “catchall” generic category
into which copyright transfers might possibly fall. We decline
to read in an invitation to create new exceptions piecemeal.
AHRN’s proffered authorities to the contrary are
inapposite. None mention the E-Sign Act; instead, AHRN points
to courts which have invalidated transfers in circumstances not
at all analogous--for example, where there was no written
agreement, but merely one party’s declaration after the fact
that he had assigned his copyright interest, see Am. Plastic
Equip., Inc. v. Toytrackerz, LLC, 2009 WL 902422, at *6 (D. Kan.
Mar. 31, 2009), or where an e-mail purporting to transfer the
relevant rights was not actually sent by the owner of the
copyright interest, see McMunigal v. Bloch, 2010 WL 5399219, at
*8 (N.D. Cal. Dec. 23, 2010). We do not find these cases
relevant to our present inquiry.
There is little authority regarding the application of e-
signatures to instruments conveying copyrights. In what appears
to be the only case relying on the E-Sign Act in this context,
the Southern District of Florida held that the conveyance of a
copyright interest by e-mail was valid. See Vergara Hermosilla
v. Coca-Cola Co., 2011 WL 744098, at *3 (S.D. Fla. Feb. 23,
evaluate, over a period of 3 years, whether such exceptions
continue to be necessary for the protection of consumers.”).
26
2011), aff’d by per curiam opinion, 446 F. App’x 201 (11th Cir.
Nov. 3, 2011). In its brief analysis of the issue, that court
relied on the purpose of Section 204, which is to “resolve
disputes between copyright owners and transferees and to protect
copyright holders from persons mistakenly or fraudulently
claiming oral licenses or copyright ownership,” not to be
“unduly burdensome” or to “necessitate[] protracted negotiations
nor substantial expense.” Id. (citations and internal
quotations omitted). The court reasoned that allowing the
transfer of copyright ownership via e-mail pursuant to the E-
Sign Act accorded with, rather than conflicted with, this
purpose.
Additionally, courts have held that agreements reached by
electronic means are not invalid pursuant to analogous statutory
requirements. For example, the Federal Arbitration Act (the
“FAA”) specifies that its protections for arbitration agreements
pertain only to a “written provision” in any contract. 9 U.S.C.
§ 2. Courts have uniformly applied the E-Sign Act to subsequent
interpretations of the FAA’s written provision requirement.
See, e.g., Campbell v. Gen. Dynamics Gov’t Sys. Corp., 407 F.3d
546, 556 (1st Cir. 2005) (“[The E-Sign Act] definitively
resolves the issue . . . as to whether an e-mail agreement to
arbitrate is unenforceable under the FAA because it does not
satisfy the FAA’s ‘written provision’ requirement, 9 U.S.C. § 2.
27
By its plain terms, the E–Sign Act prohibits any interpretation
of the FAA’s ‘written provision’ requirement that would preclude
giving legal effect to an agreement solely on the basis that it
was in electronic form.”); Specht v. Netscape Comm’cns Corp.,
306 F.3d 17, 26 n.11 (2d Cir. 2002) (assessing whether clicking
to download software created enforceable agreement to arbitrate,
and noting that the matter of whether “the agreement is a
‘written provision’ despite being provided to users in a
downloadable electronic form . . . has been settled by [the E-
Sign Act],” although ultimately finding that consumers’ clicking
“yes” in the context presented in that case did not manifest
assent to license terms).
We find this analysis helpful in reaching the same
conclusion in the context of the Copyright Act. To invalidate
copyright transfer agreements solely because they were made
electronically would thwart the clear congressional intent
embodied in the E-Sign Act. We therefore hold that an
electronic agreement may effect a valid transfer of copyright
interests under Section 204 of the Copyright Act. 13 Accordingly,
13
We make no comment (nor did the district court) as to
whether the subscribers’ assent to MRIS’s TOU constitutes a
valid agreement under generally applicable principles of
contract law, or whether, as in Specht, 306 F.3d at 27, it might
fail for lack of mutual assent. AHRN waived this argument by
raising it for the first time in its reply brief. See McBurney
(Continued)
28
we agree with the district court that MRIS is likely to succeed
against AHRN in establishing its ownership of copyright
interests in the copied photographs.
III.
For the foregoing reasons, the decision of the district
court is
AFFIRMED.
v. Young, 667 F.3d 454, 470 (4th Cir. 2012), aff’d, 133 S. Ct.
1709 (2013).
29