It’s a problem that has vexed website owners since the days of the dot-com boom – how to make certain user-generated content available to users or subscribers, but also prevent competitors and other unauthorized parties from scraping, linking to or otherwise accessing that content for their own commercial purposes.

The law on scraping and linking remains undeveloped, and has not provided clear remedies for this kind of access.  Given the state of the law, sites often employ the “kitchen sink” strategy against scraping competitors: throwing multiple claims at the unauthorized party in the hope that at least one viable legal theory survives.  We last wrote about this approach in a May 2009 post when Facebook brought a multi-count suit against Power Ventures, an online service that allowed social networking users to access all of their accounts through one interface.

One tool that website owners would like to have to combat unauthorized use of user-generated content is copyright — that is, the ability to allege that the unauthorized use of user-generated content constitutes an infringement of the website publisher’s copyright.  Unfortunately, there is a problem….

Website providers that collect user-generated content typically include licensing provisions in their terms of use whereby users grant the site a non-exclusive license to content while (implicitly or explicitly) providing that the ownership of any copyright in such content remains with the user.  The use of a clickwrap agreement to convey a non-exclusive license to such content is a standard practice. Under Copyright Act Section 501, however, a non-exclusive licensee may not bring an action for copyright infringement.

Accordingly, a website provider that wants legal standing to bring a copyright claim against unwanted entities scraping content needs an online agreement that grants additional rights – namely, an exclusive license or an actual transfer of ownership in the underlying copyright.  Putting aside – for a moment – the issue of how users will react if a website owner tries to do this, the question is, from a legal perspective, can one obtain an exclusive license or assignment of copyright through online terms of use assented to by users?

This issue was recently addressed by the Fourth Circuit in a dispute between a real estate multiple listing service and an online real estate information aggregator over the copying of photographs and listing information. The listing service provider asserted claims with respect to user-submitted photographs as a copyright owner, based upon an agreement presented to its users when they uploaded photographs to the provider’s database. We previously discussed this dispute in a prior post when the lower court granted a preliminary injunction against the defendant-aggregator. Metropolitan Regional Information Sys., Inc. v. American Home Realty Network, Inc., 888 F. Supp. 2d 691 (D. Md. 2012).  The defendant filed an interlocutory appeal challenging the order and the Fourth Circuit affirmed the lower court’s ruling.  Metropolitan Regional Info. Sys., Inc. v. American Home Realty Network, Inc., 2013 WL 3722365 (4th Cir. July 17, 2013).

In the case, the parties were competitors in the real estate listing business. The plaintiff (“MRIS”) operated an online fee-based “multiple listing service” for real estate brokers and agents. Brokers and agents who entered into a subscriber agreement with MRIS could upload their listing information, including photographs of properties, to the MRIS site, and then display those and other listings on their own websites.  By uploading information, brokers and agents agreed to terms containing the following provision:

“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. [emphasis added]

The defendant (“AHRN”) was an aggregator that took listing data from public domain sources and online databases like MRIS and made it directly available to consumers on its “real estate referral” website.  AHRN had not acquired permission from MRIS to reproduce, display, or otherwise use the MRIS Database.  MRIS brought copyright infringement claims against AHRN for the alleged unauthorized use of MRIS listings, particularly the uploaded photographs of properties. The lower court entered a preliminary injunction order prohibiting AHRN’s display of MRIS’s photographs on AHRN website, and in a subsequent decision, clarified the scope of the injunction, stating that the injunction only covered AHRN’s use of MRIS’s photographs–not the database compilation itself or any textual elements that might be considered part of the compilation.

On appeal, the court addressed, among other things, the issue of whether a MRIS subscriber who assented to online terms of use prior to uploading copyrighted photographs signed a written copyright assignment in those photographs consistent with Section 204(a) of the Copyright Act, 17 U.S.C. § 204(a). Specifically, the defendant AHRN argued that a subscriber’s electronic assent to the MRIS terms did not operate as an assignment of rights under § 204. The plaintiff MRIS responded that an electronic transfer satisfies § 204’s writing and signature requirements, particularly in light of the later-enacted E-Sign Act, 15 U.S.C. § 7001.

Under §204(a), 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 owner of the rights conveyed or such owner’s duly authorized agent.” Generally speaking, a qualifying writing under Section 204(a) need not contain an elaborate explanation or any particular “magic words.”

The E-Sign Act, which sought to bring uniformity to state electronic signatures law, mandates that no signature be denied legal effect simply because it is in electronic form and that, barring certain exceptions, a contract may not be denied legal effect solely because an electronic signature or electronic record was used in its formation. 15 U.S.C. §§ 7001(a)(1), (a)(2).

The court first found that because Section 204(a) of the Copyright Act requires transfers be “written” and “signed,” the E-Sign Act’s dictates on electronic signatures would apply to the copyright transfer provisions.  The court ultimately held that an electronic agreement may effect a valid transfer of copyright interests under Section 204 of the Copyright Act, affirming the lower court’s ruling that MRIS was likely to succeed against AHRN in establishing its ownership of copyright interests in the copied photographs.

This ruling is important for online businesses that want an alternative litigation strategy to protect their user-generated content from scraping by competitors for commercial purposes.  However, this strategy may not be feasible in every instance; the user “politics” on each site are different.  For example, while the users of the business-to-business MRIS online database were professional real estate agents who may have accepted the concept of assigning the copyright in listing photographs, other consumer-oriented social media sites or photo sharing services have experienced user backlash over similar changes to website terms of use. Indeed, last year, the online classified ad provider Craigslist encountered a flurry of controversy when it changed its terms of service for a limited time to gain exclusive rights to user content, in preparation to litigate claims against certain aggregators that were scraping content from its site and republishing it on websites and mobile apps (See generally Craigslist, Inc. v. 3Taps, Inc., 2013 WL 1819999 (N.D. Cal. Apr. 30, 2013).