The NeighborCity Lawsuits: Pyrrhic Victory, Thy Name is Feist

Posted By Rob Hahn December 13, 2012, Filed under: Marketing, Real Estate, Technology@ 2:11 AM

Victory is MINE! D’oh!

I haven’t written in a while, because… well, quite frankly, there hasn’t been much of note to write about. Maybe it’s just the end of the year and everyone’s just busy with holiday parties and such, but… not much has piqued my interest.

But then… I realized I missed out on this story from a couple of weeks ago. This one could be nothing, or it could be something very, very big indeed. Basically, the judge in the MRIS copyright lawsuit against NeighborCity clarified his ruling enjoining NeighborCity from using MLS data on its website. And there is… some interesting language in the ruling. Since it isn’t a formal opinion on the case itself, it may mean absolutely nothing.

Then again, if this case keeps going the way it appears to be headed, there may be um… consequences.

MRIS v. American Home Realty Network, Inc.

Let’s set the table here.

The basic gist of the lawsuit is that MRIS is alleging (and with good reason) that AHRN (parent company of NeighborCity) is violating its copyrights. It isn’t clear just how AHRN gets its listings data, but the evidence so far is that it is either scraping public websites or getting the MLS feed from a subscriber (which is a no-no, of course) or some other way. The important thing is that whatever way that is, it isn’t getting a proper license from the MLS — for either IDX or RETS — to do anything with the listings.

The case is working its way through the legal system, and in August, MRIS was granted a preliminary injunction against AHRN to stop “unauthorized copying, reproduction, public display, or public distribution of copyrighted content from the MRIS Database, and from preparing derivative works based upon the copyrighted content from the MRIS Database”.

That’s a huge win for MRIS, since the standard for granting a preliminary injunction includes the idea that the party requesting the injunction is likely to prevail at trial. From the opinion granting the injunction:

At this time, AHRN has not presented credible evidence that MRIS is engaged in this litigation for any unlawful objective, as opposed to merely enforcing its copyrights. Accordingly, the Court finds that MRIS has made a clear showing of a likelihood of success on the merits on their copyright claims.

Yeah, that’s pretty much a butt-kicking right there in legal terms.

The news in November, however, was that the judge clarified his injunction ruling in a way that makes me go Hmmmm.

The Clarification

Let’s look at the actual language the court used:

The Court’s revised Order does not imply that MRIS’s copyright interests in the MRIS Database end with the photographs. To the contrary, MRIS has demonstrated a likelihood of success on the merits that the MRIS Database exhibits the requisite originality for copyright protection. The Court is mindful, however, that “the copyright in a factual compilation is thin. Notwithstanding a valid copyright, a subsequent compiler remains free to use the facts contained in another’s publication to aid in preparing a competing work, so long as the competing work does not feature the same selection and arrangement.” Feist, 499 U.S. at 349. For compilations and other copyrightable works, “copyright protection may extend only to those components of a work that are original to the author.” Id. at 348. Generally proscribing the misappropriation of “copyrighted content from the MRIS Database” would be too vague in light of the unresolved and complex factual issues in this case, and the Court will adopt a cautious approach in setting forth the initial terms of the preliminary injunction. If, following discovery, MRIS (1) identifies original selection and arrangement of informational content in the MRIS Database and establishes AHRN’s copying of that original selection and arrangement or (2) establishes that AHRN has copied particular, copyrightable textual elements which are also owned by MRIS, and meets the other requirements for a preliminary injunction, the Court will consider revising the scope of the Order. [Emphasis added.]

What the…

NeighborCity is trumpeting this as a major triumph. I don’t know about that just yet, since the trial is long from over. But translating from legalese to English, the essential issue is this: photographs are absolutely protected by copyright (the court pretty much beat NeighborCity down on that one in the original injunction ruling). Anything that displays any sort of creativity and originality — for example, the Property Description in a real estate listing — is protected by copyright.

Bare facts, however, are not.

That’s the holding of Feist v. Rural, 499 U.S. 340 (1991) that the court cites. Feist was a Supreme Court case — meaning, that’s the whole shebang, boys, the end of the line, the Grand Mufti himself — that held that information itself cannot be protected by copyright. For the sake of non-lawyers, let’s use the Wikipedia explanation:

Since facts are purely copied from the world around us, O’Connor concludes, “the sine qua non of copyright is originality”. However, the standard for creativity is extremely low. It need not be novel, rather it only needs to possess a “spark” or “minimal degree” of creativity to be protected by copyright.

In regard to collections of facts, O’Connor states that copyright can only apply to the creative aspects of collection: the creative choice of what data to include or exclude, the order and style in which the information is presented, etc., but not on the information itself. If Feist were to take the directory and rearrange them it would destroy the copyright owned in the data.

The most interesting part of the Feist ruling for our purposes is that rearranging a directory destroys the copyright owned in the compilation of the data. Compilation copyright, which is the most important one for MLS’s, applies only to the “creative choice of what data to include or exclude, the order and style in which the information is presented, etc., but not on the information itself.”


Now, given Feist, I suppose the implications are nothing really new, but I don’t suppose that MLS’s (MRIS and NorthstarMLS are both suing AHRN on similar grounds, and both got preliminary injunctions vis-a-vis photographs and “creative” works, such as agent comments, property descriptions, etc.) will simply give up. I think they can make the argument that even the “facts” in a MLS database — such as number of bathrooms — have a spark or minimal degree of creativity/originality in them, primarily because of the compliance work that the MLS does.

The full trial ruling should make it clear whether the work of compliance, or perhaps some other angle (maybe the data entry screens resulting in the entry of the information on the listings?), is enough to grant copyright protection.

I don’t think so, however, based on Feist’s clear rejection of the “sweat of the brow” doctrine (which would apply, one would think, directly to the hard work of compliance that MLS’s do), among other things.

So… what is likely to happen?

Well, for starters, it appears that both MRIS and NorthstarMLS will absolutely prevail on the issue of photographs and original text (property descriptions, agent comments, public comments, etc.). They will both prevail if NeighborCity copied the format of the listing data. So that’s a win.

But it may be a pyrrhic victory indeed if the court makes it clear in the ultimate ruling that the facts contained in a MLS database can be freely copied and used by anybody, including a competitor.

Why? Because the really important part of a property listing isn’t likely to be the agent’s sales pitch of the home for sale. Y’know, the “Exquisite two-story colonial on quiet cul-de-sac, with granite countertops and mermaids in the swimming pool” type language. The really important part are the facts:

  • How many bedrooms?
  • How many bathrooms?
  • Square footage?
  • Price?
  • School district?
  • Listing agent?
  • How many days on market?

Consider a company like HomeLight, about whom I recently wrote on Inman. It doesn’t post any property listings on the Internet. It uses MLS data to match buyers and sellers with agents, based on objective, algorithm-driven qualifications. It does use photographs of agents, which would be a big no-no under the likely result of MRIS v. AHRN but… if we should know anything about real estate agents it’s that they love having their photographs on stuff. Like business cards and bus benches — I see no reason why they wouldn’t want to have their photos on a website, so getting them to upload that is a piece of cake.

The big brouhaha appears to be that HomeLight doesn’t have the license to use MLS data to create these “derivative works”. Well, that may be true today (or may not be true, given Feist)… but if the court actually rules directly on the MLS database in MRIS v. AHRN?

One commenter, Ruthmarie Hicks, on the Inman article was upset that HomeLight was using MLS data, saying:

This needs to come from the INDUSTRY itself. There are way too many people trying to turn a buck off of MLS data. HELLO????? That’s OUR data. I’m tired of MY DATA being given away to anyone who wants to use it for whatever reason imaginable. NAR needs to protect its people not give away the store and expect agents to buy it back for a hefty fee.

Um, Ruthmarie… the court may rule that actually, that ain’t YOUR DATA at all, if Feist is controlling here (and it is absolutely controlling, unless the district court finds some reason why property data in a MLS is different).

And if such a ruling does come down, HomeLight is the least of your concerns. Because it means that anybody can copy the facts of a property listing on any MLS and use it however he wishes to, including competing with the MLS itself. Again, Feist makes that clear as well.

Companies can absolutely scrape any IDX website in existence for all of the facts on a particular property for sale, then use it to get customers, or to construct market reports, or generate whatever product they wish.

Want to stop the scrapers? Of course you’d want to do that… but remember the Google IDX issue from a couple of years back? This was the MIBOR anti-scraping rule that caused a ruckus, and forced NAR to change its MLS Policy to specify that anti-scraping measures do not require the MLS to prevent the indexing of IDX listings by “recognized search engines”.

At that time, technology folks were scratching their heads saying, well… the technology behind indexing is pretty much the same as the technology used to scrape… so uh… it’s kinda hard, if not impossible, to stop scraping but allow Google to index all those IDX listings…. Plus what the heck does “recognized search engine” mean anyhow? Is Zillow a recognized search engine? Is AskJeeves? No one really knows.

Me and My Chicken Little Imagination

So how’s this for a scenario? launches a service that anyone can join, and for $5/month, he can enter listings, search listings, run CMA reports, setup email gateways, get tax record data… in short, join a MLS for all intents and purposes. And it will have in its database every single property for sale at that time in the United States. Because its bots go and scrape every indexable IDX website in the country and dump the data into its database.

Granted, none of the listings will have any photos, unless someone uploaded them directly into And there won’t be any showing instructions or property descriptions, unless, again, someone entered that information in directly. But AmericanMLS will offer cooperation and compensation via its subscription agreement.

When a property goes off-market, AmericanMLS will update the status just as quickly as some agent’s IDX website updates the status. No Zillow/Trulia style data inaccuracy problems here, boyo. No dealing with ListHub and syndication feeds here. Nope, just plain old scrape, scrape, scrape.

And when says anyone can join, they mean anyone, not just REALTORS(R). Anyone with a real estate license, or, for that matter, FSBO’s and buyers themselves can join for $5/month. Sure, NAR will condemn, will be a pariah at industry gatherings, and they won’t win an Inman Innovator awards, but… these guys are a software shop out of Bangladesh and don’t really care. Maybe brokers and agents will talk of boycotting it… until the lawyers start worrying about antitrust implications of such coordinated boycotts…

Sure, compared to a real MLS, this travesty out of Bangladesh sucks. But it’s $5/mo instead of $50/mo that the real MLS charges.

Now what?

Yeah, you’re probably right. I’m just being a big giant Chicken Little. The sky won’t fall. I’m being overly dramatic. Nothing much will change; it never does in real estate, y’know? Move on, folks, nothing to see here.

And yet…



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