Assignment Of Copyright Through Terms Of Use: Does E-Sign Make It OK? A Tool For B2B Sites Dealing With Unauthorized Access To Their Content?

It is a common practice for Web site providers who accept submissions of user-generated content to include a license provision in their "Terms of Use" to obtain rights to use the content. Rather than relying on the uncertain scope of an implied license, the provider can clarify, and hopefully avoid disputes over, the scope of its right to use the user's work. A typical copyright license conveys to the provider a broad, non-exclusive license to reproduce, edit, modify and otherwise use the user-generated content, while implicitly (and in some cases, explicitly) providing that the ownership of the copyright in such content is retained by the user. The use of a "clickwrap" agreement to convey a non-exclusive license is generally well-accepted and non-controversial.

However, under Copyright Act Section 501, a non-exclusive licensee may not bring an action for copyright infringement. See, e.g., HyperQuest, Inc. v. N'Site Solutions, Inc., 632 F.3d 377 (7th Cir. Jan. 19, 2011). Accordingly, a Web site provider that seeks to litigate based on an improper use of user-generated content may need more. They may in fact need an exclusive license or an actual transfer of ownership in the underlying copyright. The question is, can one obtain an exclusive license or assignment of copyright through online terms of use?

Precisely this scenario is presented in a current dispute between a real estate multiple listing service and an online real estate information aggregator over the copying of photographs and listing information. The service provider is asserting claims with respect to user-generated content as a copyright owner, based upon an agreement presented by the provider to its users when they upload photographs to the provider's database.

Metropolitan Regional Information Systems, Inc. (MRIS), the plaintiff, operates a multiple listing service that serves licensed real estate brokers and agents. Brokers and agents who enter into a subscriber agreement with MRIS can upload their listing information, including photographs of properties, to the MRIS site, and then display those and other listings on their own Web sites.

The defendant, American Home Realty, Inc. (AHR), is an online service provider that aggregates real property listing information on its www.neighborcity.com site. According to AHR, the information that it presents comes from a variety of public domain and other sources, including the MRIS online database.

In March 2012, MRIS brought suit...