E-Sign Act Held Applicable to Copyright Transfers

In a copyright dispute between rival real estate listings websites, an appeals court has for the first time ruled on the effect of the federal E-Sign Act on copyrights.  Finding that the E-Sign Act applies to copyright transfers, the Fourth Circuit held that copyright interests can legally be transferred electronically.

Metropolitan Regional Information Systems Inc. v. American Home Realty Network Inc., 4th Cir., No. 12-2102, is a dispute arising out of American Home Realty Network’s (AHRN) use of Metropolitan Regional Information System’s (MRIS) copyrighted photographs on its website.  MRIS operates a fee-based real estate listings service for real estate brokers and agents, while AHRN takes listings data from compilers like MRIS and offers it directly to consumers.  AHRN displayed MRIS’ photographs on its website, which MRIS contended constituted infringement under the Copyright Act.  A district court granted MRIS’ request for a preliminary injunction prohibiting AHRN’s display of MRIS’ photographs on its website.

As part of MRIS’ Terms of Use Agreement, MRIS subscribers agree to assign to MRIS the copyrights in each photograph included in the uploaded listings.  The subscriber must click a button assenting to the Terms of Use Agreement in order to submit the photographs to the MRIS database.  AHRN argued that MRIS does not possess copyright interests in the photographs, because the subscribers’ electronic assent to MRIS’ Terms of Use Agreement does not satisfy the writing and signature requirements of an assignment of rights under Section 204 of the Copyright Act.  MRIS responded, and the court agreed, that in light of the E-Sign Act, an electronic transfer may satisfy the writing and signature requirements of Section 204.  The E-Sign Act mandates that no agreement or signature be denied legal effect merely because it is in electronic form.  Thus, the court found that to invalidate the transfer of copyright interests in the photographs here merely because they were executed electronically would thwart the clear congressional intent of the E-Sign Act.  Moreover, the court noted that Section 204 is intended to resolve disputes between owners and alleged transferees, not to benefit third-party infringers.

The Fourth Circuit’s decision to apply the E-Sign Act to copyright transfers adds legal certainty to the practice of electronically assigning copyright interests, and should further protect those practices from legal challenge, at least in the Fourth Circuit.