"Something, something, something RPR"

I've just been looking back over traffic statistics to various recent posts on MLSTesseract. I noticed that posts with "RPR" in the title appear to have about twice as many hits as other posts. The Emperor in Family Guy's Star Wars spoof discovers that the secret to writing his lines in those movies is that many are of the formula "Something, something, something Dark Side." I'm wondering now if the same is true in industry discussions this year.

I'm not complaining - I'm very grateful for the couple hundred folks who click through to read the  non-RPR posts. But for the couple hundred who appear to be reading only the RPR-related posts, I encourage you to check out the other stuff. We know at least as much about that stuff as we do RPR! (Note I didn't promise that we know much about any of it...)

For my part, I'll be trying to work "RPR" into more post titles, just to make sure I've got your attention.
-Brian

Online Contracting: Extending legal rights over data pirates?

Many MLSs are expanding the data they permit to be displayed in IDX – including off-market statuses and fields they previously excluded. This is in response, in part, to the arrival of VOWs and to requests by Move, Inc., to be able to display more data on Realtor.com and other Move sites. With greater proliferation of the listing data, data piracy grows to be more of a concern. Web sites operated by shady companies are cropping up showing portions of MLS listing data, and scam operators are using portions of MLS listing data to commit fraud on Craigslist. The problem is compounded because the vast majority of MLSs fail to secure legal rights to stop certain kinds of piracy through a simple policy change.

Assume a broker is operating an IDX website and a data pirate visits the site and begins scraping data. Further, the party distributes this data through a separate, competing website and adversely affects the business of the broker. What are the broker’s or the MLS’s legal options against this data pirate? Currently, there is no mechanism for completely protecting data on broker IDX websites from data piracy. Federal copyright law protects some data available on broker IDX websites. For example, it protects the photographs, so if a pirate steals and uses the photographs, the MLS (or brokers) will have legally enforceable rights. But the majority of the information is factual and not protected by copyright (see Elizabeth’s previous posts on copyrights – part I and part II). Principles of electronic contracting provide one way to get the legal upper hand over pirates even where the factual information is concerned.

“Click-wrap” vs. “browse-wrap”

Web site owners often want to impose terms, conditions, and even contractual obligations on visitors to their sites. The two most common approaches that web sites use are “click-wrap” and “browse-wrap” agreements. Click-wrap contracts specifically require a visitor to click a box or button where she is affirmatively agreeing to certain terms and provisions. This might work in various ways:

• Before getting to the search page, the consumer must click on a box or button that says “I agree to the end-user license agreement” (with a link to the full text of the agreement).
• The “SEARCH” button is grayed out and will not work until the visitor checks a box next to it that says “I agree to the end-user license agreement” (with a link to the full text of the agreement).

In contrast, browse-wrap agreements are theoretically created by the visitor merely accessing the website, with the terms and conditions being available somewhere on the site. But the visitor is not required to take any affirmative step to assent to the agreement. There are many different approaches to browse-wrap, but here are two common ones:

• The site prominently displays the language “Use of this site is subject to the terms of use” (with a link to the full text of the terms of use). This might entail displaying the notice near the top of the web page or next to the “SEARCH” button whenever it occurs.
• The site displays “Terms of use” (with a link to the full text of the terms of use) at the bottom of each page of the site, in small type, often in a color that does not contrast markedly with the page background.

Note that the NAR VOW policy and rules require the use of a click-wrap agreement: under Section 19.3(d) of NAR’s model rules, the “participant shall require each Registrant [site visitor] to review and affirmatively to express agreement (by mouse click or otherwise) to a terms of use provision....” But NAR’s model IDX rules, in Section 18.3.8, provide only:

Participants... shall indicate on their websites that IDX information is provided exclusively for consumers’ personal, non-commercial use, that it may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing....

The law of online contracting varies from state to state, but in the modern trend, click-wrap contracts are generally enforceable, while browse-wrap “agreements” often are not. Especially unlikely to be enforced are browse-wrap “agreements” where the terms of use are posted inconspicuously. Thus, the click-wrap agreements on VOW sites are likely to be binding in site visitors; the browse-wraps on most IDX sites are likely not binding agreements.

An MLS looking to increase legal protections for its data should consider altering its IDX policies to require a click-through on IDX sites, where the visitor to the site affirmatively assents to the limitations in the IDX policies. We’ve drafted these rule changes and also helped MLSs distribute model “end-user license agreements” for their brokers to use on IDX sites. This simplifies the process.

Two concerns

Some brokers are concerned that consumers will not be willing to click through a license agreement to search listings or to see listing results. The evidence we have from our clients that have implemented this requirement in IDX does not support such a claim. That’s not surprising, when almost any web-based service you use requires you to click through an agreement first.

Second, some folks will argue that data piracy is practically not worth pursuing: the listing data ends up everywhere at the listing agent’s direction anyway... why make a fuss about it? This is a strategic question. We like to think that we can help MLSs help brokers influence how their listings are used, even if we cannot give them absolute control. Your MLS might think this is not important enough to take action.

Data piracy is a problem, but how important is it to you? The conventional form of legal protection (federal copyright law) is incomplete, while online contracting tools provide powerful improvements. What are your thoughts?

-Brian

Issues for MLSs to Consider Before Licensing Their Data to Third Party Vendors

Recently, some major players in the industry, including CoreLogic (formerly First American), Move, Inc., and NAR’s subsidiary RPR, have offered an exchange to MLSs: access to software/interface tools for MLS data. These three companies (and others like IMAPP) want to be licensees of your MLS’s data.

Remember, though, that whatever you think you are getting in a deal with any of these players, the contract between MLS and licensee determines what the obligations of each are. If the things you were offered during demonstrations and negotiations are not in the contract, then you cannot demand them later. The fact that a contract might be only one page long does not diminish its binding effect on your MLS.

I want to urge you to get legal advice before signing any of these contracts. This post identifies some issues your legal counsel should address with you.

(I do not intend this post as a comprehensive treatment of this subject or as legal advice. Earlier in the spring, I wrote one or two posts about the RPR contract. RPR has since revised its license agreement for MLSs. Of course, you don’t need to hire my firm to get good advice; so feel free to share these thoughts with your lawyer. This post is also not the only checklist out there: WAVGroup did one and John Rees did another, both useful tools for legal counsel.)

Before entering into an agreement with any licensee, we recommend that each MLS consider all the options. The terms of a partner’s proposed agreement can take various forms.

What are the MLS’s principal benefits and costs from the agreement?

Prior to signing an agreement, the MLS should ensure that it understands and weighs the benefits and costs of the deal. Some are asking for data in exchange for access to their software, while others are offering monetary compensation or a combination of both. We have seen a few common trends in these agreements that are worth highlighting.

One reason your MLS might agree to share its data is the benefit of the software/interface tools being offered. For example, some consider the “Find” software developed by Move, Inc. to be an impressive interface providing real estate agents access to real property information, demographics, and public records all on the same system. One specific feature that is exciting (for areas like south Minneapolis) is the availability of airplane flight pattern noise.

If the MLS subscribers use these software features, this benefit is potentially highly valuable. Therefore, you may want the agreement to contain a mechanism to quantify the usage, typically in the form of periodic usage reports provided by the licensee. For example, if quarterly usage reports from the licensee show that only 3% of your MLS subscribers are using the tool regularly, you might hesitate to renew the agreement, especially if the software tool is the only thing of value your MLSs is getting from the deal.

If the software or interface your MLS gets is the most important value, make sure you know what you are getting. Are there specifications or a description somewhere? Do your subscribers automatically get the newest version at no charge to your MLS or subscribers? It seems the licensees here want to be able to change the software at their will – if they diminish the software’s capabilities, can your MLS terminate the agreement?
Another possible benefit to MLSs and their brokers is the increased consumer exposure and greater market efficiency by connecting consumers to more data. (Not everyone sees this as valuable – we’ll save that for another discussion.) How will your MLS measure whether it is receiving that benefit? Can the licensee help with measurement?

One potential cost associated with sharing data is the broker notification process. (As I posted earlier, NAR policy requires NAR-affiliated MLSs to give listing brokers the choice to opt out of licensing their own listings in these deals) Your agreement with any licensee should make it clear that you will not supply data of brokers who opt out.

What is the scope/limit of the data license?

Agreements licensees draft will likely have broad language defining the scope of the data license. MLSs often limit the scope in a number of ways: An MLS will not be willing or able to share third-party data that is not located on its servers; an MLS may not want to share off-market listing data for the periods preceding the agreement formation; an MLS may desire to limit where the data can be displayed (i.e. only specific web sites); and others. A clearly drafted agreement should reflect the MLS’s elections.

If the licensee will use the MLS data in data products and on web sites, will the licensee provide periodic reports indicating where and how it is using the MLS data? This could be important if the MLS wants to assess later how valuable the listing information really is. It will also be important in assessing and negotiating future opportunities with other potential business partners.

What is the MLS’s exposure to liability/damages?

It is imperative that any agreement an MLS enters has sufficient protection for liability or damages resulting from sharing its data and using the licensee’s software. Each of these provisions is one that you should discuss with your lawyer – if you do not understand the risks the MLS is assuming in the deal, how can you make an informed business decision about it?

Often, an MLS will prefer to strictly limit its liability, include specific indemnification language for potential agreement breaches, disclaim all or most warranties associated with its data, and protect itself from any claims of infringement of third parties’ rights. An MLS may also elect to specify what types and amounts of damages are available to the contracting parties in case of a breach.

Conclusion

Whether you choose to license MLS data to these players is a strategic decision. But once you’ve decided to move ahead, make sure you address these and the other legal issues before you sign on the dotted line.

-Brian