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:

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