Fourth Circuit Relies on E-Sign Act to Hold Electronic Agreement May Effect A Valid Transfer of Copyright

ESIGN Electronic Signatures

On July 17, the U.S. Court of Appeals for the Fourth Circuit held that under the E-Sign Act, an electronic transfer may satisfy the requirements for transfer of a copyright under the Copyright Act, even though the Copyright Act itself does not define the “writing” or “signature” required to effectuate a transfer. Metro. Reg. Info. Sys., Inc. v. Am. Home Realty Network, Inc. No. 12-2102, 2013 WL 3722365 (Jul. 17, 2013). In this case, the company that operates the online real estate listing service MLS sued a competitor real estate referral service, contending that the referral service collected and used information without authorization – including photographs of listed properties – that MLS compiled for its customers. In order to submit photos to the MLS, customers are required to click a button and agree to certain terms of use. The court agreed with the MLS operator that its customers’ acceptance of the terms of use operated as a transfer of copyrights in any photograph provided to the MLS, and that as such the competitor service may have violated the Copyright Act through its unauthorized use of the materials. Noting the paucity of case law applying the E-Sign Act to instruments conveying copyrights, the court looked to cases in which circuit courts have applied the E-Sign Act to the Federal Arbitration Act’s protections that pertain only to written arbitration agreements, including the Second Circuit’s holding in Specht v. Netscape Comms. Corp., 605 F.3d 17 (2nd Cir. 2002). Based on the analysis in those cases, the court explained that “[t]o invalidate copyright transfer agreements solely because they were made electronically would thwart the clear congressional intent embodied in the E-Sign Act.” The court held that an electronic agreement may effect a valid transfer of copyright interests under the Copyright Act.  As such, the court affirmed the district court’s preliminary injunction prohibiting MLS’s competitor from displaying the MLS photographs.