Property, intangible

a blog about ownership of intellectual property rights and its licensing

Update: “What is an ‘E-Signature’?”

I previously wrote about a case, Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., involving the assignment of copyrights by uploading photographs to a website. In it, the district court held that uploading a photograph was the equivalent of signing an agreement under the E-Sign Act. I was unhappy with the decision; it wasn’t clear that the uploader ever encountered the Terms of Use containing the copyright assignment language, and I didn’t believe that uploading a photograph met the definition of a signature – “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”

The appeals court has now affirmed the trial court, albeit with facts that look a little different than they did before. Now, the court informs us that, in fact, “in order to submit photographs to the MRIS Database, the subscriber must click a button to assent to the TOU.n3” The footnote is telling, though: “fn3. The record is not clear as to the precise manner in which the TOU appears to subscribers.” I think that’s sloppy decisionmaking — how can there be a legal conclusion that a contract was formed if we don’t even know how, or if, one of the signatories to the contract saw it?

But all is not yet lost for AHRN. This was an appeal of a preliminary injunction, so there will be more opportunity for some additional arguments:

We make no comment (nor did the district court) as to whether the subscribers’ assent to MRIS’s TOU constitutes a valid agreement under generally applicable principles of contract law, or whether, as in Specht, 306 F.3d at 27, it might fail for lack of mutual assent. AHRN waived this argument by raising it for the first time in its reply brief.

So the decision stands, at least for now. There is an extensive discussion of the E-Sign Act and its applicability to copyright assignments, if you’re interested.

The court also makes passing reference to what I call the “Billy Bob defense,” a theory that a third party may not challenge the validity of an assignment if the parties to the agreement themselves do not dispute its validity. Even though plaintiff MRIS didn’t raise the defense, the court nevertheless did:

Before delving into the E-Sign Act and the sufficiency of the transfer here, we note one initial consideration deriving from the particular relationship of these parties. Courts have held that, in situations where “the copyright [author] appears to have no dispute with its [assignee] on this matter, it would be anomalous to permit a third party infringer to invoke [Section 204(a)’s signed writing requirement] against the [assignee].” Put another way, Section 204(a) “was intended to resolve disputes between owners and alleged transferee[s], and was not intended to operate for the benefit of a third-party infringer when there is no dispute between the owner and transferee.” Although MRIS did not raise this argument, we nevertheless feel compelled to note the anomaly of allowing AHRN to fabricate for its own benefit a dispute between MRIS and its subscribers over copyright ownership in the photographs.

(Internal citations omitted.) I am fairly vehemently opposed to this theory; it is the plaintiff’s burden to prove ownership, so I don’t understand why a plaintiff can’t be put to its proof.

Finally, the court also had to sort out whether MRIS’s registrations for its database were adequate for standing to bring suit. Defendant AHRN claimed that the registrations didn’t cover the photographs, infringement of which was the only basis for the injunction. The court examined the problem thoroughly and disagreed, finding that the registrations were adequate. The area is a mess; I’ve written before about the disconnect between the Copyright Office’s requirements for registration and how the courts are misinterpreting the scope of the registrations in its decisional law on derivative works. Here we learn that there is the same problem with database registrations, although the Copyright Office has filed an amicus brief in the 9th Circuit that may help get things straightened out.

Metropolitan Regional Info. Sys., Inc. v. American Home Realty Network, Inc., Nos. 12-2102, 12-2432 (4th Cir. July 17, 2013).

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One response to “Update: “What is an ‘E-Signature’?””

  1. […] Accepting terms of use containing a copyright assignment clause is an e-signature  […]

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