Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc. et al
MEMORANDUM OPINION. Signed by Judge Alexander Williams, Jr on 6/10/2013. (rss, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
AMERICAN HOME REALTY NETWORK, *
INC., et al.,
Civil Action No. 12-cv-00954-AW
AMERICAN HOME REALTY NETWORK, *
INFORMATION SYSTEMS, INC., et al.,
INFORMATION SYSTEMS, INC.,
Plaintiff Metropolitan Regional Information Systems, Inc. (“MRIS”) filed suit against
Defendants American Home Realty Network (“AHRN”) and AHRN CEO Jonathan Cardella on
March 28, 2012, alleging copyright infringement, violations of the Lanham Act, and tortious
conversion and unjust enrichment. Doc. No. 1. MRIS’s claims are based on AHRN’s alleged
reproduction of real estate listing content from the MRIS Database onto AHRN’s website,
On August 24, 2012, the Court granted Cardella’s Motion to Dismiss, denied AHRN’s
Motion to Dismiss, and granted MRIS’s Motion for a Preliminary Injunction. Doc. Nos. 34–35.
Specifically, the Court ordered that “Defendant AHRN and all persons acting under its direction,
control or authority are hereby enjoined from unauthorized copying, reproduction, public
display, or public distribution of copyrighted content from the MRIS Database, and from
preparing derivative works based upon the copyrighted content from the MRIS Database.” Doc.
No. 35. The Court subsequently granted-in-part AHRN’s Motion to Clarify, Reconsider, or
Suspend the Preliminary Injunction Order, and modified the Order as follows: “AHRN and all
persons acting under its direction, control or authority are hereby preliminarily enjoined from
unauthorized copying, reproduction, public display, or public distribution of MRIS’s copyrighted
photographs and from preparing derivative works based upon MRIS’s copyrighted
photographs.” Doc. No. 65 (emphasis added).
On September 24, 2012, AHRN filed its Answer to MRIS’s Complaint as well as
Counterclaims against MRIS, National Association of Realtors (“NAR”), and Does #1–25. Doc.
No. 46. After MRIS and NAR separately moved to dismiss AHRN’s Counterclaims, Doc. Nos.
62–63, AHRN filed First Amended Counterclaims on November 26, 2012, Doc. No. 68.1 On
December 13, 2012, MRIS moved to dismiss or summarily adjudicate AHRN’s First Amended
Counterclaims. Doc. No. 76. NAR moved to dismiss the First Amended Counterclaims on
December 21, 2012. Doc. No. 81. AHRN subsequently moved to strike the Declaration of
MRIS CEO David Charron from MRIS’s Motion and for other miscellaneous relief. Doc. No.
83. MRIS also filed a Motion for Leave to File a Surreply to AHRN’s Motion to Strike. Doc.
No. 95. On May 3, 2013, the Court ordered the parties to appear for a hearing on the pending
motions on May 29. Six days before the hearing, AHRN filed a Motion for Leave to file Second
Amended Counterclaims and a Motion to Seal attachments thereto. Doc. Nos. 128, 132.
AHRN was permitted to amend its counterclaims once as a matter of course pursuant to Rule 15(a)(1)(B) of the
Federal Rules of Civil Procedure. Accordingly, on May 3, 2013, MRIS and NAR’s original Motions to Dismiss
were denied as moot. See Doc. No. 124.
The Court has reviewed the First Amended Counterclaims and motion papers, and has
carefully considered the arguments of counsel at the May 29 hearing. For the reasons articulated
below, MRIS’s Motion to Dismiss or Summarily Adjudicate and NAR’s Motion to Dismiss
AHRN’s First Amended Counterclaims will be GRANTED-IN-PART and DENIED-IN-PART.
Counts I, V, VI, and VII will be dismissed with prejudice, while Counts II, III, and IV will be
dismissed without prejudice. AHRN will be granted fourteen days to file second amended
counterclaims with respect to Counts II, III, and IV. The remaining motions will be DENIED as
The following facts are taken from AHRN’s First Amended Counterclaims. The Court
also incorporates by reference the factual background from its August 24, 2012 and November
13, 2012 Memorandum Opinions.
AHRN is a five-year old San Francisco-based real estate brokerage referral services and
technology company. AHRN, through its website Neighborcity.com and its AgentMatch
software, provides information to home buyers and sellers on a nationwide basis by identifying
real estate agents best suited to assist them in purchasing or selling properties in their local
market. AHRN searches the Internet for data on real estate listings, identifies, rates, and ranks
real estate agents most suitable to represent potential buyers and sellers in proposed transactions,
facilitates the introduction of the agents to its individual customers, and monitors its customers’
satisfaction with the agents to whom they were introduced. AHRN is compensated by receiving
a percentage of a broker’s commission if the broker accepts an AHRN client-referral and the
The Motion to Strike and Motion for Leave to file a surreply are denied as moot in light of the Court’s conclusion
that the First Amended Counterclaims are dismissed for failure to state a claim. The Motion for Leave to file second
amended counterclaims and related Motion to Seal are denied as moot given the Court’s determination that AHRN
should be granted leave to file amended counterclaims and attempt to cure the deficiencies articulated herein.
referral results in a closed transaction. Consumers in the residential real estate market have
responded positively to the increased access to information that AHRN has provided, and AHRN
has grown significantly in the last year in terms of its revenues, transactions referred, and fulltime employees.
Counterclaim-Defendant MRIS provides what is known in the real estate industry as
multiple listing services (“MLS”). MRIS facilitates real estate transactions in the mid-Atlantic
region by operating and maintaining an automated database consisting of compiled property
listings and related informational content (the “MRIS Database”). To use the database, real
estate brokers and agents must execute a subscription agreement, under which they agree to
upload their real estate listings to the database and upon payment to MRIS are granted access to
all the listings in the database and the right to display those listings on their own websites via a
licensed data feed. Counterclaim-Defendant NAR is a trade organization which establishes and
enforces policies and professional standards for its over one million individual member real
estate brokers and their affiliated agents and sales associates, and 1,600 state and local member
boards, which control approximately 80% of the roughly 1,000 MLSs in the United States.
NAR’s members compete with one another in local brokerage referral services markets to
represent consumers in real estate transactions.
AHRN also names as Counterclaim-Defendants Does #1–25, who are thought to be
brokers and/or other MLSs and their principals. AHRN intends to amend its counterclaims to
add the true names and capacities of these Counterclaim-Defendants once they become known.
AHRN does not name Regional Multiple Listing Service of Minnesota, Inc. (“RMLS” or
“Northstar”) as a Counterclaim-Defendant at this time. However, RMLS is the plaintiff in a
similar action filed against AHRN in the District of Minnesota. See Regional Multiple Listing
Service of Minnesota, Inc. d/b/a NorthstarMLS v. American Home Realty Network, Inc., Case
No. 12cv965 (D. Minn.).
In broad terms, the thrust of AHRN’s First Amended Counterclaims is that CounterclaimDefendants instigated a program to register and obtain sham compilation copyrights for MLS
listings, threatened to and actually enforced those copyrights against AHRN, refused to deal with
and refused to license MLS data to AHRN, made false and misleading statements related to their
copyrights and concerning AHRN, and passed anticompetitive MLS rules consistent with their
goal of driving AHRN and similar innovators out of the market.
MRIS Guidance Paper and Copyright Program
In 2005, MRIS President and CEO David Charron, MRIS General Counsel Erik M. Feig,
and MRIS outside counsel J.T. Westermeier jointly wrote a two-part Guidance Paper issued in
several versions and titled in the 2006 version, “Strengthening the Foundation: The Real Estate
Listing Content Copyright FAQ and An Updated Program to Administer, Secure, and Enhance
the Value of Real Estate Listing Content.” The purpose of the Guidance Paper was to invite the
MLS industry to join MRIS’s Copyright Program, the object of which was to defeat “the
emergence of several high profile initiatives proclaiming ‘new’ and ‘improved’ alternative
business models that they propose will dramatically change the real estate industry.”
The authors heavily publicized the Guidance Paper, featuring it and distributing it at
various MLS industry conferences throughout 2005. According to AHRN, the Guidance Paper
proposed the defeat of the alternative business models through subversion of the copyright
process by claiming the existence of and encouraging the enforcement of copyrights in
unregistered and uncopyrightable listing data consisting of facts assembled in compilations. The
Guidance Paper urged the MLS industry to stop using the term “listing data” because the term
implies that the real estate information supplied by MLSs is merely factual and thus not
copyrightable. Instead, the Guidance Paper urged use of the term “listing content,” noting that
“[w]hile listing content may not, on the surface, have the degree of creativity we associate with a
song or a story or other types of so-called ‘creative’ works, there should be little question that
listing content is protectable by copyrights.”
The MRIS Copyright Program, as outlined by the Guidance Paper, also urged “making
each property listing a joint work owned by the broker and the MLS for copyright purposes.
This joint work is created by merging each listing broker’s and MLS’s respective copyright
contributions into a merged, unitary property listing with co-ownership of the respective
copyrights. Joint ownership is a key building block of the Program.” The Copyright Program
also devised the “mashing” of non-copyrightable listing data from different sources after
renaming it “content” in the MLS databases and urged MLSs to register the listing content under
compilation copyright procedures for automated databases, thereby claiming coverage for both
“the compilation and collection of content in the database . . . and to the jointly owned
copyrighted content in each individual listing.”
With respect to copyright registration, the Program devised a practical strategy which
AHRN alleges was motivated by a desire to evade the Copyright Office’s fee structure for
individual copyright and published database copyright registrations:
Given the number of listings in a typical MLS database and the number of updates
occurring on a daily basis, as a practical matter registering the claims of copyright
ownership in each individual listing with the U.S. Copyright Office is impractical
and not cost effective. What we contend is needed is a practical strategy that
protects the copyrights in each individual property listing as well as the
compilation and collection of property listings contained in the MLS database.
AHRN further alleges that the MLS industry’s registration of databases as “unpublished” rather
than “published” compilations saves the industry and deprives the Copyright Office of trillions
of dollars per year in registration fees due to the difference in fees between quarterly and daily
registration. Similarly, AHRN alleges that foregoing registration of listing photographs in group
registration copyrights and instead claiming the photographs as covered under the database
registration saves the MLS industry and deprives the Copyright Office of hundreds of billions of
The MLS industry adopted the Copyright Program “under the auspices of, and with the
encouragement and guidance of NAR.” NAR held its annual meeting in Anaheim, California
from November 11-14, 2011. “On information and belief,” this meeting featured discussions of
the perceived threat AHRN posed to the industry and what the industry could do to “shut down”
AHRN. “[A]t a time yet unknown,” NAR advised its members to follow MRIS’s recommended
“sham compilation copyright registration process.” In its publication titled MLS Copyright
Compilation Registration, NAR instructed its member MLSs to state in their compilation
copyright applications that “the materials included in this compilation are preexisting materials”
and to make it clear that these materials “were ‘selected’ and ‘arranged,’ in order to assure that
the compilation receives copyright protection.” The NAR publication also included “MLS
Registration Tips,” which provided instructions on compilation copyright registration.
Cease-and-desist Letters and Related Communications Concerning AHRN
Beginning in November 2011, just before the Anaheim meeting, AHRN began to receive
what would become, following the Anaheim meeting, “a torrent of cease-and-desist letters” from
brokers and MLSs. Through 2012 AHRN received 32 letters, all substantially similar in form
and content, and all alleging copyright infringement and threatening legal action. AHRN
received eleven additional letters from brokers complaining about its referral program, and three
letters involving complaints to government agencies regarding infringement or licensing
violations. AHRN received a cease-and-desist letter from Northstar on November 15, 2011, the
day after the NAR Anaheim meeting ended, and another letter from MRIS on November 18,
2011. AHRN also received a number of phone calls and e-mails from other MLSs and their
consultants that stated that they were in attendance or participated in the Anaheim meeting.
On December 22, 2011, AHRN was copied an on e-mail from a Northstar employee,
John Mosey, in which Mosey stated that MLSs across the country had “called in the full force
and fury of their respective legal advisors” and dropped C&Ds (cease-and-desist letters) “on the
head of the bad fellow,” AHRN CEO Jonathan Cardella. Mosey continued by saying:
How do we connect the dots between all of the MLS’s [sic] that have been abused
so that we can act collectively, either in cost sharing and/or strategically by taking
an action against Mr. Cardella that has the desired outcomes of:
1. Getting all of our listings off of his site[.]
2. Discovering where he has been getting the listings[.]
3. Throwing a world of hurt on both[.]
4. Sending a message that our copyrights are enforceable and we are serious about
punishing anyone who doesn’t take us seriously.
At the NAR Mid-Year meeting in Washington, D.C. in May 2012, the General Counsel of NAR
allegedly advised local MLSs to send cease-and-desist letters if their data was taken.
AHRN’s Offer to Negotiate Licenses
In response to the cease-and-desist letters, AHRN responded to each letter with an offer
to negotiate a license for the use of the broker’s or MLS’s website. In most cases, AHRN’s
overtures to negotiate were rebuffed, always in the same format and in essentially the same
language. In instances in which agreements were reached or negotiations had commenced with
brokers over referral agreements and AHRN’s use of listing information, the brokers repudiated
these agreements in January 2012. AHRN alleges “upon information and belief” that this
repudiation was in response to pressure from MLSs. Each repudiation letter from these brokers
stated in “remarkably similar language” that AHRN’s overtures were brought to the broker’s
attention, that the broker had no interest in entering into any agreements with Neighborcity.com
or AHRN, and that any agreements purporting to bind the broker were void and of no legal
effect. AHRN has received nearly identical letters from brokers across the country intending to
cease solicitations by AHRN and repudiating agreements with AHRN.
AHRN alleges “[o]n information and belief” that MRIS’s lawsuit in this case and
Northstar’s lawsuit against AHRN “are the direct and concerted action discussed and sought by
the concerted action at the Anaheim NAR Annual Meeting.” AHRN adds that these actions
followed AHRN’s roll-out of updated professional profile pages for real estate agents in March
2012. AHRN alleges that Redfin and other companies that introduced similar real estate agent
profile pages discontinued publication under pressure from MRIS and other MLSs within days of
launch. AHRN also alleges “[o]n information and belief” that NAR voted on Saturday, May 19,
2012, at the end of its Midyear Meeting in Washington, D.C., to fund the MRIS lawsuit and the
Northstar lawsuit against AHRN in Minnesota. According to AHRN, NAR “seeks to fund the
litigations for its own financial gain.” In May 2012, the NAR Board allegedly approved
$161,667 in legal assistance for seven cases, including the challenged misappropriation of MLS
data by a third-party website.
NAR promulgates rules which govern the conduct of MLSs and requires its member
boards to adopt such rules, including those that prohibit or strongly discourage MLSs from
licensing their listing databases to third parties like AHRN. According to AHRN, these rules
inhibit entities like AHRN from ranking or evaluating real estate agents, selling referrals, and
using the MLS licensed data for unauthorized purposes.
For example, in November 2009, NAR revised its MLS Policy Statement to prevent
brokers from using their MLSs’ IDX data feeds “for any purpose other than display on their
websites.” Furthermore, as of February 9, 2010, another NAR rule, addressed by NAR’s
Statement of MLS Policy 7.85, provided:
Use of listings and listing information by MLSs for purposes other than the
defined purposes of MLS requires participants’ consent. Such consent cannot be
required as a condition of obtaining or maintaining MLS participatory rights.
MLSs may presume such consent provided that listing brokers are given adequate
prior notice of any intended use unrelated to the defined purpose of MLS, and
given the opportunity to affirmatively withhold consent for that use.
According to 7DS Associations, a frequent participant in real estate industry events, the primary
motivation behind NAR’s rules is to take back control of broker listings and prevent further loss
of control over such listings.
False and Misleading Statements
AHRN identifies the following allegedly false and misleading statements made by MRIS:
(a) statements that the Guidance Paper’s suggestions and MRIS Copyright Program are in
accordance with the law; (b) statements that MRIS’s compilation copyrights are valid, when in
fact any copyright would be owned by CoreLogic; (c) statements that MRIS has valid copyrights
in unregistered textual elements or photographs within the Database; (d) statements that MRIS
when its members upload photos into the MRIS Database; (e) using false and misleading
copyright notices on photos on MRIS’s website and third party websites to which it syndicates
the data; and (f) informing its members that uncopyrightable real estate listing information can
be regarded as copyrightable merely by treating it as “content.” NAR is alleged to have
republished or encouraged its members to republish these allegedly false and misleading
statements. Furthermore, NAR has itself referred to AHRN with terms such as “thief,” “theft,”
“pirate,” “pirating,” and “piracy,” and has encouraged others to do the same. The website
belonging to the Berkshire County Board of Realtors, an NAR member, accused NeighborCity
of stealing listing data and called them “Data pirates of the year.”
Nature of MLS Databases
AHRN alleges “[o]n information and belief” that MRIS, Northstar, and other MLS listing
databases are “based on third party-created software layouts in templates of fields and field
descriptors into which brokers or their assistants insert individual numbers, words, and short
phrases, individual unadorned facts they have obtained from prospective sellers of real estate.”
AHRN alleges that MRIS, Northstar, and “as much as half” of the real estate industry use the
same MLS Matrix database software by CoreLogic, and that if any authorship is involved in the
collection and arrangement of material in MLS listing databases, it would involve the creativity
of CoreLogic, not the MLSs. AHRN alleges “[o]n information and belief” that NAR has
conducted insufficient due diligence on the merits of MRIS’s copyright claims to fund the instant
litigation, but that its payments represent an endorsement as to the merits of MRIS’s claims.
Based on the foregoing, AHRN asserts the following causes of action in its First
Amended Counterclaims: false advertising in violation of § 43(a) of the Lanham Act against
MRIS and NAR (Count I); unfair competition against MRIS and NAR, in violation of Maryland
law (Count II); unfair competition against all Counterclaim-Defendants, in violation of
California law (Count III); violation of § 1 of the Sherman Act against all CounterclaimDefendants (Count IV); violation of § 2 of the Sherman Act against MRIS (Count V); copyright
misuse against MRIS (Count VI); and barratry against NAR (Count VII).
STANDARD OF REVIEW
The purpose of a motion to dismiss under Rule 12(b)(6) is “to test the sufficiency of [the]
complaint.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). Except in certain
specified cases, the complaint need only satisfy Rule 8(a) of the Federal Rules of Civil
Procedure, which requires a “short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). A plaintiff must plead “enough facts to state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In
resolving a motion to dismiss, the Court should proceed in two steps. First, the Court should
determine which allegations in the Complaint are factual allegations entitled to deference, and
which are mere legal conclusions that receive no deference. See Ashcroft v. Iqbal, 556 U.S. 662,
678–79 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id. at 678. Second, “[w]hen there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.” Id. at 679.
In its determination, the Court must “accept the well-pleaded allegations of the complaint
as true,” Albright v. Oliver, 510 U.S. 266, 268 (1994), and “must construe factual allegations in
the light most favorable to the plaintiff,” Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 783 (4th Cir. 1999). The Court should not, however, accept unsupported legal
allegations, Revene v. Charles Cnty. Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989), “legal
conclusion[s] couched as . . . factual allegation[s],” Papasan v. Allain, 478 U.S. 265, 286 (1986),
or conclusory factual allegations devoid of any reference to actual events, United Black
Firefighters of Norfolk v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979). “Factual allegations must be
enough to raise a right to relief above the speculative level . . . on the assumption that all the
allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555.
As a threshold matter, MRIS and NAR argue that AHRN’s counterclaims are barred by
the law of the case doctrine. “As most commonly defined, the doctrine posits that when a court
decides upon a rule of law, that decision should continue to govern the same issues in subsequent
stages in the same case.” Arizona v. California, 460 U.S. 605, 618 (1983). “This rule of practice
promotes the finality and efficiency of the judicial process by protecting against the agitation of
settled issues.” Christianson v. Cold Indus. Operating Corp., 486 U.S. 800, 816 (1988)
(quotations omitted); see also 18B WRIGHT AND MILLER, FEDERAL PRACTICE AND PROCEDURE
§ 4478 (2d ed. 2010) (“Law-of-the-case principles . . . are a matter of practice that rests on good
sense and the desire to protect both court and parties against the burdens of repeated reargument
by indefatigable diehards.”). The doctrine applies to those questions actually decided and those
decided by necessary implication, but it does not apply to questions which might have been
decided but were not. Sejman v. Warner-Lambert Co., Inc., 845 F.2d 66, 69 (4th Cir. 1988).
The doctrine is a rule of discretion, not a jurisdictional requirement. Columbus-America
Discovery Grp. v. Atl. Mut. Ins. Co., 203 F.3d 291, 304 (4th Cir. 2000). Generally, where an
appellate court’s decision establishes the law of the case, it must be followed by the trial court in
all subsequent proceedings in the same case. Sejman, 845 F.2d at 69. Interlocutory orders by the
district court may also be considered the law of the case in subsequent proceedings. See Boyd v.
Coventry Health Care Inc., 828 F. Supp. 2d 809, 814 (D. Md. 2011). However, district courts
retain the power to reconsider and modify their interlocutory orders at any time prior to final
judgment when such reconsideration is warranted. Am. Canoe Ass’n v. Murphy Farms, Inc., 326
F.3d 505, 514 (4th Cir. 2003); Hill v. Pitt & Greene Elec. Membership Corp., 161 F.3d 2
(Table), 1998 WL 482784, at *1 (4th Cir. Aug. 11, 1998); see also Washington Gas Light Co. v.
Prince George’s Cnty. Council, 784 F. Supp. 2d 565, 571 n.2 (D. Md. 2011).
In general, a court’s decisions at the preliminary injunction phase do not constitute law of
the case in further proceedings and do not limit or preclude the parties from litigating the merits.
See, e.g., Center for Biological Diversity v. Salazar, 706 F.3d 1085, 1090 (9th Cir. 2013);
Sherley v. Sebelius, 689 F.3d 776, 781 (D.C. Cir. 2012); Grudzinski v. Staren, 87 F. App’x 508,
512 (6th Cir. 2004); Boit v. Gar-Tex Prods., Inc., 967 F.2d 671, 678 (1st Cir. 1992); Goodheart
Clothing Co., Inc. v. Laura Goodman Enters., Inc., 962 F.2d 268, 274 (2d Cir. 1992). The Ninth
Circuit explained that “[t]his is true for the reason that a preliminary injunction decision is just
that: preliminary.” Salazar, 706 F.3d at 1090; see also Grudzinski, 87 F. App’x at 512
(“Findings made in the course of deciding whether to issue a preliminary injunction . . . generally
do not establish the law of the case, because preliminary injunctions require plaintiffs to satisfy a
lesser burden of proof than is required for a decision on the merits.”). For similar reasons, courts
have been loath to apply the doctrine where the prior holdings in the case were based on an
undeveloped factual record, or where the prior holdings were made on a different standard of
review. See, e.g., McKenzie v. BellSouth Telecommc’ns., Inc., 219 F.3d 508, 513 (6th Cir. 2000);
McAnaney v. Astoria Fin. Corp., 665 F. Supp. 2d 132, 142 (E.D.N.Y. 2009); Davidson v.
Bartholome, 460 F. Supp. 2d 436, 443 (S.D.N.Y. 2006).
The allegations underlying AHRN’s First Amended Counterclaims are that
Counterclaim-Defendants engaged in a sham copyright registration program, made false and
misleading statements regarding the legality of the asserted copyrights, and enforced their sham
copyrights in sham litigation. Counterclaim-Defendants essentially argue that the Court already
upheld the legality and validity of MRIS’s copyrights, and therefore, AHRN’s counterclaims
should be dismissed pursuant to the law of the case doctrine. In its August 24, 2012
Memorandum Opinion, the Court concluded that MRIS had a valid cause of action for
infringement on the individual photographs in the MRIS Database. Doc. No. 34 at 17.
However, the Court’s holding was made in the context of denying AHRN’s Motion to Dismiss3
and granting MRIS’s Motion for a Preliminary Injunction. The Court’s conclusions that MRIS’s
infringement claims survived AHRN’s Motion to Dismiss and that MRIS had established a
likelihood of success did not foreclose the possibility that AHRN could prevail on the merits.4
Given the preliminary nature of the August 24 and November 13 rulings, the Court rejects
Counterclaim-Defendants’ assertions that the law of the case bars AHRN’s counterclaims.
Count I: Lanham Act § 43(a) (Against MRIS and NAR)
AHRN’s First Amended Counterclaims allege that MRIS and NAR have violated section
43(a) of the Lanham Act, 15 U.S.C. § 1125(a). AHRN’s claims appear to be based on section
43(a)’s false advertising provision, which prohibits the “use in commerce [of any] false or
The fact that the Court considered AHRN’s Motion under Rule 56 does not alter the Court’s conclusion with
respect to Counterclaim-Defendants’ law of the case argument. The Court merely concluded in its August 24
Opinion that AHRN was not entitled to judgment as a matter of law on MRIS’s infringement claims, and whether
AHRN’s Motion was analyzed under Rule 12(b)(6) or Rule 56, it was made at a preliminary stage of the case
without the benefit of discovery.
Indeed, the language adopted by the Court in its August 24 Opinion demonstrates that its rulings were preliminary
in nature and were made on a sparse record without the benefit of discovery. For example, the Court noted that
MRIS presented credible, not conclusive, evidence that it owned copyrights in the underlying photographs of the
MRIS Database, and merely held that AHRN was not entitled to judgment as a matter of law on the grounds that
MRIS did not individually register the photographs. Doc. No. 34 at 17–18. The Court also held that MRIS’s
identification of “photographs” and “text” as preexisting material in its Database registration appeared to be
adequate under 17 U.S.C. § 409. Id. at 20. It was further noted that the TOU constituted credible, not conclusive,
evidence that MRIS’s users intended to assign the copyrights in photographs to MRIS, and that Defendants were not
entitled to judgment as a matter of law on the grounds that the assignments of copyrights in the individual
photographs were void. Id. at 22–23. Similarly, the Court held that the MRIS had a credible, not conclusive, claim
that its subscribers intended to assign the copyrights to MRIS. Id. at 23. The Court relied in part on these
conclusions in granting MRIS’s Motion for Preliminary Injunction. Id. at 24–25. In concluding that MRIS
demonstrated a likelihood of success on the merits, the Court further held that the MRIS Database exhibited the
requisite originality for copyright protection. Id. at 26. The Court also held that “[a]t this time, AHRN has not
presented credible evidence that MRIS is engaged in this litigation for any unlawful objective, as opposed to merely
enforcing its copyrights.” Id. at 29 (emphasis added). The Court’s November 13, 2012 Memorandum Opinion
largely affirmed the substance of these rulings.
misleading description of fact, or false or misleading representation of fact, which . . . in
commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or
geographic origin of his or her or another person’s goods, services, or commercial activities.” 15
U.S.C. § 1125(a)(1)(B); see Doc. No. 68 ¶ 120 (alleging false advertising). To state a claim for
false advertising under the Lanham Act, a party must establish that:
(1) the defendant made a false or misleading description of fact or representation
of fact in a commercial advertisement about his own or another’s product; (2) the
misrepresentation is material, in that it is likely to influence the purchasing
decision; (3) the misrepresentation actually deceives or has the tendency to
deceive a substantial segment of its audience; (4) the defendant placed the false or
misleading statement in interstate commerce; and (5) the plaintiff has been or is
likely to be injured as a result of the misrepresentation, either by direct diversion
of sales or by a lessening of goodwill associated with its products.
PMB Prods., LLC v. Mead Johnson & Co., 639 F.3d 111, 120 (4th Cir. 2011) (quoting Scotts Co.
v. United Indus., 315 F.3d 264, 272 (4th Cir. 2002)).
The Supreme Court has explained that § 43(a) of the Lanham Act “does not have
boundless application as a remedy for unfair trade practices, [and b]ecause of its inherently
limited wording, § 43(a) can never be a federal codification of the overall law of unfair
competition.” Dastar Corp. v. Twentieth Century Fox Film Co., 539 U.S. 23, 29 (2003)
(citations omitted) (internal quotations and alterations omitted). The language of 15 U.S.C.
§ 1125(a)(1)(B) unequivocally limits liability to false or misleading statements made in
“commercial advertising or promotion.” Although the Fourth Circuit has not defined the term,
several district courts within this circuit have held that statements or representations constituting
“commercial advertising or promotion” must be: “(1) commercial speech; (2) by a defendant
who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to
buy defendant’s goods or services; and the representations (4) must be disseminated sufficiently
to the relevant purchasing public to constitute ‘advertising’ or ‘promotion’ within that industry.”
Neurotron, Inc. v. Am. Ass’n of Electrodiagnostic Med., 189 F. Supp. 2d 271, 275 (D. Md. 2001)
(adopting test from Gordon & Breach Sci. Publishers, S.A. v. Am. Inst. of Physics, 859 F. Supp.
1521, 1536 (S.D.N.Y. 1994) (internal alterations omitted)); accord Design Res., Inc. v. Leather
Indus. of Am., No. 1:10CV157, 2012 WL 4580982, at *5–6 (M.D.N.C. Sept. 28, 2012) (noting
that several other circuits have adopted the Gordon & Breach test); Huntingdon Life Scis., Inc. v.
Rokke, 978 F. Supp. 662, 666 (E.D. Va. 1997).
Thus, the threshold issue for a Lanham Act violation is that the complaining party must
establish that the statements at issue constitute commercial speech. See, e.g., Porous Media
Corp. v. Pall Corp., 173 F.3d 1109, 1120 (8th Cir. 1999); Neurotron, Inc., 189 F. Supp. 2d at
275. Generally, three factors govern whether speech is commercial: “(i) whether the
communication is an advertisement, (ii) whether it refers to a specific product or service, and (iii)
whether the speaker has an economic motivation for the speech.” Porous Media, 173 F.3d at
1120 (citing Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66–67 (1983)). The presence of
all three characteristics provides “strong support” for the conclusion that statements are
commercial speech. Bolger, 463 U.S. at 67.
For liability to arise under the false advertising provision, “the contested statement or
representation must be either false on its face or, although literally true, likely to mislead and to
confuse consumers given the merchandising context.” C.B. Fleet Co. v. SmithKline Beecham
Consumer Healthcare, L.P., 131 F.3d 430, 434 (4th Cir. 1997). Statements of opinion are
generally not actionable under § 43(a) of the Lanham Act. See, e.g., Osmose, Inc. v. Viance,
LLC, 612 F.3d 1298, 1311 (11th Cir. 2010); see also Pizza Hut, Inc. v. Papa John’s Int’l, Inc.,
227 F.3d 489, 496 (5th Cir. 2000); Nutrition & Fitness, Inc. v. Mark Nutritionals, Inc., 202 F.
Supp. 2d 431, 435 (M.D.N.C. 2002). For a statement to be actionable, it must be a “specific and
measurable claim, capable of being proved false or of being reasonably interpreted as a statement
of objective fact.” Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 731 (9th
According to AHRN, MRIS’s false and misleading statements include its statements
(primarily those from the 2005 Guidance Paper) that the Copyright Program was lawful, that its
compilation copyrights are valid, that it has valid copyrights in the underlying elements of the
MRIS Database, and that it acquires valid copyrights to the underlying photographs through a
photographs when they upload them to the Database. Doc. No. 68 ¶ 111. AHRN also claims
that MRIS’s copyright notices on photographs in the MRIS Database constitute false and
misleading statements, and that it was false and misleading to promote the idea that listing
information could be regarded as copyrightable by treating it as “content.” Id. AHRN alleges
that NAR (1) republished MRIS’s allegedly false and misleading statements that it held valid
copyrights in the MRIS Database and underlying elements thereof, id. ¶¶ 111–12; (2) published
“MLS Registration Tips,” which provided instructions to MLSs as to how to obtain copyright
protection for their databases, id. ¶ 69; and (3) has accused AHRN of “stealing” information and
referred to AHRN as a “thief” and “pirate,” and has encouraged others to make similar
accusations, id. ¶ 112. With respect to the last allegation, AHRN alleges:
NAR has republished or encouraged its members to republish MRIS’s false and
misleading statements on its web site. In presentations to NAR’s MLS members
and their broker members, and based on NAR’s endorsement of MRIS’s false and
misleading statements, NAR has itself, and encouraged others to, refer to AHRN
as “stealing” information, as a “thief” or of “theft,” as a “pirate,” “pirating” or of
“piracy.” E.g., NAR-member, Berkshire County Board of Realtors’ website
accused Neighbor City of “taken [sic] our MLS listing data without license,
authorization or agreement (we call that stolen in these parts) and are rating
agents. . . . Termed: Data pirates of the year.”
For multiple reasons, AHRN has failed to state a plausible Lanham Act violation against
either Counterclaim-Defendant. First, any statements made by MRIS and NAR regarding the
copyrightability of MLS listing data were nonverifiable legal opinions that are not actionable
under the Lanham Act. Several courts have recognized that such opinions cannot form the basis
of a Lanham Act claim. For example, in Dial A Car, Inc. v. Transportation, Inc., 884 F. Supp.
584 (D.D.C. 1995), aff’d 82 F.3d 484 (D.C. Cir. 1996), the plaintiff claimed that defendants
falsely represented in discussions with taxicab customers and clients that defendants’ cars could
lawfully be used to provide the same services provided by plaintiff. Id. at 591–92. Defendants
claimed that their statements were merely expressions of opinion regarding the legality of their
services, and that the accuracy of their representations had yet to be made by an administrative
agency in the District of Columbia. Id. at 592. The Court agreed with the defendants and
dismissed the claim, holding that “[a]t this point, all that can be said is that defendants were
expressing an opinion on an inconclusive question of law and were not making representations of
verifiable or hard definable facts.” Id. at 592 (internal quotations omitted) (citations omitted);
see also, e.g., Coastal, 173 F.3d at 731 (“Absent a clear and unambiguous ruling from a court or
agency of competent jurisdiction, statements by laypersons that purport to interpret the meaning
of a statute or regulation are opinion statements, and not statements of fact.”); General Cigar
Holdings, Inc. v. Altadis, S.A., 205 F. Supp. 2d 1335, 1356–57 (S.D. Fla. 2002) (dismissing
§ 43(a) claim based on defendants’ statements that plaintiff’s marks would lose trademark
protection, holding that “speculative legal analysis does not give rise to Lanham Act liability
unless it can be shown to be false”). The Guidance Paper and related statements connected to the
MRIS Copyright Program merely opined that MLSs’ listing databases could obtain copyright
protection and outlined a strategy whereby MLSs could register for protection with the
Copyright Office. Such statements were clearly expressions of legal opinion, and AHRN has
failed to explain how these statements could be verified as false statements of fact.5
Second, AHRN’s false advertising claims against MRIS and NAR must be dismissed
because none of the allegedly false or misleading statements were made in “commercial
advertising or promotion.” 15 U.S.C. § 1125(a)(1)(B). AHRN relies largely on the fact that
MRIS promoted, published and republished its Guidance Paper and other statements connected
to its Copyright Program in industry journals and at industry conferences across the country.
Doc. No. 68 ¶ 57. However, statements in the Guidance Paper were allegedly directed to MLSs
and focused on the copyrightability of MLS content. AHRN’s allegations fail to suggest that the
Guidance Paper is a commercial advertisement that promoted MRIS as a multiple listing service,
or that it was likely to influence anyone’s purchasing decisions. See, e.g., PMB Prods., LLC, 639
F.3d at 120; see also Porous Media Corp., 173 F.3d at 1120 (noting that statements most likely
to constitute commercial speech refer to specific goods or services); Neurotron, 189 F. Supp. 2d
at 275 (noting that alleged statements must be made for the purpose of influencing consumers to
buy particular goods or services). To the extent AHRN relies on any statements MRIS allegedly
Even if the Court accepted that the truth or falsity of these statements could be verified, the only logical conclusion
it could reach is that the statements asserting the copyrightability of MLS compilations were true. Indeed, the
record reveals that the Copyright Office routinely grants MLSs copyright protection in their compilations, and
federal courts have routinely found at both the preliminary injunction stage and on the merits that MLS compilations
are entitled to copyright protection. See, e.g., Montgomery Cnty. Ass’n of Realtors v. Realty Photo Master Corp.,
878 F. Supp. 804, 809-10 (D. Md. 1995) (granting summary judgment to MLS), aff’d 91 F.3d 132 (Table) (4th Cir.
1996); Supermarket of Homes, Inc. v. San Fernando Valley Bd. of Realtors, 786 F.2d 1400, 1408-09 (9th Cir. 1986)
(granting summary judgment to MLS); Regional Multiple Listing Serv. of Minn. v. Am. Home Realty Network, Inc.,
2012 WL 4470286, at *8-9 (D. Minn. Sept. 27, 2012) (granting preliminary injunction to MLS); Doc. No. 81-2,
Realtor Ass’n of Greater Ft. Lauderdale, Inc. v. Prop. Am. Corp., Case No. 99-6141 (S.D. Fla. Mar. 20, 2000)
(finding that MLS had established likelihood of success on infringement claim, but denying preliminary injunction
where it failed to show irreparable harm); Doc. No. 81-3, Real Data, Inc. v. Houston Ass’n of Realtors, Inc., Case
No. H-94-0947 (S.D. Tex. Apr. 28, 1995) (finding on motion for summary judgment that MLS held valid
compilation copyright, but denying motion for summary judgment and injunctive relief based on disputed factual
issues regarding infringement).
made to the Copyright Office, see Doc. No. 68 ¶ 18, there is no basis to conclude that such
statements constituted commercial advertising or promotion.6
With respect to NAR, AHRN alleges in conclusory fashion that “NAR has republished or
encouraged its members to republish MRIS’s false and misleading statements on its web site.”
Doc. No. 68 ¶ 112. AHRN’s allegations fail to identify which statements were republished and
the nature and context of the alleged republication. To the extent AHRN relies on the statements
from the Guidance Paper and statements related to the Copyright Program, it has failed to state a
claim for the reasons discussed above. AHRN’s Lanham Act claim against NAR also relies on
the basis of NAR’s alleged “Registration Tips,” which recommended how MLSs should apply
and register their copyrights with the U.S. Copyright Office Id. ¶ 69. AHRN has failed to
specify what is false or misleading in the “Registration Tips” publication, much less allege that
the statements were made in an advertisement or for the purpose of promoting a particular good
or service. Furthermore, like the statements in the Guidance Paper, the statements in the
“Registration Tips” are nonactionable legal opinions.
Finally, AHRN’s allegations regarding Counterclaim-Defendants’ disparaging statements
are also insufficient to state a claim for false advertising under the Lanham Act. AHRN
identifies a single disparaging statement made about NeighborCity.com by an NAR member,
Berkshire County Board of Realtors. Aside from conclusory assertions of conspiracy and
agreement, AHRN’s pleadings fail to connect this particular statement to MRIS, NAR, or the
other allegations underlying the First Amended Counterclaims. Furthermore, even if the Court
accepted that this particular statement or any of the other alleged statements accusing AHRN of
It is not clear whether AHRN’s Lanham Act claim was also based upon MRIS’s statements that its database was
“unpublished.” These statements do not give rise to liability for false advertising, however, because they were not
false. See infra, Part III.B.1. Furthermore, statements made to the Copyright Office do not constitute commercial
advertising or promotion.
“theft” or “piracy” could be attributed to MRIS or NAR, AHRN has not demonstrated that any of
them occurred in the context of commercial advertising or promotion.7
Although a court “should freely give leave [to amend] when justice so requires,” Fed. R.
Civ. P. 15(a)(2), leave to amend is properly denied and a claim dismissed with prejudice where
further amendment would be futile, where the deficiencies in the complaint are fundamental, or
where the party has failed to cure the deficiencies despite repeated opportunities. See, e.g.,
Forman v. Davis, 371 U.S. 178, 182 (noting that reasons for denying leave to amend include
“undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, [and] futility of amendment”); Cozzarelli v. Inspire Pharms.
Inc., 549 F.3d 618, 630 (4th Cir. 2008) (holding that district court did not abuse discretion in
denying motion for leave where amendment was futile in light of complaint’s “fundamental
deficiencies”); United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376
(4th Cir. 2008) (affirming district court’s determination that further amendment would be futile
where proposed complaint did not state a claim under Rule 12(b)(6) and lacked sufficient
particularity under Rule 9(b)). As discussed above, the crux of AHRN’s Lanham Act claims is
based on Counterclaim-Defendants’ allegedly false statements relating to the copyrightability of
MLS listing data. Further amendment in this case would be futile, as no set of facts would make
these allegedly false statements actionable under the Lanham Act. Furthermore, there is nothing
in the new allegations presented in AHRN’s proposed Second Amended Counterclaim, Doc. No.
133-1, that would alter the Court’s analysis. Accordingly, the Court will dismiss AHRN’s
Lanham Act claims with prejudice.
The Court further notes that even well-pleaded allegations based on Counterclaim-Defendants’ accusations of
infringement would likely not give rise to a cause of action. For the reasons discussed herein, such allegations
would constitute nonactionable legal opinions.
Count IV: Sherman Act § 1 (Against All Defendants)
AHRN’s allegations that Counterclaim-Defendants have conspired to engage in sham
litigation, or efforts incident to that litigation, such as the sending of cease-and-desist letters,
form a substantial basis of its Sherman Act claims. See Doc. No. 68 ¶¶ 3, 14, 58, 62, 70–74, 101,
109, 139-40, and 143. As a preliminary matter, MRIS and NAR contend that they are immune
from antitrust liability based on Noerr-Pennington immunity.
Noerr-Pennington antitrust immunity
“Those who petition government for redress are generally immune from antitrust
liability.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 56
(1993). In Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., the Supreme
Court held that the Sherman Act “does not prohibit . . . persons from associating together in an
attempt to persuade the legislature or the executive to take particular action with respect to a law
that would produce a restraint or monopoly.” 365 U.S. 127, 136 (1961); accord United Mine
Works of Am. v. Pennington, 381 U.S. 657, 669 (1965). However, Noerr “withheld immunity
from ‘sham’ activities because ‘application of the Sherman Act would be justified’ when
petitioning activity, ‘ostensibly directed toward influencing governmental action, is a mere sham
to cover . . . an attempt to interfere directly with the business relationships of a competitor.’”
Prof’l Real Estate, 508 U.S. at 56 (quoting Noerr, 365 U.S. at 144). The Supreme Court
subsequently extended Noerr-Pennington immunity to “the approach of citizens or groups of
them . . . to administrative agencies . . . and to courts.” Cal. Motor Transp. Co. v. Trucking
Unlimited, 404 U.S. 508, 510 (1972) (noting that the right of access to the judiciary “is indeed
but one aspect of the right to petition”). Accordingly, litigation, “including good faith litigation
to protect a valid copyright, . . . falls within the protection of the Noerr-Pennington doctrine.”
Primetime 24 Joint Venture v. Nat’l Broad. Co., Inc., 219 F.3d 92, 100 (2d Cir. 2000). In recent
years, courts have extended Noerr-Pennington “to encompass concerted efforts incident to
litigation,” including prelitigation threat letters and settlement offers. Id. (listing cases).
In Professional Real Estate Investors, Inc., the Supreme Court held that “an objectively
reasonable effort to litigate cannot be a sham regardless of subjective intent.” 508 U.S. at 57.
“Whether applying Noerr as an antitrust doctrine or invoking it in other contexts, we have
repeatedly reaffirmed that evidence of anticompetitive intent or purpose alone cannot transform
otherwise legitimate activity into a sham.” Id. at 59 (citing cases). The Court went on to outline
a two-part definition of “sham litigation”:
[T]he lawsuit must be objectively baseless in the sense that no reasonable litigant
could realistically expect success on the merits. If an objective litigant could
conclude that the suit is reasonably calculated to elicit a favorable outcome, the
suit is immunized under Noerr, and an antitrust claim premised on the sham
exception must fail. Only if challenged litigation is objectively meritless may a
court examine the litigant’s subjective motivation.
Id. at 60–61 (emphasis added).
In this case, not only did the Court deny AHRN’s Motion to Dismiss, but it also granted
MRIS a preliminary injunction. The lawsuit therefore cannot be deemed “objectively baseless.”
See, e.g., Omni Res. Dev. Corp. v. Conoco, Inc., 739 F.2d 1412, 1414 (9th Cir. 1984) (“[T]he suit
cannot not be characterized as baseless at all; for although we do not know the outcome, at least
to the point of a preliminary injunction the state court plaintiffs were successful.”). AHRN
contends, however, that Counterclaim-Defendants are not entitled to Noerr-Pennington
immunity because they committed fraud on the U.S. Copyright Office in registering their
The Copyright Act provides, in relevant part:
A certificate of registration satisfies the requirements of this section and section
412, regardless of whether the certificate contains any inaccurate information,
(A) the inaccurate information was included on the application for copyright
registration with knowledge that it was inaccurate; and
(B) the inaccuracy of the information, if known, would have caused the Register
of Copyrights to refuse registration.
17 U.S.C. § 411(b)(1). “[T]he fraudulent procurement of a copyright by means of knowing and
willful misrepresentations to the Copyright Office may strip a copyright holder of its exemption
from the antitrust laws.” Michael Anthony Jewelers, Inc. v. Peacock Jewelry, Inc., 795 F. Supp.
639, 647 (S.D.N.Y. 1992) (internal quotations and alterations omitted) (citation omitted). A
claim alleging fraud on the Copyright Office is only available where the registrant is alleged to
have made false representations of fact with the requisite intend to defraud. See, e.g., id. at 643–
44 (entertaining fraud claim where plaintiff was alleged to have applied for copyright registration
in its own name for designs originated by others and “willfully” omitted in its applications
reference to any work from which its designs were copied or originated); Kimberly-Clark
Worldwide, Inc. v. First Quality Baby Prods., LLC, No. 1:CV-09-1685, 2011 WL 1883815, at *4
(M.D. Pa. May 17, 2011) (holding that counterclaimant adequately alleged that plaintiff
deliberately and intentionally withheld material prior art in connection with the prosecution of
the patent-in-suit where the complaint specifically described individuals with knowledge of prior
art, that the plaintiff withheld the prior art, and that its objective was to deceive the Patent and
Trademark Office); Nabi Biopharms. v. Roxane Labs., Inc., No. 2:05-CV-889, 2007 WL 894473,
at *5–6 (S.D. Ohio Mar. 21, 2007) (denying motion to dismiss counterclaim where it alleged that
the applicant failed to disclose to the PTO “a variety of facts” concerning its prior art and sales,
was aware of the relevance of the information, and failed to disclose it). As with all allegations
of fraud, claims of fraud on the Copyright Office must be pled with particularity pursuant to the
requirements of Rule 9(b) of the Federal Rules of Civil Procedure. See, e.g., Robinson v.
Fountainhead Title Grp. Corp., 447 F. Supp. 2d 478, 490 (D. Md. 2006); see also Yurman
Design, Inc. v. Chaindom Enters., Inc., No. 99 Civ. 9307 (JFK), 2002 WL 31358991, at *1-3
(S.D.N.Y. Sept. 30, 2002) (requiring claims of fraud on the Copyright Office to be pled with
particularity); Spectrum Creations, Inc. v. Catalina Lighting, Inc., No. SA-00-CA-875-F, 2001
WL 1910566, at *10 (W.D. Tex. Aug. 1, 2001) (same).
The basis for MRIS’s alleged fraud on the Copyright Office is its (1) failure to inform the
Copyright Office of the Guidance Paper Program; (2) failure to disclose the generic selection,
coordination, and arrangement through the Database software for which it claims copyright
protection; (3) failure to disclose mandated arrangement of the MRIS Database for compliance
with real estate industry standard communication protocols; and (4) failure to disclose the
publication of real estate listings from the ostensibly unpublished database. Doc. No. 89-1 at 30–
31; Doc. No. 93 at 24. The first basis of alleged fraud—that MRIS failed to disclose the
existence of the Guidance Paper—is nowhere in AHRN’s First Amended Counterclaims. AHRN
also fails to demonstrate that the alleged omission was made knowingly and how the omission
made MRIS’s copyright applications materially inaccurate. The second basis of alleged fraud—
that MRIS failed to disclose that its selection, coordination, and arrangement was “generic”—
appears to be a reiteration of AHRN’s legal argument that the MRIS Database does not exhibit
sufficient originality to warrant copyright protection. See Doc. No. 68 ¶¶ 58, 89, 91, 94; see also
Doc. No. 25, Defendants’ Opposition to MRIS’s Motion for Preliminary Injunction. AHRN has
failed to allege with sufficient particularity that MRIS committed fraud on the Copyright Office
by knowingly making material, factual misrepresentations regarding its selection, coordination,
and arrangement of its database. As for the third basis of alleged fraud, AHRN has simply failed
to identify or describe the real estate industry’s “standard communication protocols” in its briefs
or in its First Amended Counterclaims.
AHRN’s fourth basis for alleged fraud on the Copyright Office—that MRIS failed to
disclose publication of real estate listings from the ostensibly unpublished database—appears
grounded in its allegation that Counterclaim-Defendants misrepresented in their applications
with the Copyright Office “that their compilation copyrights covering their databases are
‘unpublished,’ when in fact their databases are published through wide dissemination to
subscribers and licensees for purposes including display to public.” Id. ¶ 18. However, the
Court finds no basis to conclude that MRIS acted improperly in registering the MRIS Database
as an “unpublished” work. Both “published” and “unpublished” works may obtain copyright
protection. 17 U.S.C. § 104(a)–(b). “Publication” is defined in the Copyright Act as “the
distribution of copies of a work to the public by sale or other transfer of ownership, or by rental,
lease, or lending.” Id. § 101. The legislative history and reports of the 1976 Copyright Act
“define ‘to the public’ as distribution to persons under no explicit or implicit restrictions with
respect to disclosure of the contents.” United States Copyright Office, Circular 1, at 4, available
at http://www.copyright.gov/circs/circ01.pdf. MRIS does not distribute its database “to the
public”; indeed, the MRIS Database is only made available to subscribers under restrictive
licensing terms. See Doc. No. 29-1, MRIS Subscriber License and Access Agreement.
Furthermore, the MRIS Database is not distributed by rental, lease, or lending. MRIS properly
registered its database as an “unpublished” work, and as such, this representation does not form a
plausible basis for a claim of fraud on the Copyright Office.
For the foregoing reasons, the First Amended Counterclaims do not set forth a plausible
claim of fraud on the Copyright Office. Counterclaim-Defendants are therefore entitled to
Noerr-Pennington immunity from AHRN’s § 1 claims to the extent they are based on the filing
of this litigation and the incidents of that litigation.
Other bases for § 1 claims
AHRN asserts that it has stated a § 1 claim against MRIS and NAR even without
considering the litigation. Doc. No. 89-1 at 30. Section 1 of the Sherman Act declares illegal
“[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of
trade or commerce . . . .” 15 U.S.C. § 1. To establish a § 1 violation, “a plaintiff must prove,
and therefore plead, ‘(1) a contract, combination, or conspiracy; (2) that imposed an
unreasonable restraint on trade.’” Robertson v. Sea Pines Real Estate Cos., Inc., 679 F.3d 278,
284 (4th Cir. 2012) (quoting Dickson v. Microsoft Corp., 309 F.3d 193, 202 (4th Cir. 2002)).
With respect to the first element, stating a § 1 claim “requires a complaint with enough
factual matter (taken as true) to suggest than an agreement was made. Asking for plausible
grounds to infer an agreement does not impose a probability requirement at the pleading stage; it
simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence
of illegal agreement.” Twombly, 550 U.S. at 556. The Court in Twombly elaborated on what is
required to plead an agreement for § 1 purposes:
[A]n allegation of parallel conduct and a bare assertion of conspiracy will not
suffice. Without more, parallel conduct does not suggest conspiracy, and a
conclusory allegation of agreement at some unidentified point does not supply
facts adequate to show illegality. Hence, when allegations of parallel conduct are
set out in order to make a § 1 claim, they must be placed in a context that raises a
suggestion of a preceding agreement, not merely parallel conduct that could just
as well be independent action.
Id. at 556–57.
As to the second element, a § 1 plaintiff “must prove the existence of ‘antitrust injury,
which is to say injury of the type the antitrust laws were intended to prevent and that flows from
that which makes defendants’ acts unlawful.’” Dickson, 309 F.3d at 202–03 (emphasis in
original). AHRN does not appear to dispute that its § 1 claims will be assessed by the rule of
reason. The Fourth Circuit noted in Sea Pines, a case involving § 1 claims against MLS
Because trade associations may be protective of consumer interests and not just
inimical to them, the cooperative actions of MLS members are not per se
unreasonable. As the district court properly noted, the restraints at issue should be
evaluated at the merits stage according to the rule of reason, traditionally applied
to joint venture cooperation that has possible procompetitive justifications.
679 F.3d at 290 (citing Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984) and
American Needle, Inc. v. National Football League, 560 U.S. 183 (2010)).
In rule of reason analysis, “the reasonableness of a restraint [on trade] is evaluated based
on its impact on competition as a whole within the relevant market.” Dickson, 309 F.3d at 206
(quoting Oksanen v. Page Mem’l Hosp., 945 F.2d 696, 708 (4th Cir. 1991)). “This evaluation
requires a showing of ‘anticompetitive effect’ resulting from the agreement in restraint of trade.”
Dickson, 309 F.3d at 206. To have anticompetitive effect, conduct “must harm the competitive
process and thereby harm consumers. . . . [H]arm to one or many competitors will not suffice.”
Id. (quoting United States v. Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir. 2001)). Accordingly,
allegations that an antitrust defendant sought to harm plaintiff’s business in particular are not
sufficient to state a §1 claim. See, e.g., Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp.,
509 U.S. 209, 255 (1993) (“Even an act of pure malice by one business competitor against
another does not, without more, state a claim under the federal antitrust laws.”); Brown Shoe Co.
v. United States, 370 U.S. 294, 320 (1962) (noting that antitrust laws were passed “for protection
of competition, not competitors”) (emphasis added). Furthermore, conclusory allegations that an
alleged agreement produced anticompetitive effects will not suffice. Dickson, 309 F.3d at 212–
13 (affirming dismissal of § 1 claim where complaint’s assertions of anticompetitive effects were
AHRN primarily relies on the writing and promotion of the MRIS Guidance Paper and
copyright registration program, refusals to deal, restrictive NAR rules, and industry meetings as
the basis for its § 1 claims against both MRIS and NAR. The Court concludes that AHRN’s
First Amended Counterclaims do not adequately plead the existence of either element of a § 1
claim. First, AHRN fails to plead the time, place and contours of any anticompetitive agreement.
It is not sufficient to allege that Counterclaim-Defendants agreed to enforce their copyrights
against AHRN; MRIS and NAR are immunized from such a claim for the reasons discussed
above. Second, AHRN has not plausibly alleged that competition in general was harmed as a
result of Counterclaim-Defendants’ conduct.
AHRN relies to a great extent on NAR’s annual meeting in Anaheim in November 2011,
which allegedly “featured discussions of the perceived threat AHRN poses to the industry and
what the industry could do to shut down AHRN.” Doc. No. 68 ¶ 69. Although MRIS
acknowledges that it had representatives at the meeting, Doc. No. 76-1 at 18, the Court cannot
infer that any agreement was reach merely because an industry meeting was held. The Court
will not equate mere “discussions” with the consummation of an anticompetitive agreement,
particularly where the claimant fails to outline the specific contours of the alleged agreement.8
See, e.g., Loren Data Corp. v. GXS, Inc., No. DKC 10-3474, 2011 WL 3511003, at *5 (D. Md.
Aug. 9, 2011) (dismissing § 1 claim where the complaint did not identify the parties with whom
Even if the Court accepted that an agreement was reached at this meeting, it is only alleged that the agreement was
directed to harming AHRN, not competition in general.
defendant allegedly agreed, the time or place at which such agreement was reached, or the
specific contours of the agreement). Indeed, AHRN’s difficulty in pinning down the time, place
and contours of an agreement is reflected in other allegations in the First Amended
Counterclaims. For example, AHRN claims that the “conspiracy” among CounterclaimDefendants actually had its origins “much earlier” than the November 2011 Anaheim meeting
and “dates at least to 2005,” when MRIS issued the Guidance Paper. Doc. No. 68 ¶ 139; see also
Doc. No. 89-1 at 37 (calling the Guidance Paper the “genesis” for concerted action, sham
copyrights and sham litigation). AHRN’s claim that the Guidance Paper evidences agreement
makes little sense considering that its publication predated AHRN’s existence by approximately
two years and the Anaheim meeting by approximately five years. See Doc. No. 68 ¶ 6
(indicating that AHRN was founded five years ago). Furthermore, AHRN alleges that it began
receiving cease-and-desist letters before the Anaheim meeting. Id. ¶ 70.
In further misplaced reliance on the MRIS Guidance Paper and Copyright Program,
AHRN alleges that the “MLS industry adopted the Program under the auspices of, and with the
encouragement and guidance of NAR.” Id. ¶ 67. AHRN relies largely on a September 27, 2010
NAR meeting in Chicago, where points of discussion included:
MLS’ [sic] debate the merits of consolidation, revenue streams, data ownership
and their ‘true role’ ● Real estate brokers struggle to survive on narrow margins
● Realtors struggle to earn U.S. median income ● Everybody wants realty data
for free ● Innovators want no barriers to innovation ● Thought leaders want their
views adopted ● New business models and technologies continue to disrupt
(Freemium) ● RETS is not all it could be[.]
Id. (emphasis added). AHRN alleges that this coded discussion represented “a clear signal to
drive disruptive innovators out of business with the ‘true role’ of the MLS copyright Program.”
Id. ¶ 68. While this “clear signal” may be apparent to AHRN, it is not apparent to the Court, and
the Court “will not accept as true any unwarranted inferences or unreasonable conclusions.”
Daniels v. Arcade, L.P., 477 F. App’x 125, 128 (4th Cir. 2012). Indeed, AHRN does not identify
who was at the September 2010 meeting, and the points of discussion include no mention of
MRIS, the Guidance Paper, or copyright registration. There is no reasonable inference to be
drawn from the 2010 meeting that NAR, MRIS, or any other entity reached an agreement.
AHRN also emphasizes a December 2011 e-mail from a Northstar employee, John
Mosey, in which Mosey called for the MLSs to take collective action against AHRN. Id. ¶ 73.
The Mosey e-mail makes no mention of MRIS or NAR, does not evidence their involvement in
drafting the e-mail, and is otherwise not probative of Counterclaim-Defendants’ participation in
any alleged agreement. Furthermore, when read in context, the collective action referred to in
the Mosey e-mail concerns litigation and related activities, including the sending of cease-anddesist letters and other copyright enforcement efforts. Id. The Court acknowledges that the email reflects some level of animus against AHRN and its CEO, Jonathan Cardella, but as
discussed above, Counterclaim-Defendants are shielded from antitrust immunity under the
Noerr-Pennington doctrine. Prof’l Real Estate, 508 U.S. at 60 (“Only if challenged litigation is
objectively meritless may a court examine the litigant’s subjective motivation.”).
AHRN further alleges that the cease-and-desist letters and refusal and repudiation letters
related to broker or agent referrals were “coordinated by discussions and agreements among
NAR, MLSs and brokers.” Doc. No. 68 ¶ 83. These vague allegations fail to specify the
contours of the agreement and when the agreement was reached.9 See Loren, 2011 WL 3511003,
at *5. However, even if the Court could infer an agreement based upon the receipt of the letters
as well as the timing of the November 2011 meeting, the Mosey e-mail, and the initiation of
AHRN’s allegation that NAR’s General Counsel Lauri Janik advised MLSs to send cease-and-desist letters does
not support the plausibility of its claim that an agreement was reached. See Doc. No. 68 ¶ 85. Janik’s
communication does not mention MRIS and is alleged to have occurred in May or June 2012, approximately six
months after AHRN received the “torrent” of cease-and-desist letters. Id. ¶¶ 70, 85.
lawsuits, the First Amended Counterclaims fail to allege that any such agreement produced
anticompetitive effects generally. AHRN repeatedly alleges that Counterclaim-Defendants
intended to drive AHRN out of business, or that the effect of Counterclaim-Defendants’ alleged
agreement was to make it hard for AHRN to compete effectively. See, e.g., Doc. No. 68 ¶ 20
(lawsuits are an attempt “to drive AHRN out of business and eliminate AHRN as a competitor”);
id. ¶ 109 (Counterclaim-Defendants’ coordinated action “was intended to and did have anticompetitive effects on AHRN”). Such allegations are insufficient to state a § 1 claim, as AHRN
must allege that Counterclaim-Defendants’ concerted action affected competition in general. To
the extent the First Amended Counterclaims contain such allegations, they are largely
conclusory. See, e.g., id. ¶ 110 (“Defendants’ activities, and the violations alleged in this First
Amended Counterclaim, affect home buyers and sellers located throughout the United States.”);
id. ¶ 146 (“The anti-competitive acts of the Conspiracy have directly harmed competition . . . .”).
Where AHRN does identify specific anticompetitive effects, including the elimination of price
competition and price maintenance on brokerage referral services and the impeding and blocking
of market entry by AHRN and other innovative businesses, see id. ¶ 109, it fails to explain the
connection between such anticompetitive effects and the conduct complained of—CounterclaimDefendants’ copyright registration and enforcement efforts.
AHRN also relies upon certain rules promulgated by NAR, including rules (1) preventing
brokers from using their MLSs’ IDX data feeds for any purpose other than display on their
websites and (2) requiring participant consent for use by the MLS of listings or listing
information for any purposes other than the defined purposes of the MLS. Id. ¶¶ 102–03. As an
initial matter, the First Amended Counterclaims fail to sufficiently allege that any agreement was
reached in connection with the NAR rules.10 Instead, AHRN baldly asserts that the NAR rules
“adopt the anticompetitive premise and goals of the MRIS Guidance Paper’s ‘Program.’” Id.
¶ 102. This is not a case like Sea Pines, which addressed complaints alleging anticompetitive
rules passed by real estate brokerages serving together as board members on MLSs. 679 F.3d at
282-83. There, the content of the rules constituted the factual matter “establishing a plausible
claim of conspiracy between the MLS board members,” and “the concerted conduct [was] not a
matter of inference or dispute.” Id. at 289-90. In this case, however, the mere existence of NAR
rules as alleged in the First Amended Counterclaims lends no support to the existence of an
But even if the Court accepted that the NAR rules evidenced agreement or were part of
some larger cooperative scheme, AHRN’s allegations of anticompetitive effects are still
insufficient under Sea Pines. Plaintiffs in Sea Pines challenged MLS rules which
prohibited members from offering alternative contractual terms and operating a
“fee-for-service” business model, which would have allowed a seller who found
a buyer on his own to avoid payment of a commission to the brokerage. Other
rules operated to restrict lower-priced and consumer-friendly internet
competition by excluding brokerages without a physical office in the MLS area
and brokerages that did not primarily do business in the MLS service area or
hold a South Carolina real-estate license as their primary license. Memberbrokerages were required to reside within the MLS service area and operate their
offices only during hours deemed reasonable by the MLS.
Id. at 291. Plaintiffs alleged that these rules resulted in the following anticompetitive effects:
(1) raised entry barriers for potential competitors by imposing burdensome
prerequisites for membership; (2) provided a means of identifying potentially
aggressive competitors so defendants could exclude them from [MLS]
membership; (3) stabilized the price of real-estate-brokerage services through the
AHRN cites a 2008 consent decree between the NAR and the Department of Justice. Doc. No. 68 ¶ 44. AHRN
claims that the consent decree provides factual evidence to support its claims that NAR acts in concert with its
member MLSs. Doc. No. 93 at 22. AHRN fails to draw any specific connection between the 2008 consent decree
and any of the alleged concerted action in this case, however. Furthermore, by its terms, the consent decree does not
constitute “any evidence against, or any admission by, any party regarding any issue of fact or law.” United States
v. Nat’l Ass’n of Realtors, No. 05-C-5140, 2008 WL 5411637, at *1 (N.D. Ill. Nov. 18, 2008).
prospect of price controls; (4) deterred the emergence of Internet-based
brokerages; (5) stabilized the price of, and reduced customer options for, realestate-brokerage services by dictating the services that all brokerages in the
[MLS] Service Area had to provide; and (6) discouraged entry of potential
competitors who raised funds through public ownership.
Id. at 290. The court concluded that the allegations were sufficient where “the alleged
anticompetitive effects are economically plausible in light of the MLS restrictions recounted in
the complaint.” Id. at 291.
AHRN alleges that the NAR rules in question “were designed to make it more difficult
for MLSs to share listing data with third parties.” Doc. No. 68 ¶ 102. As an initial matter,
although NAR rules may make it more difficult for AHRN obtain access to the third party listing
data, the Sherman Act does not guarantee AHRN the benefit of more effective competition. See,
e.g., Clorox Co. v. Sterling Winthrop, Inc., 117 F.3d 50, 59 (2d Cir. 1997) (“The antitrust laws do
not guarantee competitors the right to compete free of encumbrances . . . so long as competition
as a whole is not significantly affected.”); SCFC ILC, Inc. v. Visa USA, Inc., 36 F.3d 958, 972
(10th Cir. 1994) (“[I]f [plaintiff’s] goal is to compete more effectively in [the] market, we do not
believe this objective constitutes the proverbial sparrow the Sherman Act protects.”). More
importantly, however, the First Amended Counterclaims’ allegations of anticompetitive effects
are conclusory, and AHRN has failed to specify an economically plausible connection between
the NAR rules it identifies and harm to competition generally. See, e.g., Keller v. Greater
Augusta Ass’n of Realtors, Inc., 760 F. Supp. 2d 1373, 1389 (S.D. Ga. 2011) (dismissing § 1
claim where the allegations of anticompetitive conduct consisted of legal conclusions and the
complaint did not factually allege how the challenged NAR rule affected the relevant market, as
opposed to merely harming plaintiff individually).
To summarize, MRIS and NAR’s litigation and related activities are immunized from
antitrust liability. With respect to the other factual allegations in the First Amended
Counterclaims, AHRN has failed to outline the contours of an agreement and has failed to
explain how Counterclaim-Defendants’ alleged conduct affected competition generally.
Accordingly, the Court will dismiss the § 1 claims in the First Amended Counterclaims. In light
of the deficiencies identified herein, the Court has serious reservations about AHRN’s ability to
set forth a cognizable Sherman Act claim against either Counterclaim-Defendant. However,
AHRN set forth in its proposed Second Amended Counterclaims some allegations which may be
relevant to its § 1 claims, including its claim for fraud on the Copyright Office. See Doc. No.
133-1. Accordingly, in the interest of justice, the Court will grant AHRN leave to file amended
counterclaims and attempt to cure the deficiencies outlined above.
Count II: Maryland Unfair Competition (Against MRIS and NAR)
The law of unfair competition in Maryland is laid upon the premise that no one “is
justified in damaging or jeopardizing another’s business by fraud, deceit, trickery or unfair
methods of any sort.” Balt. Bedding Corp. v. Moses, 34 A.2d 338, 342 (Md. 1943)). “What
constitutes unfair competition in a given case is governed by its own particular facts and
circumstances. Each case is a law unto itself, subject, only, to the general principle that all
dealings must be done on the basis of common honesty and fairness, without taint of fraud or
deception.” Elecs. Store, Inc. v. Cellco P’ship, 732 A.2d 980, 991 (Md. Ct. Spec. App. 1999)
(quoting Balt. Bedding Corp., 34 A.2d at 342). The rules relating to liability for unfair
competition “developed largely from the rule which imposes liability upon one who diverts
custom from another to himself by fraudulent misrepresentation.” Cellco, 732 A.2d at 991
(quoting Edmondson Vill. Theater, Inc. v. Einbinder, 116 A.2d 377, 379 (Md. 1955)). Although
allegations of fraud and deception commonly underlie claims of unfair competition, the presence
of misleading or deceptive conduct is not a necessary element of every unfair competition claim.
See, e.g., Mascaro v. Snelling & Snelling of Balt., Inc., 243 A.2d 1, 10 (Md. 1968) (“As the law
[of unfair competition] developed, proof of fraudulent deception was no longer essential for
relief.”); Paccar Inc. v. Elliot Wilson Capitol Trucks LLC, No. SKG-11-2016, 2012 WL
5920864, at *12 (“Maryland courts’ description of the tort is not so narrowly drawn.”).
AHRN alleges in its First Amended Counterclaims that NAR and MRIS’s “false
statements, group boycott, and litigation activities constitute unfair competition,” and that their
unfair competition includes “fraud, deceit, and trickery.” Doc. No. 68 ¶¶ 126–27. The unfair
competition claims rely on the same set of facts relied upon in the Lanham Act and Sherman Act
§ 1 claims, and for similar reasons, the Court will dismiss them. The Court discerns nothing
unfair in Counterclaim-Defendants’ statements regarding the copyrightability of MLS listing
data, particularly where they simply expressed legal opinions and the Copyright Office
ultimately granted the applications. The Court also discerns nothing unfair in MRIS or NAR’s
litigation or related activities with respect to MLS compilation copyrights, especially given that
AHRN has not pled with particularity a basis for a claim of fraud on the Copyright Office.
Furthermore, AHRN’s reliance on MRIS’s or other MLSs’ refusals to grant licenses to AHRN
cannot form the basis of an unfair competition claim, as copyright holders generally have the
authority to exclude others from using their copyrighted work. See, e.g., Stewart v. Abend, 495
U.S. 207, 229 (1990) (“[A] copyright owner has the capacity arbitrarily to license one who seeks
to exploit the work.”); Océ N. Am., Inc. v. MCS Servs., Inc., 795 F. Supp. 2d 337, 344 (D. Md.
2011) (quoting Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1187 (1st Cir.
1994)) (“[W]hile exclusionary conduct can include a monopolist’s unilateral refusal to license a
copyright, an author’s desire to exclude others from use of its copyrighted work is a
presumptively valid business justification for any immediate harm to consumers.”). The
deficiencies underlying AHRN’s unfair competition claim are similar to those underlying its
Sherman Act § 1 claims. Accordingly, the dismissal of the unfair competition claims will be
without prejudice, and AHRN will be permitted an opportunity to file amended counterclaims
which cure the deficiencies identified herein.
Count III: California Unfair Competition (Against All Defendants)
The California Business and Professions Code prohibits unfair competition, which
includes “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue
or misleading advertising.” CAL. BUS. & PROF. CODE § 17200. This cause of action largely
mirrors a claim for unfair competition under Maryland law. For the reasons discussed above, the
First Amended Counterclaims fail to state a plausible claim for violation of California’s unfair
competition law (UCL).
AHRN’s California claim contains an additional defect. Courts have held that the
California UCL does not apply to nonresidents where the allegedly wrongful conduct occurred
outside California. See, e.g., Norwest Mortg., Inc. v. Superior Court, 72 Cal. App. 4th 214, 222
(Cal. Ct. App. 1999) (holding that UCL was not applicable to claims of non-residents injured by
conduct occurring outside California); Parkinson v. Hyundai Motor Am., 258 F.R.D. 580, 598
(C.D. Cal. 2008) (same). “However, extraterritorial application of the UCL is not barred where
the alleged wrongful conduct occurred in California.” Parkinson, 258 F.R.D. at 598. The only
conduct alleged to have occurred in California was NAR’s November 2011 meeting in Anaheim,
and MRIS’s presentation of the Guidance Paper in San Francisco and Sacramento in 2005. Doc.
No. 68 ¶¶ 57, 69. AHRN’s reliance on the 2005 presentation of the Guidance Paper is illogical,
as such presentation predated AHRN’s existence by approximately two years. The factual
allegations surrounding the 2011 Anaheim meeting are also insufficient to state a claim for the
same reasons discussed in the context of AHRN’s Sherman Act § 1 claim. See supra Part
III.B.2. Furthermore, AHRN has failed to sufficiently plead the harm it suffered in California.
The Court cannot infer that AHRN suffered harm from MRIS and NAR’s conduct merely
because its principal place of business is in the state. Accordingly, the dismissal of the
California claim will be without prejudice, and AHRN may file second amended counterclaims
and attempt to cure the deficiencies identified herein.
Count V: Sherman Act § 2 (Against MRIS)
In support of its monopolization claim under section 2 of the Sherman Act, AHRN
alleges, in relevant part:
At least by 2005, MRIS and its large broker subscribers had an intent and scheme
to monopolize the market for real estate brokerage referral services in the MRIS
service area of Maryland, Virginia, Washington, D.C. and parts of Pennsylvania,
Delaware and West Virginia. MRIS has market power through its dominant
shares of 100% of the MLS services to its member brokers and its member
brokers’ dominant share of 85% of listed properties—as measured by dollar
volume of closed transactions—in MRIS’s service area. The property listing
information in MRIS’s Database is an essential facility controlled by MRIS and
required by brokers operating in MRIS’s service area to effectively serve their
clients and to complete with other brokers. . . . MRIS has engaged in exclusionary
conduct for itself, MRIS and other Defendants through MRIS’s dissemination,
promotion, and implementation of MRIS’s Guidance Paper’s “Program” and its
rules governing its member brokers, its litigation against AHRN and its refusal to
deal with AHRN, and others. MRIS has effectively denied the essential facility to
AHRN and other innovative brokers who compete with MRIS’s broker
subscribers. MRIS can effectively provide the essential facility to AHRN and
other innovative brokers by relaxing its stranglehold on property listing data and
ceasing its anticompetitive conduct against AHRN and other innovative brokers.
Doc. No. 68 ¶¶ 148–50.
To prevail on a monopolization claim under Section 2 of the Sherman Act, 15 U.S.C. § 2,
a plaintiff must establish “possession of monopoly power in a relevant market, willful acquisition
or maintenance of that power in an exclusionary manner, and causal antitrust injury.” Advanced
Health-Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 147 (4th Cir. 1990). “To run
afoul of Section 2, a defendant must be guilty of illegal conduct ‘to foreclose competition, to
gain a competitive advantage, or to destroy competition.’” E.I. du Pont de Nemours and Co. v.
Kolon Indus., Inc., 637 F.3d 435, 441 (4th Cir. 2011) (quoting Eastman Kodak Co. v. Image
Tech. Servs., Inc., 504 U.S. 451, 480 (1992)). “Proof of a relevant market is the threshold for a
Sherman Act § 2 claim. The plaintiff must establish the geographic and product market that was
monopolized.” Consul, Ltd. v. Transco Energy Co., 805 F.2d 490, 493 (4th Cir. 1986). “In
considering what is the relevant market for determining the control of price and competition, no
more definite rule can be declared than that commodities reasonably interchangeable by
consumers for the same purposes make up that part of the trade or commerce, monopolization of
which may be illegal.” United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395
(1956) (internal quotations omitted). The Supreme Court has further defined “market power” as
the “ability to alter the interaction of supply and demand in the market” or the “ability to raise
prices above those that would be charged in a competitive market.” Nat’l Collegiate Athletic
Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 109, 109 n.38 (1984). For an antitrust
plaintiff to prevail on an essential facilities claim, it must establish the following four elements:
“(1) control of the essential facility by a monopolist; (2) a competitor’s inability practically or
reasonably to duplicate the essential facility; (3) the denial of the use of the facility to a
competitor; and (4) the feasibility of providing the facility to competitors.” Advanced HealthCare, 910 F.2d at 150 (quoting MCI Comm’ns v. AT & T, 708 F.3d 1081, 1132–33 (7th Cir.
Even if MRIS was not immunized from antitrust claims, see supra Part III.B.1, AHRN’s
§ 2 claim is fundamentally deficient for two primary reasons. First, AHRN has failed to plead
the boundaries of the relevant market and that MRIS has monopoly power within that market.
AHRN alleges that the relevant market in this case is the market for real estate brokerage referral
services in the geographic areas in which MRIS operates. However, MRIS does not provide or
compete in the market for such referral services; rather, it is a multiple listing service. AHRN
does not offer multiple listing services, and as such, it fails to state a plausible claim for
monopolization against MRIS.
Second, AHRN has also failed to state a § 2 claim based on the essential facilities
doctrine. For the reasons discussed above, AHRN does not and cannot allege that it is a
competitor of MRIS in any relevant market, as AHRN offers brokerage referral services while
MRIS offers multiple listing services. Furthermore, AHRN cannot allege that it is unable to
practically or reasonably duplicate the property listing data in the MRIS Database. Indeed, its
President has offered sworn testimony that the data displayed on NeighborCity.com comes from
multiple sources that are not the MRIS Database, including from brokers and agents, public
records, foreclosure data providers, FSBO aggregators, school data websites, map websites, and
other third parties. See Vahabzadeh Dec., Doc. No. 24-3 ¶ 12; see also Cardella Dec., Doc. No.
54-1 ¶ 8 (acknowledging that AHRN has obtained access to property listings by way of
permission from many of MRIS’s brokers and agents). AHRN cannot now assert in its First
Amended Counterclaims that these other sources and methods are inadequate and that the MRIS
Database is an essential facility.
In its opposition, AHRN relies on a April 2007 Joint Report by the Federal Trade
Commission and U.S. Department of Justice, “Competition in the Real Estate Brokerage referral
services Industry,” which allegedly states that “MLSs are so important to the operation of real
estate markets that, as a practical matter, any broker who wishes to compete effectively in a
market must participate in the local MLS and brokers must have access to their local multiple
listing service (MLS) to compete effectively.” Doc. No. 68 ¶ 52. Again, AHRN cannot allege
based on this provision or otherwise that it (as opposed to brokers and agents) is a competitor of
MRIS, as they offer distinct services. Furthermore, AHRN made no attempt to explain the
inconsistency between the Vahabzadeh declaration and other prior representations in this
litigation and its current claim that the MRIS Database is an essential facility. Because
amendment would be futile, the Court will dismiss AHRN’s § 2 claim with prejudice.
Count VI: Copyright Misuse (Against MRIS)
The Fourth Circuit has recognized that copyright misuse is a valid defense to an action
for copyright infringement. Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 977 (4th Cir. 1990).
However, virtually every court that has addressed the issue has held that copyright misuse is only
a defense, not a basis for affirmative relief. See, e.g., Interscope Records v. Kimmel, No. 3:07cv-0108, 2007 WL 1756383, at *5 (N.D.N.Y. June 18, 2007; Arista Records, Inc. v. Flea World,
Inc., 356 F. Supp. 2d 411, 428 (D.N.J. 2005); Online Policy Grp. v. Diebold, Inc., 337 F. Supp.
2d 1195, 1198 n.4 (N.D. Cal. 2004); Broad. Music, Inc. v. Hearst/ABC Viacom Entm’t Servs.,
746 F. Supp. 320, 328 (S.D.N.Y. 1990). AHRN cites caselaw from the Ninth Circuit which
indicates that a claim of copyright misuse may form the basis for a declaratory judgment action.
See, e.g., Practice Mgmt. Info. Corp. v. Am. Med. Ass’n, 121 F.3d 516, 520–21 (9th Cir. 1997);
Oldcaste Precast, Inc. v. Granite Precasting & Concrete, Inc., 2011 WL 813759, at *9–10
(W.D. Wash. Mar. 2, 2011). However, these facts do not apply to AHRN’s First Amended
Counterclaims. Because there is no freestanding, independent cause of action for copyright
misuse, Count VI of AHRN’s First Amended Counterclaims will be dismissed with prejudice.
Count VII: Barratry (Against NAR)
Under Maryland law, “a person may not, for personal gain, solicit another person to sue
or to retain a lawyer to represent the other person in a lawsuit.” MD. CODE, BUS. OCC. & PROF.
§ 10-604(b)(1). Any person in violation of the prohibition on barratry “is guilty of a
misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not
exceeding one year or both.” Id. § 10-606(c).
By its own terms, section 10-604 expressly provides for the criminal prosecution of
violators, but does not declare a private cause of action. Son v. Margolias, Mallios, Davis, Rider
& Tomar, 689 A.2d 645, 653 n.11 (Md. Ct. Spec. App. 1997), rev’d on other grounds, 709 A.2d
112 (Md. 1998). Reported cases that have examined the Maryland barratry statute have typically
involved a party’s attempt to invalidate a contract as being against public policy due to unlawful
barratry. See, e.g., Son v. Margolias, Mallios, Davis, Rider & Tomar, 709 A.2d 112, 119 (Md.
1998); Schackow v. Medical-Legal Consulting Serv., Inc., 416 A.2d 1303, 1312 (Md. Ct. Spec.
App. 1980); see also Accrued Fin. Servs. v. Prime Retail, Inc., 298 F.3d 291, 296-300 (4th Cir.
2002). However, AHRN cites to no cases, and the Court is not aware of any, holding that
Maryland’s criminal barratry statute creates a private cause of action in tort. In fact, most courts
that have examined that issue in other jurisdictions have concluded that a private cause of action
for barratry cannot be implied from a criminal statute. See, e.g., DaimlerChrysler Corp. v.
Kirkhart, 561 S.E.2d 276, 283 (N.C. Ct. App. 2002); Pelletier v. Zweifel, 921 F.2d 1465, 1512–
13 (11th Cir. 1991); Galinski v. Kessler, 480 N.E.2d 1176, 1179 (Ill. App. Ct. 1985); Moiel v.
Sandlin, 571 S.W.2d 567, 571 (Tex. Civ. App. 1978). The Court finds no basis to conclude that
the Maryland criminal barratry statute creates a private right of action, and therefore, AHRN’s
claim must be dismissed with prejudice on that basis alone.
Even if the Court accepted that such a private cause of action existed under Maryland
law, AHRN has plainly failed to plead the required elements of barratry. The key elements to
the statutory offense are “officious meddling” and “personal gain.” Accrued Fin. Servs., 298
F.3d at 299 (quoting Son, 709 A.2d at 121). In this case, AHRN’s amended pleadings fail to
allege that NAR engaged in “officious meddling” in this lawsuit. Indeed, the only specific
allegation of financial support is that on May 19, 2012, NAR approved funding of MRIS’s
lawsuit against AHRN. Doc. No. 68 ¶¶ 81, 84. However, MRIS’s lawsuit against AHRN was
filed nearly two months before the alleged financial support. It therefore does not follow from
these allegations that NAR engaged in “officious meddling.”
Furthermore, AHRN’s First Amended Counterclaims are devoid of any specific factual
allegations that NAR solicited MRIS to sue AHRN prior to the initiation of this suit. AHRN’s
allegation that NAR “featured discussions” concerning AHRN’s threat to the industry at its
November 2011 annual meeting, id. ¶ 69, does not satisfy the “officious meddling” element,
much less the statutory requirement that the alleged barrator engage in solicitation, see MD.
CODE, BUS. OCC. & PROF. § 10-604(b)(1). Other allegations cited by AHRN, including its
receipt of cease-and-desist letters from MRIS and other MLSs, do not contain any claims that
NAR instigated the cease-and-desist process or otherwise engaged in solicitation within the
meaning of the Maryland barratry statute. See Doc. No. 68 ¶¶ 72–73.11 For these reasons, Count
VII of AHRNs’ First Amended Counterclaims will be dismissed with prejudice.
Although AHRN alleges that NAR’s General Counsel advised MLSs to send cease-and-desist letters, she did not
do so until May or June 2012, several months after MRIS sent a cease-and-desist letter and initiated this lawsuit.
Doc. No. 68 ¶ 85.
For the foregoing reasons, MRIS’s Motion to Dismiss or Summarily Adjudicate will be
GRANTED-IN-PART, and NAR’s Motion to Dismiss will be GRANTED-IN-PART. AHRN’s
Motion to Strike the Charron Declaration, MRIS’s Motion for Leave to file a surreply, AHRN’s
Motion for Leave to file second amended counterclaims, and AHRN’s Motion to Seal will all be
DENIED as moot. Counts I, V, VI, and VII will be dismissed with prejudice. Counts II, III, and
IV will be dismissed without prejudice, and AHRN will be granted fourteen days to file second
amended counterclaims that cure the deficiencies identified herein. A separate Order follows.
June 10, 2013
Alexander Williams, Jr.
United States District Judge