Stross v. Redfin Corporation

Filing 130

ORDER GRANTING Redfin Corporation's 103 MOTION for Summary Judgment. IT IS FURTHER ORDERED that 54 Order and 118 Order are <Withdrawn in Part. Signed by Judge Sam Sparks. (klw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TIW4SE? -6 ki
,.
AUSTIN DIVISION

t;

yEStEr

ALEXANDER STROSS,
Plaintiff,

1Y-t1;i

CAUSE NO.:
A-15-CA-00223-SS

-vs-

REDFIN CORPORATION,
Defendant.

ORDER
BE IT REMEMBERED on the 15th day of August 2016, the Court held a hearing in the

above-styled cause, and the parties appeared by and through counsel. Before the Court are
Defendant Redfin Corporation (Redfin)'s First Motion for Summary Judgment [#30], Plaintiff
Alexander Stross (Stross)'s Response [#32] in opposition, Redfin's Reply [#37] in support, and

Stross's Surreply [#44] in opposition; Stross's First Motion for Partial Summary Judgment [#34],

Redfin's Response [#40] in opposition, and Stross's Reply [#46] in support; Redfin's Letter
Briefs [#89, 90, 95, 97]; Stross's Letter Briefs [#92, 93, 94, 98, 99]; Redfin's Motions for
Summary Judgment [#102, 103, 104] and its Exhibits [#105, 106, 108, 109, 116] in support;

Stross's Second Motion for Partial Summary Judgment [#107]; the National Association of
Realtors' Amicus Curiae Brief [#125]; and the Court's Orders of November 12, 2015 [#54] and
July 5, 2016 [#118] denying the parties' motions for summary judgment.' Having reviewed the

On November 12, 2015, and again on July 5, 2016, the Court denied the parties' motions for summary
judgment. But "because the denial of a motion for summary judgment is an interlocutory order, the trial court is free
to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an
intervening change in or clarification of the substantive law." Lavespere v. Niagara Mach. & Tool Works, Inc., 910
F.2d 167, 185 (5th Cir. 1990), rev'd on other grounds, Little v. LiquidAir Corp., 37 F.3d 1069, 1075 n.14 (5th Cir.
1996). The Court therefore exercises its right to reconsider its previous interlocutory orders denying the parties'
motions for summary judgment.
1

J

documents, the governing law, the arguments of the parties at the hearing, and the file as a
whole, the Court now enters the following opinion and orders.

Background
This case involves a claim for copyright infringement. Plaintiff Alexander Stross is an
architectural photographer and a licensed real estate broker in the state of Texas. Real estate
agents and brokers often participate in "multiple listing services" (MLS) as a forum for posting
real estate listings to facilitate the sale, lease, and valuation of real property. For Austin and the

surrounding area, the MLS is owned and operated by the Austin Board of Realtors (ABOR)
through its wholly-owned subsidiary Austin-Central Texas Realty Information Services
(ACTRIS).
To participate in ACTRIS's MLS, an ABOR member must submit a Participant Content

Access Agreement (PCAA). Def.'s First Mot. Summ. J. [#30-5] Ex. D (PCAA) at 29-35. The
PCAA incorporates the ACTRIS Rules and forms a binding legal agreement between ACTRIS
and the participant. Id. at 29; Pl.'s Mot. Summ. J. [#107-1] Ex. C (ACTRIS Rules) at 21-63.

Both Stross and Defendant Redfin Corporation, an online real estate brokerage company, signed
separate PCAA (Stross PCAA and Redfin PCAA, respectively), and are thus participants in

ACTRIS's MLS system. It is through this connection the instant dispute arises.
Stross alleges Redfin used over 1,800 of Stross' s registered architectural photographs
taken of 116 houses in Austin, Texas, in violation of Stross's copyright. As an ACTRIS

participant, Redfin is subject to the ACTRIS Rules. The ACTRIS Rules circumscribe a

participant's use of the MLS's uploaded content (MLS Compilation). For example:
Section 7.3 states a participant may display "sold" data only "to support an
estimate of value on a particular property for a particular client."

2

Section 7.6 prohibits a participant from "recommercializ[ing]" MLS content, or
deriving any economic benefit from the utilization, transmission, retransmission
or repackaging of same.
Section 9.24 prohibits a participant from displaying more than 100 sold listings in
response to a consumer inquiry.

ACTRIS Rules

§

7.3, 7.6, 9.24.

Stross contends Redfin violated the ACTRIS Rules by (1) using Stross's photographs of

sold listings for purposes other than "to support an estimate of value on a particular property for
a particular client," and (2) by redistributing and recommercializing Stross's photographs by

encouraging customers to "share" Stross's photographs via social media. Pl.'s Second Mot.
Summ. J. [#107] at 5-6.

Redfin asserts two affirmative defenses: (1) it was licensed to use the photographs as it
did, and (2) the Digital Millennium Copyright Act (DMCA) safe harbor provisions shield Redfin

from liability for infringement. As to Redfin's first defense, Redfin maintains Stross, by signing
the Stross PCAA, granted ACTRIS and its licensees a broad license to use the photographs at
issue. Section 7.10 of the ACTRIS Rules states:

By the act of submission of any Listing Content to ACTRIS or into the MLS
Compilation, the Participant and/or Subscriber. . . thereby does grant, ACTRIS
(and its service providers and licensees) an irrevocable, worldwide, paid-up,
royalty-free, right and license to include the Listing Content in the MLS
Compilation, any statistical report or comparables, and to use, copy and create
derivative works of it and authorize its use, copying and creation of derivative
works for any purpose consistent with the facilitation of the sale, lease and
valuation of real property or such other uses; provided that with respect to such
other use, the Participant has not opted-out of such other use after notice of the
same.

ACTRIS Rule

§

7.10 (emphasis added). Redfin argues it is a licensee under this rule, and

therefore was granted the right to use Stross's photographs "for any purpose consistent with the
facilitation of the sale, lease and valuation of real property or such other uses."

3

As to Redfln's second defense, Redfin contends Stross cannot recover monetary or

injunctive relief because the safe harbor provisions of the DMCA shield Redfin from liability for
copyright infringement. See 17 U.S.C.

§ 5 12(c).

Redfin has moved for summary judgment on both of its affirmative defenses, and Stross
has moved for summary judgment on the license issue. The Court, having previously denied the

parties' first and second cross-motions for summary judgment, now reconsiders those Orders.

Analysis
I.

Legal Standard
Summary judgment shall be rendered when the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law.
Celotex Corp.

v.

Catrett, 477 U.S. 317, 323-25 (1986); Washburn

v.

FED.

R. Civ. P. 56(a);

Harvey, 504 F.3d 505, 508

(5th Cir. 2007). A dispute regarding a material fact is "genuine" if the evidence is such that a

reasonable jury could return a verdict in favor of the nonmoving party. Anderson

v.

Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the

court is required to view all inferences drawn from the factual record in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986);

Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh

the evidence" in ruling on a motion for summary judgment. Reeves

v.

Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support

the nonmoving party's case, the party opposing the motion must come forward with competent

summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at

ri

586. Mere conclusory allegations are not competent summary judgment evidence, and thus are

insufficient to defeat a motion for summary judgment. Turner

v.

Baylor Richardson Med. Ctr.,

476 F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and

unsupported speculation are not competent summary judgment evidence. Id. The party opposing
summary judgment is required to identify specific evidence in the record and to articulate the
precise manner in which that evidence supports his claim. Adams

v.

Travelers Indem. Co.

of

Conn., 465 F.3d 156, 164 (5th Cir. 2006). Rule 56 does not impose a duty on the court to "sift

through the record in search of evidence" to support the nonmovant's opposition to the motion
for summary judgment. Id.

"Only disputes over facts that might affect the outcome of the suit under the governing
laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248.

Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in

ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing
sufficient to establish the existence of an element essential to its case and on which it will bear

the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
When both parties move for summary judgment, the Court reviews the motions
independently of each other, viewing the evidence in the light most favorable to the non-moving

party with respect to each motion. Shaw Constructors

v.

ICF Kaiser Engineers, Inc., 395 F.3d

533, 539 (5th Cir. 2004); Courtland Custom Homes, Inc.

v.

Mid-Continent Cas. Co., 395 F.

Supp. 2d 478, 480 (S.D. Tex. 2005).

II.

Application
The parties' motions for summary judgment raise two primary issues for the Court's

resolution: (1) whether Stross has standing to sue Redfin for alleged violations of the ACTRIS

5

Rules, and (2)

if Stross has standing, whether the safe harbor provisions of the DMCA shield

Redfin from liability for copyright infringement. Because the Court determines Redfin did not
exceed the scope of its license, it GRANTS Redfin's motion for summary judgment on this
issue.
A.

License
To establish copyright infringement, a plaintiff must demonstrate: "(1) ownership of a

valid copyright, and (2) copying a constituent elements of the work that are original." Feist

Publ'n, Inc.

v.

Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The defendant bears the burden of

establishing the affirmative defense that a license existed authorizing his use of the copyrighted
material. Lulirama Ltd., Inc.

v.

Axcess Broad. Servs., Inc., 128 F.3d 872, 884 (5th Cir. 1997).

The gravamen of the parties' dispute is whether Stross has standing to sue Redfin for its
alleged violations of the ACTRIS Rules.
i.

Redfin's "Narrow" License

It is undisputed Stross uploaded his photographs to ACTRIS and thereby agreed to the

ACTRIS Rules.3 Section 7.10 of the ACTRIS Rules provides:

The Court therefore does not reach Redfin's alternative argument that the safe harbor provisions of the
DMCA shield it from liability for infringement. Nevertheless, from its comprehensive review of the record, the
Court finds this argument persuasive.
2

Although neither party has produced the Stross PCAA granting Stross access to ACTRIS's MLS, Stross
admits he signed a PCAA. See Pl.'s First Mot. Summ. J. [#321 at 5 ("The license provision upon which Redfin relies
[to argue Stross granted Redfin a broad license] is contained in the ACTRIS Rules which are incorporated in their
entirety into, and made part of, Plaintiff's Applicant Agreement with ACTRIS."). By signing a PCAA, Stross
expressly agreed to license his photographs to ACTRIS under Section 7.10.
The fact that roughly half of the photographs at issue were uploaded by third-party brokers does not change
the Court's analysis, as it is clear Stross licensedat least impliedlythese brokers to upload his photographs to the
MLS Compilation. See, e.g., Def. 's Exhibits [#105-12] Ex. J (Third-Party Broker Invoice) at 15-19 (describing
licensing terms as "[o]n market MLS only and according to MLS rules regarding sales comparibles"). Of the five
third-party brokers who were deposed, none of them understood the language printed on Stross's invoice as limiting
their use of the photographs, nor do they recall Stross ever orally limiting their use of his photographs in any way.
See id. [#105-7] Ex. E (Chris Long Dep.) at 26:15-18; id. [#105-8] Ex. F (Ken Doocy Dep.) at 25:17-29:22; id.
[#105-9] Ex. G (Jacquelyn Krenek Dep.) at 37:24-38:7; id. [#105-10] Ex. H (Jon Luce Dep.) at 30:21-25; id. [#10511] Ex. I (Jennifer Mehis Dep.) at 34:11-18. Indeed, if the use of Stross's photographs were as limited as Stross

By the act of submission of any Listing Content to ACTRIS or into the MLS
Compilation, the Participant and/or Subscriber. . thereby does grant, ACTRIS
(and its service providers and licensees) an irrevocable, worldwide, paid-up,
royalty-free, right and license to include the Listing Content in the MLS
Compilation, any statistical report or comparables, and to use, copy and create
derivative works of it and authorize its use, copying and creation of derivative
works for any purpose consistent with the facilitation of the sale, lease and
valuation of real property or such other uses; provided that with respect to such
other use, the Participant has not opted-out of such other use after notice of the
same.
ACTRIS Rule § 7.10 (emphasis added).
Based on this language, the parties agree Stross granted ACTRIS a "broad" license to use

his photographs "for any purpose consistent with the facilitation of the sale, lease, and valuation

of real property or such other uses." See Id.; Pl.'s First Mot. Summ.

J. [#32] at 4 ("Plaintiff

alleges that he licensed his photographs 'to ACTRIS' pursuant to Section 7.10."); Pl.'s Brief
[#92] ("With respect to the Stross Listings, by the act of submission into the ACTRIS MLS,

Plaintiff licensed to ACTRIS the right to use the photographs 'for any purpose consistent with
[the facilitation of] the sale, lease [and] valuation of real property."); Def.'s Mot. Summ. J.
[#103] at 8 ("Tendering photographs to ACTRIS requires ACTRIS participants to grant the

broad license in [Section] 7.10.")
Like Stross, Redfin also signed a PCAA, which represents a binding agreement between

Redfin and ACTRIS.4 Under the Redfin PCAA, ACTRIS granted Redfin "a non-exclusive,

alleges, third-party brokers would not have hired Stross to take photos in the first place. See Chris Long Dep. at
27:11-16; Ken Doocy Dep. at 43:23-44:18; Jon Luce Dep. at 32:1-10.
In situations where the scope of the license is ambiguous, courts may imply a license based on the parties'
conduct. See, e.g., Lulirama Ltd., Inc., 128 F.3d at 879-80; Baisden v. I'm Ready Prods., Inc., 693 F.3d 491, 500
(5th Cir. 2012). In this case, the Court fmds an implied license existed under which the third-party brokers could
upload Stross's photographs to the MLS Compilation. As with the photographs Stross uploaded directly to the MLS
Compilation, Section 7.10 defines the scope of this license, and grants ACTRIS the right to use these photographs
"for any purpose consistent with the facilitation of the sale, lease and valuation of real property or such other uses."
"

Stross maintains he is entitled to a judgment of copyright infringement for Redfin's use of Stross's
photographs prior to April 18, 2012, because the only PCAA Redfin produced is dated April 18, 2012. According to
Stross, because Redfin has failed to produce a PCAA covering any period prior to April 18, 2012 Redfin's defense
of license for that period must fail.

7

limited-term, revocable license

.

.

to make copies of, display, perform, and make derivative

.

works of the ACTRIS Content specified in certain attachments referencing this Agreement."

PCAA at 29. This license is expressly "[s]ubject to [Redfin's] compliance with the terms of this
Agreement and ACTRIS Policies." Id. ("[Redfin] shall comply with ACTRIS Policies at all

times.")
Based on this language, the parties also agree ACTRIS granted Redfin a "narrow"
license: Redfin may only use the MLS Compilationincluding Stross's

accordance with the ACTRIS Rules.

See

Pl.'s

photographsin

First Mot. Summ. J. [#321 at 4 ("In accordance

with Section 7.10, ACTRIS authorized Redfin to make limited use and display of ACTRIS

content

including Plaintiff's photographs

subject to the restrictions contained in the ACTRIS

Rules."); Def.'s Mot. Summ. J. [#103] at 7. Accordingly, although ACTRIS may have a broad

license to use his photographs for "any purpose consistent with the facilitation of the sale, lease
and valuation of real property," Redfin's use is limited by various ACTRIS Rules which curtail a

participant's use of the MLS Compilation.

See, e.g.,

ACTRIS Rules

§

7.3, 7.6 9.24.

Stross contends Redfin exceeded the scope of its narrow license by violating the ACTRIS

Rules, and in turn infringed his copyright. Stross's argument proceeds in three steps. First,
pursuant to Section 7.10, Stross licensed his photographs to ACTRIS to use "for any purpose
However, Redfin has produced evidence indicating it signed the Redfin PCAA in October 2010 when
Redfin began using ACTRIS. Beth Gatlin, the Director of Member Services at ABOR who managed ACTRIS's
MLS from October 1997 until June 2015, testified a participant caimot "receive a data feed from ACTRIS for
authorized display on its website without first signing a PCAA." Beth Gatlin Decl. [#108] ¶ 6. Indeed, the ACTRIS
. is conditioned or in agreement and compliance with these [ACTRIS]
Rules expressly state "[u]se of the MLS
Rules and the Terms and Conditions included on the Internet where the MLS . . . may be accessed." ACTRIS Rules
at 28. Stross even admits as much in one of his many letter briefs to the Court: "like all ACTRIS Participants in
order to receive any information from ACTRIS (including [Stross's] photographs) [Redfin] was required to enter
into a [PCAA]." P1. 's Letter Brief [#92] at 2. Gatlin testified Redfin was granted access to the ACTRIS database in
October 2010. Beth Gatlin Deci. [#108] ¶ 7. Based on the weight of the summary judgment evidence, the Court
concludes Redfin entered into an agreement with ACTRIS in October 2010. Accordingly, even assuming Redfin's
use exceeded the scope of the narrow license ACTRIS granted it under the Redfin PCAA during this time period,
Stross, a non-party to the Redfin PCAA, has no standing to sue based on these alleged violations. See infra Section
II.A.i.
.

.

consistent with the facilitation of the sale, lease and valuation of real property or such other

uses." See Pl.'s Resp. [#32] at 4. Second, under the Redfin PCAA, ACTRIS authorized Redfin to
make limited use and display of the MLS Compilationincluding Stross's photographssubject
to the restrictions contained in the ACTRIS Rules. Id. Third, because ACTRIS granted Redfin a

narrow license subject to Redfin's compliance with the ACTRIS Rules, Stross may sue Redfin
for Redfin's alleged violations

of the ACTRIS Rules. Id.

The last step in Stross's argument contains an incurable error, as it conflates two distinct
documents: the Stross PCAA and the Redfin PCAA. Stross is not a party to the Redfin PCAA,
nor has he shown he is a third-party beneficiary of that contract. See OAIC Commercial Assets,
L.L.C. v. Stonegate Village, L.P., 234 S.W.3d 726, 738 (Tex.

App.Dallas 2007, no pet.) ("In

order to establish standing to maintain a breach of contract action, a plaintiff must show either

third-party beneficiary status or privity."). In fact, by arguing

Redfinas

an ACTRIS

participantis not a third-party beneficiary of the Stross PCAA, Stross circuitously admits he is
not a third-party beneficiary of the Redfin PCAA. See Resp. [#32] at 5. Stross therefore lacks

standing to sue based on any alleged violation of the narrow license ACTRIS granted Redfin in
the Redfin PCAA.
Stross argues such an interpretation leads to an absurd result, because

if the only license

Stross is entitled to enforce is the broad license granted under Section 7.10, then a future broker

would never need to photograph a previously sold home. See Resp. [#32] at 8. Instead, he could
simply use the photographs bought and paid for by the prior listing broker. Id. In making this
argument, however, Stross ignores Chapters 10 and 11 of the ACTRIS Rules. See ACTRIS Rules
at 55-62. Under these Chapters, any participantincluding

Strossmay report

alleged

violations of the rules to ACTRIS. Id. at 55. In fact, Section 7.2 requires participants to report

ITJ

such violations.

See

id.

at 41 ("Any Participant.

believes that any use by a Participant

.

.

.

. .

shall promptly notify ACTRIS

if he or she

is inconsistent" with the ACTRIS Rules). Once a

violation has been reported, ACTRIS may discipline the alleged violator by imposing monetary
fines, suspending or terminating its MLS rights, or ultimately initiating legal action against the

alleged violator. Id. at 56. Thus, a participant may seek to have the ACTRIS Rules enforced, just

not in federal court. That Stross chose not to avail himself of established ACTRIS remedies does
not make the proper interpretation absurd.
ii.

Redfin's "Broad" License

The Court's conclusion that Stross does not have standing to sue under the Redfin PCAA
does not turn on whether Redfin is a "licensee" under Section 7.10. Were the Court to consider
Redfin a "licensee" under Section 7.10, however, Stross could argue he has standing to sue

Redfin for any alleged violations of the broad license grant under Section 7.10. Under this
interpretation of Section 7.10, Stross would have granted both ACTRIS and Redfin a broad
license to use the uploaded content in the MLS Compilation "for any purpose consistent with the

facilitation of the sale, lease and valuation of real property or such other use." ACTRIS Rule
§

7.10. Stross therefore would be entitled to sue Redfin, as a licensee, for violating the Stross

PCAA by using his photographs for purposes other than to facilitate the "sale, lease and
valuation of real property or such other use." Indeed, this is the argument Redfin propounds. It
argues this two-part licensing

structurewhere ACTRIS 's licensees, i.e. participants such as

Redfin, are granted both a broad and narrow license to use the MLS Compilationis essential
for ACTRIS to "protect[] itself and its licensees from claims of infringement and/or misuse" and
to "maintain[] control over the uses to which the data may be put."5 Def.'s Mot. Summ. J. [#103]

In making this argument, Redfin does not abandon its position that Stross has no standing to sue Redfin
for any alleged violation of its narrow license, as Stross is not a party to the Redfin PCAA. Rather, Redfin's

10

at 8 (explaining if "ACTRIS secured no broader license than that suggested by [Stross], it either

could never amend its Rules or could not assure brokerages that they could safely engage in any

post-amendment use of the MLS data").
Regardless of the merit of this argument, Stross has maintained throughout this litigation
that Redfin is not a licensee, because the ACTRIS Rules refer to

membersas "[p]articipants," not licensees.

Redfinand

all other

See Resp. [#32] at 7-8; Pl.'s Brief [#94] at 2.

Where the term "licensee" is used, Stross argues, the ACTRIS Rules mean independent
contractors, which Redfin is not. See Resp. [#32] at 7-8. Given Stross's pronounced opposition
to viewing Redfin as a "licensee," the Court is not inclined to entertain this argument in Stross's

favor. Nevertheless, even assuming Redfin is a licensee under Section 7.10, Stross has failed to

create a fact issue as to whether Redfin exceeded the broad license grant by using Stross' s

photographs for purposes other than to facilitate "the sale, lease and valuation of real property or
such other use." ACTRIS Rule

§

7.10.

By signing the Stross PCAA, Stross granted ACTRIS a broad license to use his
photographs in conjunction with the "sale, lease and valuation of real estate or such other use."
Stross retains his copyright for purposes other than those contemplated in Section 7.10. Were

ACTRIS or its licensees to exceed this broad license, Stross could file a lawsuit alleging

copyright infringement. For everything else, Stross is advised to tell it to ACTRIS, not the judge.

Conclusion
Redfin's licensed use of Stross's photographs is a defense to Stross's allegation of direct
infringement. With no direct infringement, Redfin has no secondary liability for encouraging its
users to "share" Stross's photographs via social media. See Metro-GoidwynMayer Studios Inc.

v.

argument regarding the two-part licensing structure is simply an extension of its previous argument, with which the
Court agrees.
11

Grokster, Ltd., 545 U.S. 913, 930 (2005) ("One infringes contributorily by intentionally inducing

or encouraging direct infringement"); Metropcs Wireless, Inc.

v.

Virgin Mobile USA, L.P., No.

3:08-CV-1658-D, 2009 WL 3075205, at *15 (N.D. Tex. Sept. 25, 2009) (noting "a finding of
contributory infringement is dependent upon the existence of an act of direct infringement"). As
a result, the Court GRANTS Redfin's motion for summary judgment on the license issue and

WITHDRAWS its previous Orders to the extent they conflict with this Order.
Accordingly,
IT IS ORDERED that the Court hereby WITHDRAWS iN PART its previous

Orders [#54, 118] denying Redfin's motions for summary judgment based on the license

issue; and
IT IS FINALLY ORDERED that Redfin's Motion for Summary Judgment [#103]
is GRANTED.

SIGNED this the c"

day of September 2016.

UNITED STATES DISTRICT JUDGE

12