In a matter of first impression, the Fourth Circuit Court of Appeals recently ruled that an electronic signature can create a legally binding agreement to transfer copyright ownership. The decision relied on the federal E-Sign Act of 2000, which clarified that contracts cannot be invalidated simply because the signature is in electronic form.

The Facts of the Case

The copyright infringement case revolves around Metropolitan Regional Information Systems, Inc.’s (MRIS) real estate listing service. In order to submit photographs to the MRIS Database, the subscriber must click a button to assent to its Terms of Use Agreement. In exchange, subscribers are granted access to all of the real estate listings in the MRIS Database and a nonexclusive license to display those listings on their own websites via data feed. In relevant part, the MRIS TOU reads as follows:

All images submitted to the MRIS Service become the exclusive property of [MRIS]. By submitting an image, you hereby irrevocably assign (and agree to assign) to MRIS, free and clear of any restrictions or encumbrances, all of your rights, title and interest in and to the image submitted. This assignment includes, without limitation, all worldwide copyrights in and to the image, and the right to sue for past and future infringements.

MRIS subsequently affixes a copyright notice on all of the photographs published in the MRIS Database and registers the MRIS Database with the Copyright Office. The company filed a copyright infringement suit after its competitor, American Home Realty Network, Inc. (AHRN), used its copyrighted material without authorization by displaying real estate listings containing copyrighted photographs taken from the MRIS Database. In defending the suit, AHRN alleged that MRIS does not possess copyright interests in the photographs because the subscribers’ electronic assent to MRIS’s terms of use failed to transfer those rights.

The Court’s Decision

The Forth Circuit disagreed. While it acknowledged that a transfer of copyright ownership by assignment or exclusive license “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent,” it deemed the electronic signature to be sufficient.

“To invalidate copyright transfer agreements solely because they were made electronically would thwart the clear congressional intent embodied in the E-Sign Act. We therefore hold that an electronic agreement may effect a valid transfer of copyright interests under Section 204 of the Copyright Act,” the panel held.

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– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +