Fight Brewing Over Push to Stop Online Piracy

In Hawaii last year, a real estate broker imported home listings from a competing broker’s Web site onto his own home page.

Though some experts argue that this might give the broker whose listing was pirated more exposure for his client’s property, the National Assn. of Realtors sees it differently.

The 750,000-member trade group is so concerned about the piracy of home listings that it believes the government needs to legislate against such activity, sothat the association is using its political muscle to push for a new federal law, the Collections of information anti-piracy act.

Among the most hotly debated issues in Congress, the bill is designed to protect electronic database products like Realtor listings from unscrupulous competitors who, with a few mouse clicks, can take the information and recast it as their own.

Concerned about the illegitimate copying and redistribution of online real estate listings, the association has made passage its top legislative priority. Its allies include organized medicine, book and newspaper publishers, stock exchanges and EBay.

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But opponents--online stock brokerages, universities and research libraries, Amazon.com and Yahoo, to name a few--assert that the bill is overly restrictive, extending established copyright law by granting ownership to facts.

They argue that the proposed law would lock in the dominance of the largest players in particular markets and stifle legitimate reuse of the information.

Some in the real estate industry wonder whether the association is merely trying to stop a few rogue agents or instead attempting to use public policy to protect its online listing franchise and its $250-million investment in Homestore.com, which has a lock on the nation’s resale home listings.

“Everyone’s kind of sitting back and saying, ‘Gosh, this is a major push by [association], and it’s really unclear as to why,’ ” said John Giaimo, president and chief operating officer of HomeSeekers.com, one of the largest national online listing sites and a Homestore.com competitor.

Critics of the association-sponsored bill have rallied around a competing bill, the Consumer and Investor Access to Information Act, which would reinforce existing copyright law.

The bill would enable competitors to glean information from someone else’s database as long as the gleaner puts his own creative stamp on the new product and as long as wholesale copying is not involved.

That bill has passed the House Commerce Committee, where it has collided with the Realtors’ version, which passed the House Judiciary Committee. The bills have been stalled for months as the two committees seek to work out the differences.

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The issue strikes at the heart of the residential real estate industry, affecting everything from commissions to the increasingly intense battle over where properties are listed online.

And there is a staggering amount of money at stake.

In 1999, some 5.2 million resale homes were sold in the United States, at an average price of $168,300, according to the association.

That would make the residential realty industry worth $875 billion last year. Figuring a negotiable commission of 6%, that is $52.5 billion in commissions to Realtors involved in the transactions.

The association argues that “pirates” are taking multiple listing data collected by legitimate online real estate Web sites, repackaging it and posting it as their own, whether it’s to sell advertising, demand referral fees from listing agents if they secure a buyer or both.

“If information about listings is taken out of a Realtor’s file drawer when he’s gone at night, that’s theft,” said Lee Verstandig, senior vice president for the Realtors association.

“When a Realtor puts information he’s developed for a new listing on the Web and it’s stolen, it’s no different, and he should be protected,” he said.

In the Hawaii incident, a broker reportedly imported listings from another broker’s Web site to his own. In the “remarks” section on some of the properties, the non-listing agent would indicate that the seller was under distress and willing to entertain low offers.

“Imagine the seller cruising the Internet and seeing that information,” said John Riley, a real estate attorney and a vice president of InternetCrusade.com, which provides technology solutions for realty agents and is a leading creator of online communities for the real estate industry.

“On the one hand, it’s in the sellers’ interest to have as much exposure as possible for their property. But you have potential for manipulation,” Riley said.

Realtors are bound by state laws and regulations as well as the ethical codes of their profession. As the legislation’s supporters point out, information in the hands of individuals or groups with no such obligation can produce unwanted consequences, such as solicitations for ancillary services.

“If consumers could feel more comfortable with how their information was going to be handled, more of them would be willing to go to an online listing service,” said Sam Wright, senior vice president for government relations at realty giant Cendant Corp., which supports the Realtor-backed bill.

But just how much pirating actually occurs is unclear.

John Giaimo, president and chief operating officer of HomeSeekers.com, said he has had few problems with Internet thieves.

“There are individuals who try to pirate the data, but they’re identifiable,” he said.

Giaimo said Homeseekers.com has developed mechanisms to identify irregularities indicating that the user is copying large data sets.

“We’re a technology company,” he said. “We can put up firewalls and block pirates at the source. They get the first couple hundred listings and then they’re toast.”

Proponents of database legislation concede that few piracy victims have come forward, but they say that’s to be expected.

“A lot of people are [reluctant] to talk about it,” said a House Judiciary Committee staff member. “They don’t want to show their vulnerability.”

Others argue that even if pirating is as widespread as database legislation supporters say, federal copyright and state laws have proved sufficient.

“Every time [the Realtors’ association] has gone to court because someone illegally competed with them, they’ve won,” said Skip Lockwood, coordinator of the Digital Future Coalition, a group of 100 organizations that have come together to oppose the association-backed bill. Among the coalition’s members are universities, libraries, Charles Schwab, Amazon.com, AT&T; and Yahoo.

The association counters that its legal victories under copyright law have occurred in cases in which there was wholesale pirating.

“We’ve been lucky,” said Lee Verstandig, senior vice president of the association. “Right now it’s up to judicial interpretations all over the country, and we think tighter legislation would help them make the proper decisions.”

Giaimo isn’t so sure. “I totally agree that the data have value and need to be protected,” he said. “But does that require a congressional bill? They’re trying to replicate the laws already protecting the copyrights of those databases.” One critic of the association-backed bill suspects that the unspoken fear among real estate interests is that the industry is moving in the direction of increased fee-splitting.

“Right now if you go onto Realtor.com and find a house you like, you contact the listing agent and that agent gets the full commission [on the sale],” said Jonathan Band, an attorney who represents Internet and software companies opposed to the association-backed bill.

“But if I as a Realtor decide to start a rival Web site and--to the extent it’s permitted under copyright--extract information from Realtor.com, and for whatever reason you come to my Web site and find that house, the listing agent would have to split the fee,” said Band.

Others view the association’s push for database legislation--particularly given its minority stake in Realtor.com, Homestore.com’s flagship site and the leader in online listings with some 1.3 million listings--as part of a bare-knuckle fight over where properties will be listed on the Internet.

“It’s a control issue,” said John Mosey, vice president and general manager of CyberHomes, a rival national Internet site.

“[The association] and its member brokers and [multiple listing service] organizations want to make sure they will get all of the benefit from exposing their listings.” said Mosey.

For Riley, of InternetCrusade.com, it’s a matter of balance.

“While you like the exposure, you’ve got to weigh that against the control aspect. When the listing broker has lost control of the listing, he’s not fulfilling his duties to the seller,” Riley said.

With time running out on this congressional session, it is unlikely that database legislation of any sort will pass. Both sides expect the issue to be revived once the next session begins in January.

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At least one industry expert from outside the two camps suggests that, from the Realtor’s perspective, database legislation will eventually become moot for marketing reasons.

“This is part of a long transition process from the data being completely hidden from public view to Realtors recognizing that getting the data in the public domain is critical to their doing their jobs,” said Stephen Kropper, president of Domania.com, which provides online access to public real estate data and information.

“Clearly, the data are proprietary and no one should have the right to steal them. But from a marketing perspective, broader dissemination of listing information--not less--will advance both the real estate agent’s cause and the homeowner’s,” Kropper said.

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Distributed by Inman News Features.