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Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., No. 12-cv-00954-AW (D. Md.

June 10, 2013). By Jeffrey Young, Garvey Schubert Barer On June 10, 2013, Judge Alexander Williams, Jr. of the United States District Court for the District of Maryland entered an order granting-in-part and denying-in-part motions to dismiss several counterclaims brought by the defendant. One of those counterclaims asserted violations of Section 1 of the Sherman Act, and was dismissed without prejudice under the NoerrPennington doctrine. The plaintiff and counterclaim-defendant, Metropolitan Regional Information Systems, Inc. (MRIS), was a provider of multiple listing services (MLS) in the mid-Atlantic region. Another counterclaim-defendant, the National Association of Realtors (NAR), was a trade association that established and enforced policies and professional standards for member real estate brokers, their affiliated agents and sales associates, and state and local member boards. The defendant and counterclaim-plaintiff, American Home Realty Network, Inc. (AHRN), was a San Francisco-based real estate brokerage referral service and technology company. Through its website, Neighborcity.com, AHRN provided information to home buyers and sellers on a nationwide basis by identifying real estate agents best suited to assist with the purchase and sale of properties in a local market. MRIS facilitated real estate transactions by operating and maintaining an automated database consisting of compiled property listings and related informational content, for which MRIS received compensation through subscription agreements. MRIS obtained copyright protection for its real estate listing content, and along with NAR, encouraged others in the MLS industry to do the same. MRIS sued AHRN, alleging that AHRN reproduced copyrighted real estate listing content from the MRIS Database onto AHRNs website. AHRN counterclaimed against both MRIS and NAR, alleging a violation of Sherman Act 1. One of AHRNs theories was that MRISs lawsuit, and efforts incident to the suit, including the sending of cease-and-desist letters, constituted sham litigation designed to drive AHRN and others out of the market. MRIS and NAR responded that they were immune from antitrust liability under the Noerr-Pennington doctrine. The court agreed that Noerr-Pennington immunity applied. It began by noting that good faith litigation to protect a valid copyright falls within the protection of the Noerr-Pennington doctrine, and that the protection extends to efforts incident to litigation, including pre-litigation threat letters. The court then applied the standard set forth in Profl Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 57 (1993), under which an objectively reasonable effort to litigate cannot be a sham regardless of subjective intent. AHRN could not meet this objectively baseless standard because not only did the court previously deny a motion to

dismiss filed by AHRN, but it also granted MRISs motion for a preliminary injunction. These factors, the court found, demonstrated the objective reasonableness of MRISs suit. AHRN further contended, however, that the counterclaim-defendants were not entitled to Noerr-Pennington immunity because the registration of their listing content constituted a fraud on the U.S. Copyright Office. While acknowledging that false representations of fact with the requisite intent to defraud may strip a copyright holder of its exemption from the antitrust laws, the court disagreed that AHRNs allegations supported such a finding. The court stated that the allegations of fraud either confused legal argument for factual misrepresentations, described legitimate, non-fraudulent conduct, or were incomplete. While citing serious reservations about AHRNs ability to amend its complaint to state a cognizable Sherman Act claim, the court nevertheless dismissed the 1 counterclaim without prejudice, noting that AHRNs proposed amendment to its counterclaims contained allegations that may be relevant under 1, including the claim for fraud on the Copyright Office. Accordingly, the court granted leave for AHRN to re-file within 14 days. As of the time of this writing, AHRN has filed its amended counterclaims, including an amended claim under 1 of the Sherman Act, and MRIS and NAR have obtained extensions of time with which to answer or otherwise respond.

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