Copyright Controversy Flares Up (Again)

Editor’s Note: As the copyright controversy simmers, WRE takes another look- making source documents available and reporting that appraisers are not alone in grappling with this issue: agents, inspectors and surveyors also have an interest in copyright protection and controlling work product. And there is the issue of AVMs and the prospect of a landscape in which appraisers really can control the use of their data. The copyright issue is not going away- here’s why.

Copyright Controversy Flares Up (Again)

by David Brauner, Editor

Recently, a WRE reader called asking for an explanation of discrepancies between last issue’s reporting of the copyright “win” for appraiser Tim Vinning, MAI and a recent piece in another trade publication which, to his mind, cast doubt on Vinning’s victory and whether appraisals are copyrightable.

First, to help you make up your own mind, we’ve unlocked documents on our website which heretofore have been available only to paying subscribers of Working RE.

The documents include two stories– one authored by Vinning (Appraiser Wins Copyright Suit) and one offering background and analysis (Appraiser Wins Copyright Suit: Now What?) The “source” documents are the Summary Judgment and Final Judgment from the suit and a handbook from the U.S. Copyright Office, Copyright Basics.

Clarity First
First, our apologies to Mike Deal, IFAS, the appraiser who “called us” on our coverage, and to any other readers left with the impression that the outcome of the case was decided. It was not. It was settled. As to whether appraisal reports are copyrightable, we offer the following quote from the final judgment, which appears in our original reporting:

“It is Further Ordered, Adjudged and Decreed that Defendants are permanently enjoined from initiating, copying, counterfeiting, or making unauthorized use of Plaintiff’s copyrighted Appraisal Reports, or engaging in any activity constituting an infringement of Plaintiff’s copyrights, or to assist, aid or abet any other person in copying or infringing Plaintiff’s copyrights.”

You will also find the following in the Final Judgment:  “It is hereby ordered, adjudicated and decreed that Plaintiff owns a valid, existing Copyright- for the work entitled “Self-Contained Appraisal Report A & B, Hop Farms, Inc., Agricultural Properties, Grant County, Benton County and Walla Wall County.”

Vinning adds, “The case was settled because the Defendant’s insurance company was going to exit (the case) when the judge allowed us to amend the complaint for a second infringement. The amended complaint would allow us to go after them for willfulness (greater damages). We proved liability. In fact, the Defendants admitted liability.”

Borrowing or Stealing?
The issue for Vinning has always been the protection of his work product. “I have found my work in someone else’s appraisal reports many times. In the pre-FIRREA days, I had a lender tell me that he got a lot of mileage out of one of my appraisal reports as he made four loans based on the information in that one appraisal. Over time I wondered how I could protect my work. It seemed logical to investigate copyrighting,” Vinning said.

Along with protecting their own work, Vinning believes appraisers have an obligation not to use the work of colleagues without permission. “I firmly believe that clients hire me for my opinions based on my investigation, analysis and reporting. Appraisers who take the work of others without permission are intellectually dishonest. Our clients always deserve our best efforts. We expect no less from other professionals whether it is doctors, lawyers or authors. The appraisal profession will be much better off when we learn to respect our work and the work of our peers.”

Copyright and AVMs
As we reported previously, there is a bigger picture than whether appraisals are copyrightable. It is the issue of appraisers asserting ownership of their intellectual property in order to control its use. Not to limit or restrict the use of their work, necessarily, but to be compensated if they choose to license their work for a fee. Can you say AVMs? Purveyors of AVMs have routinely lifted data from appraisal reports for years without asking permission or paying remuneration. If appraisers can assert ownership and control the use of part or all of the data in their reports, it could turn the industry on its head.

Business is Business: $50,000 Worth
Issues such as whether “cookie cutter” reports are sufficiently unique to be “copyrightable” and whether all appraisers will be able or even willing to assert ownership of their work remain to be seen (and tested, some argue). Many appraisers predict that copyrighting their reports and asserting their rights is bad business– that in a competitive market lenders will simply switch to a more docile and compliant appraiser. This argument rings true to many. Each individual will have to weigh their own risk/reward.

At the very least, this case undeniably demonstrates one appraiser’s success at asserting ownership of an appraisal report based on a copyright. Even if the jury is still out as to what it means for other appraisers and for the industry, we do know what it means for Plaintiff Tim Vinning: a $50,000 settlement award. You can read that for yourself in the Final Judgment posted online.

Jury Still Out?
As for Mike Deal, he remains unconvinced. Deal, appraising 32 years, is an appraisal instructor and holds a PhD in Real Estate. After reading the materials noted above including the Summary and Final Judgments, he still feels the issue is not decided. Speaking as an appraisal instructor (and not as an attorney, he stresses), he tends to think appraisals are not copyrightable. He believes the term “unauthorized use” in the Final Judgment is at the heart of the settlement and that it has nothing to do with whether the report is copyrighted. The Defendants used Vinning’s report without permission. They got caught and settled.

Hitting a Nerve: Appraisers, Agents, Surveyors, Inspectors
How hot is this subject? WRE received reprint requests within days of first reporting Vinning’s win from publications in three professions other than appraising: real estate agents/brokers, surveyors and home inspectors. The story hit a nerve. We also received a reprint request from a member of the Advisory Committee of The Appraisal Foundation for use at one of its meetings, an indication that the powers that be also may be taking this issue seriously. (All requests were granted, of course.)

While it may not be fully adjudicated, judging by the simmering interest, the issue of copyright protection for the work of real estate professionals of many stripes is not going away anytime soon. We’ll keep you posted.

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