When the coronavirus pandemic arrived in North America two years ago, homesellers and their agents had to pivot hard.
Because in-person home tours suddenly became verboten in many places, the industry collectively began investing in virtual technology that would give consumers glimpses into homes without actually stepping foot inside. And one of the big winners in that pivot was floor plans. They were suddenly everywhere in home listings.
But now, even as that pivot becomes engrained in the fabric of the industry, an ongoing lawsuit is asking a provocative question: What if floor plans were copyrighted, meaning homeowners and their agents could be sued for sharing them?
That question gained new urgency last year thanks to a ruling from the 8th U.S. Circuit Court of Appeals. The case began in 2018 when home designer Charles James and his company Designworks Homes sued several real estate companies that created and shared floor plans of a home he designed. A judge in 2019 ruled in favor of the real estate companies, but then last year the Circuit Court of Appeals reversed that decision and sided with James. The ruling indicated that the design of a home should be treated sort of like a hit pop song; you can’t just go record your own copy of a hit song without giving credit, and money, to the original artist because it’s protected intellectual property.
Now, however, a handful of real estate industry players are pushing back. Among them, the National Association of Realtors published a brief and accompanying statement late last week suggesting the case could ultimately lead to lawsuits “against homeowners who make or display floor plans of their own homes.”
NAR General Counsel Katie Johnson added that the court’s “decision not only puts countless consumers at risk of costly, burdensome litigation for making a floor plan of their own home, but it also strains a key sector of America’s economy and threatens a critical tool of transparency for potential home buyers.”
The argument in NAR’s brief — which was also joined by other industry players such as Redfin, Zillow, CoreLogic and other trade groups — is based on a 1976 copyright law that let people make pictures or pictorial representations of architectural works without being sued. The brief goes on to note that many homebuyers rely on floor plans when making decisions about a sale, and that other real estate services such as appraisals sometimes rely on making a floor plan.
“After acquiring a dwelling, homeowners will often make floor plans to help them tackle installations, arrange furniture and complete do-it-yourself projects,” the brief notes. “[And] many jurisdictions require homeowners to submit floor plans before they renovate their property.”
The Council of Multiple Listing Services (CMLS) filed a similar brief last week opposing the Circuit Court of Appeals decision. In a statement, CMLS argued that the court’s decision to treat floor plans as copyrighted material could foist “millions of dollars of extra costs on consumers and their real estate brokers.” The decision could also force people to “track down their homes’ designers or architects to purchase a license if they want to make informal floor plans of the homes part of a listing,” the statement adds.
The case hasn’t been settled yet, but it gets at the tricky landscape of intellectual property in an age of digital tools and the internet. When lawmakers passed the current law in 1976, after all, there was no internet, 3D cameras, or real estate portals. That meant anyone wanting a floor plan would have had to hire an architect or draftsman, and then would have had a limited ability to share that document.
Today, on the other hand, anyone with a 3D camera and an hour of free time can come up with an interactive floor plan. And thanks to sites like Zillow and Redfin, people can share their floor plans with a potential pool of hundreds of millions of people.
In this way, real estate intellectual property may be on the verge of a moment that took place a decade or two ago in other disciplines. In the late 1990s, for example, websites such as Napster took the concept of making mixtapes — technically illegal, but widely accepted — and launched it onto the internet. The moment revolutionized music sharing, but ultimately led to lawsuits, crackdowns, and finally a world in which most people are paying for their music.
Similarly, in Netflix’s early days, there was a question about whether or not streaming a movie online was the same thing as offering a physical copy of that tape for rent at a brick-and-mortar store. Netflix wanted to make the world’s film library available online, but the film industry pushed back — and won. Today, online streaming services have to pay hefty licensing fees for content, or simply make their own. Some movies — as Inman recently learned — simply aren’t available to stream anywhere.
The point here is that recent decades have raised numerous questions about what should and shouldn’t be protected intellectual property in the age of the internet. And notably, those questions weren’t settled at the beginning of the various disputes.
Real estate could be reaching a similar inflection point right now, with new technology raising new questions about what should and shouldn’t count as protected intellectual property.
Despite the ruling last year, the case isn’t resolved yet and NAR and the other industry players are asking the U.S. Supreme Court to reverse the lower court’s ruling. Floor plans, they believe, are simply too important to real estate consumers, with NAR’s statement pointing to a report that found “roughly two-thirds of home buyers listed floor plans as ‘very useful’ in the online homebuying process, ranking behind only ‘photos’ and ‘detailed property information’ as their most valuable resources.”
“So important are floor plans, in fact, to the average U.S. consumer as they make one of the most consequential decisions of a lifetime,” the statement adds, “that this category ranked ahead of other key educational resources and disclosures like ‘neighborhood information,’ ‘virtual open houses’ and price data on recently sold local homes.”
Read NAR’s full brief here:
Update: This post was updated after publication with additional information from the briefs filed by real estate industry entities.
Email Jim Dalrymple II