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Real Estate Corporate

Judge grants Move/NAR motion for contempt, prompts investigation into “Samuelson Memo”

Errol Samuelson became a Zillow exec the same day he left Move, leading to a drawn out legal battle between the companies, with a contempt of court charge now at the forefront.

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King County Superior Court’s Judge John H. Chun has granted a motion for contempt filed by Move, Inc. and the National Association of Realtors (NAR) against Zillow, Inc. and Errol Samuelson. This marks the latest in the drawn out drama after Samuelson left Move, Inc. abruptly without notice last year to become competitor, Zillow’s Chief Industry Development Officer.

The contentious departure spurred an ongoing lawsuit, and last summer, Washington State Superior Court Judge Barbara Linde granted a preliminary injunction in the case of Move, Inc. and the National Association of REALTORS® et al. vs. Zillow, Inc. and Errol Samuelson et al.

What the injunction prohibits

At the time, Judge Linde found Samuelson to have misappropriated trade secrets by acquiring it using improper means, and by copying it without authorization. It also enjoined Samuelson, a former Move employee, from using and sharing any trade secret and confidential information gained while employed at Move, Inc., and from specific activities relating to his new position.

The injunction prohibits activities relating to obtaining direct data feeds of listing data, prohibits activities relating to developing contact relationship management (CRM) tools, and prohibits activities which would circumvent ListHub.

Judge Chun orders an investigation

Judge Chun has granted Move and NAR’s motion for contempt of court, ruling that further investigation into a memo written by Samuelson is warranted. Within the month, Zillow is required to produce for deposition all employees related to the creation, distribution, and implementation of what court documents refer to as the “Samuelson Memo.”

Court documents do not include the memo, and we have reached out to Zillow and Errol directly to obtain a copy, but with this case ongoing, it is unlikely that a lawyer will allow it, whether information is redacted or not.

When contacted for comment or information on the Samuelson Memo, Move declined to comment, as is their policy for ongoing legal matters.

What now?

Because there is so much that the original injunction prohibited Samuelson from doing, it is difficult to speculate as to what the Samuelson Memo contains. On March 30th, Move/NAR will go before the judge for their opening brief, Zillow follows on April 6th, and Move/NAR will enter their reply on April 10th. Then, on April 24th, Zillow is ordered to show cause as to why they should not be held in contempt for violating the preliminary injunction.

Court records refer to redacted and unredacted versions of the memo, which is not part of the public record, but the judge will likely issue a ruling late April or early May, which will indicate which rule Samuelson broke, if any at all.

Final analysis: If these allegations are true, it is shocking that any moves would be made to make any waves, given how heated Zillow’s talent grab has been for the industry.

#SamuelsonMemo

Full court document available here.

UPDATE: Zillow tells us, “To be clear, what the court granted was Move’s request for further investigation and a hearing. For context, Errol has been on leave since July 1.
Beyond that, we cannot comment on this litigation.”

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Real Estate Corporate

WeWork has more office space in Manhattan than anyone

(REAL ESTATE) WeWork is now the biggest renter in Manhattan – what it says about the company, and perhaps an opportunity for *your* business.

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It’s official: WeWork now rents more office space than anyone in Manhattan—including their previous competitor, JP Morgan. With 5.3 million square feet of rented space, the coworking company clearly intends to maintain its momentum, thus lending credit to the inherent value of social work environments.

The sheer growth WeWork has seen in 2018 speaks to the notion that the coworking craze — perhaps surprisingly — isn’t slowing down.

While WeWork (and other similarly themed companies) only accounted for 3.3 percent of the new leases signed in 2017, they ate up 9.7 percent of new leases signed in the first two-thirds of 2018. Those aren’t the numbers of a trend in decline.

Despite some water cooler disdain toward WeWork’s potentially wishy-washy work culture and some of their latest publicity stunts, investors seem to like them more than ever. In fact, word on the street is that SoftBank — a prolific WeWork investor — is considering a second investment that would value WeWork at or around 40 billion dollars.

Like we said: not a sign of a declining company.

WeWork’s objective success isn’t the star of the show here, however; it’s what they’ve proven through that success which matters.

WeWork’s ethos (that human beings need interaction with other similar human beings in order to thrive in a workplace) gets further reinforced with every lease the company signs.

If small- to mid-sized companies can take away one thing from WeWork’s example, it’s this – many people need other people in order to do their best work.

There will always be exceptions to the rule—plenty of folks work alone from home and are happy to do so—but the fact that freelancers living in some of the most expensive real estate in this country are willing to pay additional cash just to be around other like-minded individuals is fairly indicative.

If nothing else, keep in mind the social atmosphere afforded by WeWork when designing your office spaces or nailing down your workplace culture expectations. And yes, they allow Realtors and brokers to lease space, too…

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Real Estate Corporate

$81M lawsuit claims Zillow illegally scrapes real estate listing pics

(BUSINESS NEWS) Real estate giant Zillow is being sued by a California photographer who intimates that the company has scraped the images without anyone’s permission.

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zillow sued by gutenberg represented by mathew higbee of higbee associates

California photographer, George Gutenberg filed a lawsuit today against Zillow, alleging copyright violations for their use of his real estate photos, indicating that Zillow scrapes images from Multiple Listing Services (MLSs) rather than using listing data syndicated to them.

Court documents request a bench trial, damages (plus attorney’s fees and court costs), and that Zillow stop using Gutenberg’s copyrighted images. Under 17 U.S.C. § 504, Gutenberg is seeking “an amount to be proven or, in the alternative, at Plaintiff’s election, an award for statutory damages against Defendant in an amount up to $150,000.00 for each infringement pursuant to 17 U.S.C. §
504(c), whichever is larger.”

If Gutenberg were to win, Exhibit A of the lawsuit cites 543 images in question across 17 listings on Zillow, which would total $81,450,000 or more.

The issue of real estate photography copyrights has long been convoluted. There are six stakeholders that have consistently argued that they own images used in real estate listings: homeowners, real estate photographers, the listing agent, the broker, MLSs, and real estate listing websites.

The argument that homeowners own the rights to images taken of their property has very little merit, and we have uncovered no copyright lawsuits that a homeowner has won regarding photography.

One can see why an agent or broker believes they have the right to the images they’ve paid for, but those parties don’t always read their photographer’s agreement prior to paying their invoice, while MLSs and websites have slid into their Terms of Service that they own the copyright once it is uploaded to their servers (be it directly or via syndication).

But what is different about Gutenberg’s position than many others is that he retains the copyright to all photographs taken of each property, allowing the agent a “limited license to use the photographs for up to one-year purposes of marketing the property.”

Wouldn’t that include Zillow? Nope.

The license “expressly states that it is not transferrable and prohibits third party use without permission from Gutenberg.”

Unlike many photographers, Gutenberg actually registers his images with the U.S. Copyright Office.

Mathew Higbee of Higbee and Associates issued the following statement to The American Genius:

“Mr. Gutenberg has a robust working relationship with many top real estate agents in southern California and across the nation. Mr. Gutenberg’s clients gladly pay to license his work knowing that Mr. Gutenberg’s high-quality photographs and signature style add significant value to their listings. In addition to real estate listings, Mr. Gutenberg also licenses of his photographs for editorial and commercial use in print and online publications, advertisements, and retail and commercial businesses.

The agents that engage Mr. Gutenberg understand that they are permitted to use his photographs for the limited purpose of promoting their real estate listing, which includes placing the photographs on the MLS. Content placed on the MLS is only available for the life of the listing and is immediately removed when the listing is sold or otherwise taken off the market. Mr. Gutenberg is not aware of any of his real estate clients directly syndicating his photographs to Zillow, nor is Mr. Gutenberg aware of any of his real estate clients exceeding the scope of rights granted in their individual licensing agreements with him.

Rather, it appears that Zillow, owner of the largest real estate website in the world, indiscriminately copies millions of photographs per day off of the MLS in an effort to build what they refer to as their ‘Living Database of All Homes,’ which Zillow has leveraged into multi-billion dollar company. Zillow’s unlawful copying comes at the expense of creators and rights holders such as Mr. Gutenberg who depend on payment of reasonable licensing fees by those who exploit their works.”

The implication is that the clients are not in violation of the copyright if they didn’t syndicate listings to Zillow or upload them directly. A claim that is far heavier than a standard copyright lawsuit, and stands to call into question Zillow’s practices.

The internet has long changed how people copyright images, who owns them, what agreements each party enters as they upload and/or syndicate data to third party sites. This isn’t the first lawsuit of this nature, nor the last.

We’ll keep you updated as this lawsuit progresses.

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Real Estate Corporate

What companies does Zillow own? Hint – there are a bunch

(BUSINESS NEWS) Zillow’s acquisition strategy continues to be aggressive, and supporting the subsequent brands is up to your personal feelings about their parent company.

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Love them or hate them, Zillow is a real estate powerhouse and its claim as the leading real estate and rental marketplace are no joke. Zillow’s database includes over 110 million homes, and has over two dozen apps in its suite. Zillow commanded an impressive second quarter revenue in 2018 of $325 million. Fun fact: Zillow recently started buying homes directly through Zillow Offers despite over a decade of swearing they’d never ever pursue a brokers license.

Zillow has grown by a series of strategic acquisitions since 2011.

Postlets was acquired in April of 2011. This service originally helped users post for rental and for sale notices.

Diverse Solutions was acquired in 2011 for $7.8M, which was an IDX company specializing in helping real estate professionals manage their brand with listing platform, mapping, and email management.

In 2012, Zillow acquired RentJuice for $40M, which was a rental relationship management for landlords, property managers, and rental brokers. They also acquired Buyfolio, a web tool to help brokers and clients streamline the home-buying process.

In November of 2012, both Mortech and Hotpads were acquired for $12M and $16M, respectively. Mortech is a mortgage pricing engine, and Hotpads is a rental listing site with specialization in heatmapping and creative mapping technologies.

NYC real estate listing platform, StreetEasy was acquired in August 2013, important given that the area doesn’t have an MLS and is known as the Wild West of real estate, making that data valuable.

In 2014, Zillow acquired Retsly, a platform for developers to access real estate listing. But that was completely undershadowed 12 days later when they acquired their direct competitor, Trulia for $3.5B

Real estate transaction system, dotloop was acquired in July 2015 for $108M.

Naked Apartments, which was another rental app exclusively for the NYC market, was acquired the following year.

Zillow’s latest acquisition was Mortgage Lenders of America in August of this year, which is an online mortgage lending service.

This is brings Zillow full circle into the ability to search, compare, and ultimately purchase your own home.

Calling Zillow the “Facebook of Real Estate” as some articles have, isn’t a far off assessment. As far as mergers go, Zillow is aggressive, and their M&A strategy doesn’t appear to be cooling.

To summarize, these are the companies that are now under Zillow’s umbrella:

  1. Buyfolio
  2. Diverse Solutions
  3. dotloop
  4. Hotpads
  5. Mortech
  6. Mortgage Lenders of America
  7. Naked Apartments
  8. Postlets
  9. RentJuice
  10. Retsly
  11. StreetEasy
  12. Trulia

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