Tim Vining, a commercial/agricultural appraiser from eastern Washington state, won a historical victory in court last month. Since we at a la mode began telling you that your work product, including your appraisal reports, is your intellectual property, we've (and you've) heard all sorts of arguments why you can't copyright your work. We -- and intellectual property experts, and attorneys for the U.S. Copyright Office -- say you own your work and grant your clients a limited license to use it for a particular purpose. Your delivering a report to your client does not give that client the blanket right to use the report and the data therein for whatever purpose they decide is best.

In response it's been said that appraisal reports can't be copyrighted. (We hosted a panel discussion of copyright law at our first Winter Convention last year and an attorney for the Copyright Office said otherwise.) Appraisals are a work for hire, it was said, and you as the appraiser don't own the report, your client does. The client can do whatever he wants, including culling the data for use in an Automated Valuation Model. Your reports set out facts about a property, it was said, and facts aren't copyrightable. It's been said, and continues to be said, that the new Fannie Mae appraisal forms with their appraiser certifications make it clear that once you deliver your report, your rights, if you ever had any, cease to exist. (We cover that particular issue in the next item below.)

Tim Vining would disagree, and he has good reason: He sued for copyright infringement and won. He'd prepared an appraisal report on farm properties in eastern Washington. A brokerage firm used parts of his report in their sales material without Vining's permission. He sought relief from the U.S. District Court for the Eastern District of Washington, alleging copyright infringement, unfair competition, civil conspiracy, and unjust enrichment.

Among the witnesses the court heard on Vining's behalf was a la mode's in-house counsel, whose background in intellectual property served Vining's cause well. Before a trial could be concluded and the court make its findings on the facts, a settlement was agreed to by the parties.

The Defendants agreed to pay Vining $50,000 (inclusive of court costs) and that Vining "has a valid, existing copyright under U.S. Registration No. TX 5-455-482" for his report. Vining had registered his report with the U.S. Copyright Office -- the one critics said would never accept such a thing -- in anticipation of his litigation. Had he registered before the report was misappropriated he would have been eligible for "statutory damages" of up to $150,000 per misuse of his work.

Vining will join us at our second annual Winter Convention in Las Vegas January and will be part of a panel discussion where we'll be discussing appraisers' legal rights and the broader regulatory landscape in Washington, D.C. Attendees will learn more about his case and victory in court and what it means to them and their business. Click the previous link to learn more and to register. We'll also talk in a seminar setting and in panel presentations about WinTOTAL Aurora's copyrighting tools.

The U.S. Copyright Office is in the final stages of initializing a system where it can accept copyright applications electronically. For now, applications are still made via mail (or in person). Instructions from the Copyright Office website can be found here.

We're devoting a lot of resources to making sure appraisers know their rights and can easily and thoroughly protect them. Tim Vining's experience demonstrates that protecting your intellectual property is a good idea. A few more Tim Vinings, and the world will really start to take notice. You'd better believe they're already starting to.

A lot of bandwidth and I.Q. points have been spent debating the new Appraiser's Certification items in the new URAR Fannie Mae is requiring (in most cases) beginning this month. Specifically, two provisions have aroused interest from appraisers concerned about their rights and liabilities and data companies hoping to get ahold of appraisers' data. They are:

21. The lender/client may disclose or distribute this appraisal report to: the borrower; another lender at the request of the borrower; the mortgagee or its successors and assigns; mortgage insurers; government sponsored enterprises; other secondary market participants; data collection or reporting services; professional appraisal organizations; any department, agency, or instrumentality of the United States; and any state, the District of Columbia, or other jurisdictions; without having to obtain the appraiser’s or supervisory appraiser’s (if applicable) consent. Such consent must be obtained before this appraisal report may be disclosed or distributed to any other party (including, but not limited to, the public through advertising, public relations, news, sales, or other media).

23. The borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns, mortgage insurers, government sponsored enterprises, and other secondary market participants may rely on this appraisal report as part of any mortgage finance transaction that involves any one or more of these parties.

We believe the issues these two provisions present have been unnecessarily complicated by entities that may want appraisers to believe their reports aren't their own work, and data companies and AVM developers that want to get their hands on appraisers' data without paying for it, like they have been for years. Organizations expressing concern about the language and hosting panel discussions in conference settings recently have at one time or another been involved on the AVM end of things, trying to facilitate getting appraisers' work into collateral databases and AVM engines.

The fact that a borrower might now "rely" on a report is arguably a change in the law and practice from previously. There have been cases where courts have said borrowers could sue over a faulty appraisal, and some that have said since there was no contractual relationship, they couldn't. The key is the limiting language "as part of any mortgage finance transaction that involves any one or more of [the] parties." You will not be sued by a borrower over the appraisal you did on their refinance last year because they couldn't use it to sell their house, or challenge their assessment. The intended use and intended user serve as notice that you are conveying only certain rights to certain parties and are not anticipating any future use or user not contemplated by the transaction.

Data companies are more interested in certification No. 21, which provides that the report may be "disclose[d] or distribute[d] to" various people. It's said that this means appraisers give up the right not to have their work inputted into a collateral database by "data collection or reporting services." This is not true. As the owner of the intellectual property represented by your report, only you can say who can use the report for what purpose. The intended use "is for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction." To the extent others may "rely" on the report, that is only in conjunction with a mortgage finance transaction as well.

By conveying a URAR and supporting material to your client, you do not give up your rights! Nothing in the appraiser's certification or elsewhere gives your client, data companies, Fannie Mae or anyone else the right to use your work for purposes you haven't agreed to. And all you've agreed to is to allow "the lender/client to evaluate the property." The report may be "disclosed or distributed to" others, but those others may not use the report outside the limited context of a "mortgage finance transaction" without your permission. Without an express, written agreement — which the appraiser's certification is not — your client gets what they always get from you: a limited use license. If you want to bargain away your rights, you have to affirmatively do so. (And we think you should charge more for it.)

Don't be misled into thinking that by completing and signing the new URAR you're signing your rights away. Your report is your intellectual property and you control who gets to use it, for what purpose. The URAR's conditions aren't as expansive as some AVM developers and their well-wishers would have you believe.