Is the new restaurant around the corner worth trying? Grab your laptop or smartphone and visit Yelp.com for reviews from other diners. Looking to rent an apartment? Head to Craigslist.org for local classifieds posted by users. Yelp, Craigslist, TripAdvisor.com, and websites like them have built businesses around compiling and presenting user ads or reviews–and they are none too happy when other websites re-post that content without permission. In the last six months, Yelp and Craigslist filed federal lawsuits claiming such behavior violates their intellectual property rights and their websites’ terms of service. (Yelp Inc. v. Datafiniti LLC et al., Case No. CV 12 1444, N.D. Cal. [filed March 22, 2012]; Craigslist, Inc. v. 3taps, Inc. et al., Case No. CV 12 3816, N.D. Cal. [filed July 20, 2012].) Is your company engaging in such behavior? What steps should you take to minimize exposure?

Yelp targets 80legs, a “web crawler” that automatically visits Yelp and gathers reviews, which it then sells to third parties for re-posting. Craigslist sued 3taps, a service that gathers Craigslist postings from search engines, indexes them, and makes them available to third parties. Craigslist also named as a defendant PadMapper.com, an apartment-hunting website that obtains Craigslist apartment listings from 3taps and superimposes them on a map, along with listings from other sources. Prior to sourcing from 3taps, PadMapper obtained listings from Craigslist’s servers through an automated process known as “scraping.”

Craigslist argues that display of Craigslist user content by unauthorized sites harms its users, who specifically entrust highly personal content to Craigslist. But critics suggest that PadMapper and other mobile applications and websites like it emerged due to Craigslist’s failure to address user needs. 3taps has publicly stated that because Craigslist willingly makes listings available to search engines, there is nothing wrong with 3taps further aggregating and indexing that data.

Licensing

The best way to ensure that your company does not become embroiled in this type of dispute is to obtain user content directly or license the content from the Yelp/Craigslist-type website. But because it is not clear that use of the content infringes intellectual property rights or breaches the originating site’s terms of use, you may end up paying for an unnecessary license. If you purchase user content through a third-party service like 80legs or 3taps, check your vendor agreement for an indemnification clause.

Avoiding Copyright Claims

If you are re-posting only user content, there is a good argument that Yelp/Craigslist-type companies cannot state a copyright infringement claim against you because only an author, assignee, or exclusive licensee may bring a copyright infringement lawsuit. When users agree to a website’s terms of use, they typically grant a non-exclusive license to their content. Around the time Craigslist filed its lawsuit, it changed its terms to state that Craigslist was the exclusive licensee of user content, which would have given Craigslist the necessary standing. Craigslist has since deleted the exclusivity language in response to pressure from the Electronic Frontier Foundation. If enforceable, the exclusive license would have meant that even original authors of an ad could become infringers if posting that same content elsewhere.

Because mere facts are not copyrightable, you should consider whether the content you are using is an “original work of authorship.” Although the threshold is low and some ads clearly embody the originality necessary for copyright, user content merely listing basic features of an apartment, such as price and number of bedrooms, might not be original enough.

Selection and arrangement of facts is copyrightable if sufficiently original. If your company uses more than the underlying facts a user posts, or copies sufficiently creative ways of organizing or presenting the posts, you may be infringing.

Avoiding Trademark Claims

Trademark law protects brand names like Yelp or Craigslist. But, in these cases the “nominative fair use” doctrine may apply because trademark rights are not violated when the brand name is used to identify the brand owner’s goods or services. For example, a shoe store may advertise that it sells “Nike” and “Reebok” shoes without permission from the brand owners, so long as the advertisement is accurate and does not suggest joint sponsorship or endorsement.

If your company merely identifies user content as originating on Yelp, Craigslist, or TripAdvisor, as do PadMapper, 80legs, and 3taps, such usage may be permissible “nominative fair use.” But if you are using the logo of one of these businesses without permission or implying a connection between your site and theirs, you may run afoul of trademark rights.

Contract

Website terms of use are generally enforceable contracts, if the user knows of the terms. If your company directly accesses Yelp or Craigslist to obtain user content, you may be bound by their websites’ terms, which prohibit crawling and scraping for the purpose of copying and aggregating website content. Courts will consider whether website use was repeated, whether it was automated, and whether the user is a company rather than an individual. All these indicate knowledge of their terms.

In the present lawsuits, only 80legs appears to visit a plaintiff’s servers to collect user content, although PadMapper used to do so. 3taps’s founder has stated that its technology does not access Craigslist servers. If this is true, it will be interesting to see if Craigslist can establish the existence of a contractual relationship with defendants.

If your company acquires user content through a third-party service, you will want to follow these cases to see if factual scenarios or legal theories emerge that could impose contractual liability on the ultimate purchaser of the content.

Money Damages

Damages are required for a successful contract claim. While Yelp may value its data by looking at 80legs’s revenues, and both Yelp and Craigslist could compare against their data licensing programs, it should be interesting to see how Craigslist formulates its damages against PadMapper. PadMapper does not charge users and does not display ads. PadMapper used to “deep link” users back to the original Craigslist ad until Craigslist objected. Craigslist also does not charge users to view or post classifieds and does not superimpose advertising.

It may be difficult for Craigslist to show either its lost profits or how and how much PadMapper profited from Craigslist postings. The same problem will arise in establishing money damages under trademark law or under the U.S. Copyright Act. The Copyright Act does allow for statutory damages whether or not there are actual damages, but only if the material found to be infringing was registered with the copyright office before infringement commenced.

If your company finds itself a party to a lawsuit of this type, you may expect discovery into your web analytics and financial information in an attempt to quantify your profits from the user content.

What Now?

Yelp’s lawsuit is in settlement discussions. A preliminary conference in the Craigslist case is set for December. 3taps’s founder, a Silicon Valley entrepreneur, recently told the press that he would “burn some shares” to oppose Craigslist, so interesting rulings may follow. In the meantime, your company should make sure it thoroughly understands what user content it displays, how the content is obtained, and the terms of any agreements governing the content, and then explore options for adjusting to minimize risk.

Darya Pollak is a lawyer in the intellectual property and complex commercial departments of the Los Angeles office of Kaye Scholer.