Realtors Handed Win in Patent Troll Suit

John Jordan | August 2015

LOS ANGELES—The National Association of Realtors announced on July 16th that after nearly eight years of litigation and three appeals, real estate professionals were handed a win in a landmark patent infringement case. A federal circuit court of appeals affirmed a lower court ruling granting summary judgment to Move Inc., the National Association of Realtors, and the National Association of Home Builders that they did not violate patents in the display of properties on websites.

The decision centered on two patents that describe methods for locating available real estate for-sale or lease using a database of properties and a “zooming” technique to display the locations on a map on a computer screen. Real Estate Alliance Ltd. had alleged patent infringement by several real estate brokers and agents, home builders, MLSs, and other companies, as well as NAHB, NAR, and Move Inc., the operators of realtor.com. Move had indemnified NAR in the case and paid all costs for the defense.  In an effort to substantially limit the defendant real estate professionals’ and MLSs’ burden and cost of defense, Move persuaded the court to bifurcate the case to address the validity of the patents and infringement by Move, NAR, and NAHB in “Phase I,” and to address those issues as to all other defendants in “Phase II.”

The summary judgment rendered on July 15th, affirms a 2012 district court ruling. The decision, by Judge George H. King of the U.S. District Court for the Central District of California, dismisses the case against Move, NAR, and NAHB, the so-called Phase I defendants.

“The patent troll’s only other option is to appeal to the U.S. Supreme Court which is highly unlikely,” said NAR General Counsel Katie Johnson.

This ruling did not dismiss the case against the Phase II defendants, but NAR legal analysts expect that this ruling will be applied to them in the same fashion and the claims against them dismissed in the near future.

Patent trolls have become a pressing issue in the real estate industry. Realtors across the country have reported receiving threatening demand letters or even faced lawsuits alleging patent infringement for the use of common business tools, such as drop down menus, search alert function on websites, and even the scanner function on a copier. The companies alleging the infringement are trying to collect licensing fees in exchange for the use of the tools.

NAR recently released a Call for Action, urging its members to contact lawmakers to support legislation to stop patent trolls and protect the real estate industry from frivolous lawsuits. From the NAR Realtor Action Center, Realtor members can instantly send a letter to members of Congress in support of H.R. 9.

San Francisco real estate broker Vince Malta, who testified earlier this year on behalf of NAR and the United for Patent Reform Coalition, told a House Energy and Commerce subcommittee at a hearing that “patent trolls are using vaguely worded demand letters to bully Realtor-owned businesses into paying exorbitant ransoms for using everyday business practices like scan-to-email technology and website features like searchable property listings. … Trolls are exploiting the patent litigation system at the expense of legitimate businesses that contribute to the economy. Congress needs to pass meaningful reforms, including transparency requirements for demand letters.”

John Jordan
Editor, Real Estate In-Depth