NAR, Score Industry Win Against Patent Troll

The real estate industry achieved an important victory last Friday on a patent-infringement case — one that stretches back more than a decade — when U.S. District Judge George King in California ruled the patent invalid.

Read more: Real Estate, This Patent Troll Win is for You

The patent involves the use of a computer to display a database of real estate listings on a map and to zoom in on listings. The so-called ‘989 patent was granted in 1991 and has since expired, but the patent holder, Real Estate Alliance Ltd. (REAL), claims it is owed millions in licensing fees from past use by real estate agents, brokers, MLSs, and MLS vendors.

REAL sued a Pennsylvania real estate agent in 2005, claiming her website’s display of the MLS’s online mapping tool constituted an infringement of the ‘989 patent; later REAL sought class action status for the suit. In 2007, Move Inc., operator of sued REAL, seeking to invalidate the patent. REAL countersued and named, among others, NAR and NAHB as additional defendants, and the case, Move Inc. et. al. v. Real Estate Alliance Ltd., et. al., has worked its way through a series of decisions and appeals.

In September 2008, Move and NAR convinced the judge to bifurcate the case into two sets of defendants: Phase 1 defendants (Move, NAR, and NAHB) and Phase 2 defendants (several agents, brokers, MLSs and MLS vendors). The Phase 1 defense has been wholly funded by Move; meanwhile, the Phase 2 defendants have been on the sidelines, largely avoiding the cost of litigation.

Move and NAR have long argued that no infringement occurred because the industry’s use of mapping technologies didn’t follow the steps laid out by the patent holder. But in invalidating the patent with this Dec. 1 ruling, the Central District of California judge has rendered the infringement claim moot.

“The court’s finding of invalidity is a tremendous win for the Phase 2 defendants,” says NAR General Counsel Katie Johnson, “and, although we expect REAL to appeal, we hope the decision will be upheld and when it is, this case will finally conclude for all defendants.”

In ruling the ‘989 patent invalid, Judge King said the ‘989 patent represented an abstract idea that added nothing new to the process of searching for properties.

“The concept of using a map to display geographic information is ancient,” the judge said in his decision, referencing a 6th century BCE map housed at the British Museum. “Organizing geographic data in this way is commonsensical—it is the type of approach anyone attempting to organize a large amount of geographic data would think to use. … All of these steps could be approximated by a [real estate agent] with an atlas.”

Under patent law, abstract ideas can be patented only when users must follow specific steps which constitute an innovative and singular way of accomplishing the task.  The judge said that “although the ‘989 Patent discloses pages of logical flow charts that explain how the computer should be programmed to perform the claimed method, REAL does not explain how the disclosed program differs from that which any programmer would have used to implement the claimed method.”

The District Court decision follows on the heels of NAR’s successful settlement with another patent holder, DDT, which was attempting to get payments from real estate agents for the use of a website that updates users via email about new information that comes available.  In that settlement, DDT agreed not to seek licensing fees from real estate professionals, companies, associations, MLSs and others in the real estate industry.

REAL is expected to appeal the Dec. 1 ruling.

—By REALTOR® Magazine

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