Patent trolls have been a growing problem for all types of businesses, and real estate companies haven’t been spared. Recently, a patent troll sent thousands of letters through several affiliated legal entities to brokerages and other companies threatening lawsuits for using multifunction office machines (copier, scanner, and fax machine, all in one) for which it owns patents. The company has since retreated a bit, in part because of claims that have been filed with regulators challenging the scope of its patents, but the broader problem persists.
For that reason, NAR joined with dozens of other organizations in a letter to federal lawmakers today, calling on them to move forcefully against this type of abusive business practice. (Patent trolls purchase broad patents and then make money by requiring users to pay a licensing fee for using products or services that allegedly use the patented technology or face a lawsuit.)
“Managing frivolous patent suits unfortunately has become an expensive distraction for a large cross section of American businesses,” the groups say in the letter. “Instead of focusing on innovation, job creation, and economic growth, we are forced to deal with legal games that have serious consequences.”
Several lawmakers have introduced legislation to curb patent abuses, and President Obama has also moved on the administrative front, but comprehensive legislation is really what’s required to curb the practice. And that’s what NAR is calling for in the letter with its partners. “Meaningful reforms . . . would make it more difficult for patent trolls to continue their destructive business model,” the groups say.
It will be a challenging road for the industry to get these abusive practices behind it, but the word is getting out that change is needed, and that’s an important start.
For questions about this issue, send an e-mail to NAR policy analyst Melanie Wyne at firstname.lastname@example.org.
By Robert Freedman, Senior Editor, REALTOR® Magazine
President Obama signed into law today the most sweeping reforms to the U.S. patent system in decades, and it holds out hope for real estate. A number of REALTOR® associations and MLSs have been hit with patent infringement lawsuits in recent years, and this law aims to reduce the number and cost of these lawsuits.
The “America Invents Act” is divided into three parts. First, it aims to keep the U.S. patent system attractive to global companies by aligning its processes with other countries’ processes. Second, it tries to align funding for the U.S. Patent Office with its needs by modifying its fee system. And third, it aims to raise the bar on the quality of the patents so only the most appropriate patent infringement lawsuits are filed.
It’s this third part that’s of most interest to real estate. Right now, companies can obtain patents that are so broad that all sorts of applications fall under them. The new law aims to narrow the scope of patents so that just the truly innovative parts are protected. In doing that, the likelihood of broad-based patent lawsuits, like the CIVIX-DDI lawsuit that hit a number of REALTOR® associations and MLSs last year (and for which NAR negotiated a comprehensive settlement earlier this year), will be reduced.
It will be years before we know whether the patent changes will have their intended effect and no doubt the law will be tweaked in the years ahead, but what’s clear is that lawmakers understand that the U.S. system needed modernization. NAR will be monitoring its implementation to make sure real estate interests remain protected.
In this four-minute video, NAR Senior Legislative Analyst Melanie Wyne walks us though the law and how it might impact real estate.