WASHINGTON (February 26, 2015) – Without meaningful patent litigation reform, Realtors® and other small and midsize business owners will remain targets of extortion by unscrupulous entities that demand licensing fees or threaten frivolous lawsuits under the guise of patent infringement. That’s according to testimony today from the National Association of Realtors® before the U.S. House Subcommittee on Commerce, Manufacturing and Trade.
“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,” said 2015 NAR Liaison for Law and Policy Vince Malta, broker of record for Malta & Company in San Francisco.
Malta testified on behalf of NAR and the United for Patent Reform Coalition, a diverse group of American businesses committed to curbing patent abuses. “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,” he said.
In 2013, more than 2,600 companies were sued by patent trolls representing 67 percent of all patent infringement cases brought that year. Small- and medium-sized companies paid on average $1.33 million to settle patent troll cases and $ 1.75 million in court defense costs for patent troll litigation. Economists estimate that in 2011, patent trolls cost operating companies $80 billion in direct and indirect costs.
“The numbers show that the patent troll problem for American business is real, and a solution for our members and consumers is urgently needed,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “Realtors® lead the real estate industry by embracing new technology and innovation to provide consumers with services that are fast, convenient and comprehensive. Unfortunately, by adopting these tools, Realtors® are vulnerable to intimidation by patent trolls, who target small businesses that lack the resources to fight false patent infringement claims.”
Patent trolls have targeted Realtor® brokers, agents and multiple listing services for implementing technologies on their websites that simply provide a computerized means for delivering real estate services. For example, patent trolls have alleged infringement for providing searchable databases of property listings, locating points of interest on a map, and delivering updates to consumers when properties matching their search criteria come on the market.
NAR members have also received demand letters from the MPHJ Technologies troll, who notoriously sent more than 16,000 letters to businesses demanding payment for using basic scan-to-email technology.
NAR and the United for Patent Reform Coalition urge Congress to act swiftly to enact meaningful demand letter reform, which will deter the patent troll business model of extracting settlements by sending deceptive settlement demands.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.