Imagine that you are using a copy of Microsoft Word that you didn't pay for. One day, Microsoft walks into your office and demands past, present and future royalties from you, based on the amount of money you've made using their product.
You would know if you were using a product or service without paying for it. And guess what -- you'd be liable for treble damages if you let Microsoft take you to court. So, you'd probably sheepishly hand over the money and pray the day didn't get any worse.
But what if you didn't know you were infringing on anything? Right now, you might be using a product, service, or a sequence of steps to zoom in on properties, without realizing that you could be accused of infringing on someone else's copyright or patent.
Imagine that your MLS has been providing you a zoom listings mapping method that exposes you to a patent lawsuit as the end user. That's what happened to top-producing RE/MAX agent Diane Sarkisian of Ambler, Pa. Sarkisian has been slapped with a lawsuit for patent infringement -- for using a listings search method without paying royalties. Stunned, she told The Title Report that she was using the services provided by her MLS, TReND.
According to the company that was formed to license the patent, Real Estate Alliance Ltd, (REAL) , Sarkisian was mailed a warning letter a month ago that she was using a zoom mapping method that was patented by a REAL company member, Mark Tornetta. She was asked to pay royalties "at a significant discount," says Steve Friedberg, spokesperson for REAL. The company says she not only ignored the letter, but they have yet to hear from her or her attorneys. (Sarkisian could not be reached for comment by Realty Times in time for publication.)
In this age of Internet scams and credit card and identity theft, Sarkisian may have not responded, believing the letter to be yet another hoax. But the lawsuit proved there was a real company with a real threat behind the very REAL letter. The question is -- does the company have a case?
Not according to the agents, attorneys, and MLSs who plan to fight REAL and Tornetta. According to one source, "Tornetta tried to sue Microsoft and Moore USA and was unsuccessful. The judge threw the case out because it was filed in the wrong name. Tornetta never refiled. Now six years later, they've decided they can't take the big fish to court, they are going after the little fish -- the agents. All it takes is for one agent to write them a check, and they could go after every agent in the country."
TReND CEO Rita Johnson was unavailable for comment, but the MLS has issued the following statement:
TReND has become aware that a lawsuit has been filed in the United States District Court for the Eastern District of Pennsylvania by Real Estate Alliance Ltd (REAL), alleging that use of the TReND MLS system by real estate agents infringes U.S. Patent Number 5,032,989.
The lawsuit states "the '989 patent claims a computer implemented method of identifying available real estate properties by mapping the locations of the real estate properties in such a manner that an initial broad geographic map for a selected area can be "drilled down" by successive iterations to display greater levels of geographic detail including the locations of the available properties."
TReND has retained a leading intellectual property law firm, DLA Piper Rudnick Gray Cary. Worldwide, DLA Piper Rudnick Gray Cary has 2,900 lawyers in 53 offices in 20 countries.
TReND believes this lawsuit is without merit and intends to vigorously defend any claims that use of the TReND MLS system infringes the REAL patent.
So far, REAL appears to be leaving TReND alone, and instead is targeting "end-user" agents in Tornetta's home town of Philadelphia, going after high-profile agents who bill themselves as top producers. According to a source, REAL wrote letters to at least seven agents with Number1Expert websites, including Sarkisian, asking for $10,000 in royalties of each agent. The agents, says the source, plan to fight back through their companies' attorneys; not one has agreed to pay the money.
REAL's U.S. Patent 5,032,989, is called the "Real Estate Search and Location System and Method." It is a mapping system "for locating available real estate properties for sale, lease or rental using a database of available properties at a central location and remote stations which use a graphic interface," according to the patent documents. "There is provided a method for locating available real estate properties for sale, lease or rental using a database of available properties at a central location and remote stations which use a graphic interface to select desired regions on a map of the areas in interest. The user begins with a region where they are interested in acquiring property and select an inner area within this region by using a pointing device such as a mouse to designate boundaries on a map displayed on screen. This is then zoomed in on and a second area is selected within the zoomed region. The second area is then cross-referenced with the database of available properties whose approximate locations are then pictorially displayed on screen. Information about the properties can then be obtained in textual form."
According to a technology advisor who is not party to the suit, the patent will be difficult to defend because technology has advanced so much since 1999 when the patent was issued. "It would be like Gutenberg demanding royalties on the printing press from today's laser jet printer users," he says.
If you didn't know there was a patent on zoom mapping methods, you're not alone. The patent is not on a product you can buy off the shelf like Microsoft Word. It's a "series of steps" you take that you license permission to use.
But ignorance is not an excuse. As Lawrence Husick, a registered patent attorney with Lipton Weinberger and Husick, and an equity holder in REAL, points out, the patent is a public document.
"If you violate the patent you are still infringing, and the patentee may seek damages in the form of reasonable royalties," he says.
The company is under no legal obligation to warn patent infringers that they are in violation, or about to be sued. They are also not defending copyright infringement, so it doesn't even matter if your MLS or content service provider is using REAL's method or a copy. It's the method that's patented, and as long as the steps are used, patent infringement has occurred.
And those with liability, as REAL sees it, are the end users -- real estate agents. In fact, REAL told The Title Report it has declined to sue TREND MLS because it is a nonprofit organization. Instead it will seek remuneration from real estate agents, which the company says averages approximately $50,000 in income from the use of its method on their personal and professional websites.
As a top agent, as she declares on her Number1Expert Website, Sarkisian was targeted for her productivity. Patent royalties will be assessed using the agent's productivity as a guide says REAL.
It's a cautionary tale, because a number of real estate associations, MLSs, website designers and programmers, and real estate agents may be using REAL's mapping method or one like it without realizing a piper is demanding to be paid.
The company does not intend to stop with Sarkisian. There may be scores of agents as end users of the mapping method, who may expect the proverbial knock at the door any minute.
REAL spokespersons say the company doesn't want to alienate real estate agents, yet clearly the company has no hesitation about scaring them into writing a check.
"They have a right to use the method but do so under license to honor the intellectual property," advises Husick. "We are not saying that the agents have done something with malice."
While one source says he believes that REAL is "testing the waters" by suing Sarkisian, the agents and their companies still have to legally defend themselves.
This is one situation where advertising their success was not an advantage for top agents.