A Cautionary Tale for Vendors. If you're a vendor thinking of selling technology products and services to the tasty demographic entity known as the Florida REALTORS, Inc. (FR), you might want to think twice.

Real Estate Industry Solutions, LLC (REIS), a subsidiary of Florida REALTORS® (FR,) filed a lawsuit against Instanet Solutions, a forms vendor and operator of TransactionDesk. The complaints are for copyright infringement, misappropriation of trade secrets, and breach of contract.

The defendants immediately fired back - countersuing REIS for breach of contract, breach of the implied covenant of good faith and fair dealing along with stealing trade secrets, process and know-how.

Here's what happened, according to both complaints.

November 1, 2008: Real Estate Industry Solutions, LLC (REIS), the for-profit subsidiary of Florida REALTORS®, and Concepts in Data Management U.S. (Instanet Solutions Inc.), creator and operator of TransactionDesk, renewed their 7-year working agreement until 2011.

March 2010: Instanet Solutions released a new update to all clients using the TransactionDesk service called TransactionDesk Lite. TransactionDesk Lite is a scaled down interface into TransactionDesk, that is similar to an older product called Forms Online Gold (FOLG), a simpler service that FR members already had access to.

April 2010: REIS officially released their own forms product called Form Simplicity, a product designed to compete with FOLG and TransactionDesk.

September 2010: Florida REALTORS® board votes not to fund Instanet Solutions contract.

July 13, 2010: REIS files suit to prevent Instanet Solutions from selling Transaction Desk or TransactionDesk Lite to members by removing its license.

Instanet Solutions countersued, claiming that in mid-2008, after REIS went under new management, REIS and FR had a hidden agenda - to use Instanet Solutions' data, process and know-how to develop its own transaction forms product.

While there's nothing wrong with wanting to make a profit, the question in this case is - where's the member benefit?

Lawsuits and other punitive actions could easily have been prevented with a quick meeting between REIS, FR and Instanet Solutions.

REIS, FR: "Hey, guys, we are getting feedback that your new TransactionDesk is too advanced for some of our members. What can you do about it?"

Instanet Solutions: "Sorry to hear that. You already have a simple forms product -Forms Online. Let's rebrand it as TransactionDesk Lite, and reintroduce it to your members, and then everyone's happy."

But that's not what happened. Instead, FR members are paying to fund a lawsuit that essentially is designed to keep them from using a vendor that they've had for over seven years.

Whether the plaintiffs or the defendants prevail, the case could expose a dark side of for-profit real estate association subsidiaries, where member benefits come second to other agendas.

Stay tuned for Part II - Florida Members Protest Removal of Long-time Vendor

Published: November 11, 2010

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