The backers of a mapping-patent infringement lawsuit filed against a Pennsylvania Realtor are seeking to expand the lawsuit to include active participants in a regional multiple listing service and those Realtors who purchased enhanced features for property listings at the Realtor.com property-search Web site.
Meanwhile, a countersuit is proceeding that alleges patent backers violated federal racketeering laws by threatening agents with lawsuits if they did not purchase licenses for the mapping technology.
The lawsuits are significant for the real estate industry, as property-search mapping applications are ubiquitous on the Web these days. The National Association of Realtors has already committed about $825,000 to help defend Sarkisian against the patent-infringement allegations. Despite the trade group’s opposition to the lawsuit, some real estate companies associated with Realtors — such as Envirian and LendingTree, have purchased licenses.
Real Estate Alliance Ltd., a company based in Pennsylvania that sells licenses to an electronic mapping technology, filed a court motion last week that seeks class-action status for its lawsuit. The company is hoping the court will expand the lawsuit to include about 15,000 members of the Delaware Valley Real Estate Information Network, also known as TREND MLS, and “at least tens of thousands” of users of the Realtor.com Web site who subscribed to enhanced features to market properties at that site since July 12, 1999. TREND MLS, which operates in the Philadelphia metro region, has about 32,000 total participants.
Realtor.com, operated by Move Inc., is affiliated with the National Association of Realtors and features property listings information for homes represented by Realtors. Officials at Move Inc. were not immediately available for comment.
Both Realtor.com and TREND have offered mapping technologies that allegedly violate REAL’s patents.
The original complaint, filed in July 2005, names Realtor and TREND MLS participant Diane Sarkisian as the lead infringer of the mapping patent, among other unnamed infringers, and the class-action motion states that Sarkisian is an appropriate representative for the class that the patent backers seek to define. The court will decide whether to allow the lawsuit to proceed as a class-action case. This week, both sides in the lawsuit will submit motions for the judge to consider whether to make a determination on the case prior to proceeding to a full trial.
Lawyers for Sarkisian did not offer a public comment about the lawsuits.
Lawrence Husick, a Real Estate Alliance Ltd. shareholder who is also a representing REAL as a lawyer in the lawsuit filed against Sarkisian, said REAL is seeking to pull active TREND MLS participants into the lawsuit because Sarkisian is a participant in TREND.
REAL could take action against participants in other MLSs at a later time, he added.
Defendants are expected to respond to the class-action motion by March 21, Husick said. While the lawsuit and countersuit are now operating on separate tracks, he said there is a possibility that the cases could be joined.
Scott Tatro, an agent and licensee of the Real Estate Alliance Ltd. (REAL) mapping technology who has the right to sell sublicenses for the technology, said, “The only hope that (the National Association of Realtors) has is to prove that this is an invalid patent that shouldn’t be issued.” Tatro is the founder of Equias Technology Development LLC, a company that offers the www.findahome.com property-search Web site that is based on the patented technology.
The countersuit charges that Tatro worked in concert with REAL officials in a racketeering scheme that sought to collect licensing money from agents, though Tatro denied this allegation. According to a Jan. 22 court filing on behalf of Sarkisian, Tatro worked with REAL officials “in furtherance of the intimidation scheme … by acting as the good cop in a good cop/bad cop routine. In this role, Mr. Tatro steps in to offer individuals an ‘easy’ alternative after (Husick) has threatened and intimidated them.”
This court statement was filed to support the countersuit’s charges that REAL and Equias officials violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO). The document charges that REAL officials sent several real estate agents a letter demanding a $10,000 licensing fee, and the letter informed the agents that “if he or she refuses to pay, they will be sued in federal court,” and included a draft version of a complaint.
“The defendants’ scheme is extortion, plain and simple,” the court filing states.
Husick said he could not comment on the charges in the countersuit, as he is named in that litigation.
Tatro said he offered to buy a discounted license for Sarkisian from REAL, at no cost to her, and he hoped she would become a beta user of his www.findahome.com Web site, and he said he was not “colluding together (with REAL) to get people to buy something.” He said he approached Sarkisian after the lawsuit was filed against her. “We only approached one person. That was after the fact — after the lawsuit had been filed.”
A court filing in the countersuit charges that Mark Tornetta, the inventor of the patents in question and a REAL shareholder, has made over 400 attempts to collect license fees from individuals and entities, and that REAL has sent about 17 letters “outlining the demand and threat” over alleged patent infringement to real estate agents in the Philadelphia area. Also, the document states that “most real estate agents do not use the method” to search for properties that is outlined by the patent.
Tornetta in 1998 filed lawsuits charging that cyberhomes.com (then operated by Moore USA) and Microsoft Corp.’s HomeAdvisor sites infringed upon his mapping patents, and those lawsuits were later dropped.
Lee Konowe, the founder and CEO of Envirian, said he approached Tatro to learn about the license for the mapping technology and became convinced that the patent was legitimate. “I purchased the licenses,” he said. “We have six patent applications ourselves. We are a fairly technology-based brokerage. Our feeling was that the patent appeared to be valid and that it had business applications for us. The appropriate thing … was to respect the property rights.”
Konowe also said that he is aware that the National Association of Realtors is opposing REAL’s patent claims. “I’m not entirely comfortable with that. Perhaps I do not understand NAR’s position correctly,” he said.