NAR meets first CIVIX milestone

The National Association of Realtors has met an initial deadline for raising $2.5 million in licensing fees from Realtor associations and multiple listing services (MLSs) seeking immunity from patent infringement claims by a company that holds several patents on location-based Internet search techniques.

Under an agreement with CIVIX-DDI LLC announced last month, NAR must raise $7.5 million in licensing fees by Aug. 16 in order for CIVIX to grant blanket immunity from lawsuits to all MLSs and Realtor associations.

If NAR fails to meet that goal -- and an interim milestone of $5 million by July 17 -- then only those Realtor associations and MLSs who paid for a licensing fee in an initial, 30-day round of fundraising that ends today will be protected from the threat of legal action.

NAR negotiated the blanket licensing agreement with CIVIX at the request of about 50 MLSs who were looking for a cheaper alternative than fighting the company in court or reaching individual settlements.

CIVIX filed suit against NAR, Realtor.com operator Move Inc. and Hotels.com in December 2005, claiming Move and NAR had infringed on four patents it holds the rights to. Move settled the suit in December 2009 for an undisclosed sum.

CIVIX has also sued two of the nation's largest MLSs, Illinois-based Midwest Real Estate Data LLC (MRED), and Maryland-based Metropolitan Regional Information Services Inc. (MRIS). MRIS and its primary vendor, Tarasoft, settled by entering into a licensing agreement with CIVIX.

MLSs served by Rapattoni have received letters from CIVIX demanding they pay a licensing fee of $6 per member per year for four years, which NAR estimates would have cost the industry nearly $20 million to comply with.

That offer covered only MLS operations software -- and not other vendor software, brokerage firms, agents, brokers and others associated with the MLSs.

"Under NAR's agreement, for a payment of $7.5 million, MLSs get far broader coverage at a much lower cost," NAR said in a Q&A about the licensing agreement posted by the Council of Multiple Listing Services.

Although CIVIX has successfully defended its patents in court over the years, some MLSs and MLS vendors have questioned the need to obtain licenses at a cost of $9.06 per user.

In a blog post on Vendor Alley, Robert Drummer, director of business development for MLS vendor IMAPP Inc., said a Xerox PARC map viewer that was used extensively in 1993 could constitute "prior art" that could be used to challenge CIVIX's claims.

"If this prior art changes the situation and the patent claims are overturned, our industry will have needlessly spent between $2.5M and $7.5M, paid by a combination of MLSs, their vendors and ultimately, the members of the NAR," Drummer wrote.

NAR General Counsel Laurie Janik, who led the negotiations with CIVIX, said she knows of no re-examination of the patent currently taking place.

"While there is always the possibility that the patent could be challenged and invalidated, the prospects for doing so are inherently uncertain," NAR said in its Q&A. "For that reason a business decision was made to attempt to provide the real estate industry with the certainty of an industrywide license agreement that eliminates the risk of litigation."

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