Every real estate professional dreads it: the arrival of a “patent troll” demand letter that can only mean their hard-earned dollars will go to lawyers instead of their business.

“Patent trolls” or “nonpracticing entities” — companies that don’t actually provide goods or services — will often offer to license their patent to firms that do in order to collect money from them in exchange for promising not to sue them. Often, the firms pay up, calculating that the licensing fees will be lower than their litigation costs.

According to the National Association of Realtors, everyday members are getting these letters for using common technology, such as scanner-copier machines or online property search.

In the future, industry pros may have a weapon against such a demand: proof that the patent should never have been granted.

The board of directors for REDPLAN Inc. has announced it has approved two new initiatives the trade group believes will help defend against “frivolous” litigation and protect the industry’s own intellectual property: a library of prior art (in order to show when inventions are not new) and a national forms registry.

“Our hope is that the knowledge that a library even exists may, in itself, be a deterrent to frivolous patent trolling,” Darity Wesley, REDPLAN’s executive administrator, told Inman in an email.

“But in the event a lawsuit is pursued, the library can offer clear and convincing evidence establishing facts that lead to a legal conclusion of invalidity of such patent, if that be the case.”

NAR lays out options for members who receive patent troll letters:

REDPLAN, a nonprofit real estate intellectual property protection group established in 2013, will issue a call out to the industry to submit applications for prior art, which can be either physical or digital, Wesley said.

“Anything that is nonconfidential in nature and may be used to prove that prior art existed and was available to the public in any form before a given date that might be relevant to a patent’s claim of originality,” she said.

“This could include things such as software manuals, contracts, proposals, printouts and even pieces of hardware!”

Hear from a broker sued by a patent troll last year:

The national forms registry is meant to help the industry with its own intellectual property claims.

REDPLAN anticipates that all kinds of industry players that create forms and have a forms library will contribute to the registry, including associations, boards, multiple listing services, franchises, brokerages and real estate information technology companies.

The trade group has not yet decided whether players will have to be members of REDPLAN to contribute to the registry or the library, though Wesley said she believed it would be beneficial if the entire industry were able to contribute to both.

Examples of forms that could be part of the registry include purchase and sale agreements, addenda, disclosures and contracts, among others.

“One of the greatest assets a Realtor organization has is its forms library, as they bring value to the association as a member benefit and also nondues revenue in the form of license and royalty fees,” Wesley said.

When forms are stolen and misused without being licensed, associations can be hurt in three ways, she added:

  • Forms can be made available to nonmembers, leading to lower membership.
  • Use of outdated forms with content that has not been changed to reflect changes in the law can potentially expose an association to liability.
  • Nondues revenue is lost when entities profit from the use of others’ intellectual property by not properly licensing the forms and paying for the right to use them.

A national forms registry would be helpful if a form’s creator wished to pursue copyright or trademark infringement claims or possibly even breach of contract claims, according to Wesley.

In addition, the forms registry would allow legal copyright owners to list entities that have legally licensed their form libraries, she said.

“The registry can support ownership claims and track licenses of the particular member’s forms library,” she added.

Email Andrea V. Brambila.

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