REALTORS® Urge Action on Patent Trolls

February 27, 2015

REALTORS® made a forceful case yesterday to lawmakers in Congress to curb so-called patent trolls—companies that use the threat of patent litigation to extort licensing fees from unsuspecting end-users.

It was an $80 billion-dollar problem in 2013, according to a study, and it continues to cast a pall on businesses, particularly small ones, because it forces them to divert resources away from their core activities to focus on patent issues. In a typical scenario, a patent troll sends out a demand letter in bulk without knowing whether the business receiving it is actually infringing its patent or is even a liable party to a lawsuit.  

“Patent trolls are using vaguely worded demand letters to bully REALTOR®-owned businesses into paying exorbitant ransoms for using everyday business practices like scan-to-email technology and website features like searchable property listings,”  San Francisco real estate broker Vince Malta told a House Energy and Commerce subcommittee at a hearing yesterday.

The hearing was the latest of several held by the lawmakers in the past couple of years. The issue attracted high-profile media attention two years ago after a company called MPHJ Technologies, using  dozens of shell companies, sent out 16,000  letters related to the use of scanning technology to companies, some of them real estate brokerages, that demanded payment of a licensing fee. The company, which has just one employee, settled with the Federal Trade Commission last year.

Malta testified on behalf of NAR and the United for Patent Reform Coalition, a group of businesses seeking to curb this kind of abuse. Real estate brokerages and practitioners in particular have been hit by patent trolls for alleged infringement of patents for searchable online listing databases on their websites.

“Trolls are exploiting the patent litigation system at the expense of legitimate businesses that contribute to the economy,” said Malta. “Congress needs to pass meaningful reforms, including transparency requirements for demand letters.”