Realtors, real estate agents and brokers are fighting a constant battle against people and companies who are trying to rip them off, and they’re not going to take it anymore, executives from the National Association of Realtors told a House subcommittee on Thursday.
Representatives from NAR were on Capitol Hill Thursday to testify before the U.S. House Subcommittee on Commerce, Manufacturing and Trade and request “meaningful patent litigation reform,” because Realtors, real estate agents and brokers are often threatened by so-called “patent trolls.”
Patent trolls buy patents for products they didn't invent or manufacture, and file lawsuits against those using them in an attempt for a pay-out.
“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,” said 2015 NAR Liaison for Law and Policy Vince Malta.
“Trolls are exploiting the patent litigation system at the expense of legitimate businesses that contribute to the economy,” Malta added. “Congress needs to pass meaningful reforms, including transparency requirements for demand letters.”
Malta testified on behalf of NAR and the United for Patent Reform Coalition, a group of American businesses committed to curbing patent abuses. The group was founded in January and includes NAR and other members, such as: Google, Facebook, Amazon and Verizon, and trade groups like the National Retail Federation and the National Restaurant Association.
According to data provided by NAR, more than 2,600 companies were sued by patent trolls in 2013, representing 67% of all patent infringement cases brought in that year. Small- and medium-sized companies reportedly paid on average $1.33 million to settle patent troll cases and $ 1.75 million in court defense costs for patent troll litigation.
Economists estimate that in 2011, patent trolls cost operating companies $80 billion in direct and indirect costs, NAR said.
“The numbers show that the patent troll problem for American business is real, and a solution for our members and consumers is urgently needed,” said NAR President Chris Polychron.
“Realtors lead the real estate industry by embracing new technology and innovation to provide consumers with services that are fast, convenient and comprehensive,” Polychron added. “Unfortunately, by adopting these tools, Realtors are vulnerable to intimidation by patent trolls, who target small businesses that lack the resources to fight false patent infringement claims.”
According to NAR, patent trolls have targeted Realtors, brokers, agents and multiple listing services for using technologies on their websites that provide a computerized means for delivering real estate services.
In one example, patent trolls alleged infringement for providing searchable databases of property listings, locating points of interest on a map, and delivering updates to consumers when properties matching their search criteria come on the market.
“NAR members have also received demand letters from the MPHJ Technologies troll, who notoriously sent more than 16,000 letters to businesses demanding payment for using basic scan-to-email technology,” NAR said in a statement.
“Without meaningful patent litigation reform, Realtors and other small and midsize business owners will remain targets of extortion by unscrupulous entities that demand licensing fees or threaten frivolous lawsuits under the guise of patent infringement,” NAR added.
“NAR and the United for Patent Reform Coalition urge Congress to act swiftly to enact meaningful demand letter reform, which will deter the patent troll business model of extracting settlements by sending deceptive settlement demands.”