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Prior Art And Help From The Industry

Wednesday, December 15, 2010   (0 Comments)
Posted by: Betsy Hanson
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By John H. Rees

A few weeks ago I reported that CIVIX-DDI, LLC (CIVIX) filed several lawsuits asserting patent infringement by at least National Association of REALTORS┬« (NAR) and Homestore, Inc., which was in the same action filed December 6, 2005 and was settled in January, 2010, MidWest Real Estate Data, LLC (MRED), which was filed on August 4, 2010, and Metropolitan Regional Information Systems, Inc. (MRIS), which was filed on August 30, 2010.  The MRIS and MRED cases are now moving forward, and the MRIS case, which is on a fast track, is scheduled to go to trial by the middle of next year.

There are two relevant patents asserted in the MRIS and MRED cases.  In technical language, they are essentially for a system and a method for remotely determining the position of a selected category of items of interest in a selected geographic vicinity from a database.  The system or method includes a database for storing information about items of interest, including, a geographical position and at least one associated category with spatial detail defining a geographic position.  It also includes a plurality of remote ports, such as personal computers, for accessing the database through the Internet.

In English, this means that CIVIX is claiming that they have enforceable patents for an online system that allows multiple users, such as MLS subscribers, to locate homes in a certain geographic area, together with information about the home, such as the local school district in which the home is located, and display photos or other graphical displays of the homes.

In order to have an enforceable patent, the inventor must be the first to create the invention.  In patent terms, the invention must be novel.  If there was prior art in existence before the time the invention was made, the invention may not qualify for the novelty element of a patent.  Prior art is the body of knowledge available at the time an invention is made, including the systems, technologies, or products employing the same methods as those claimed in the patent.  One of the strategies being employed in the MRED and MRIS cases is to establish that there was prior art, or in this case, there were systems in use prior to the time of the inventions set forth in the CIVIX patents, and therefore the inventions are not novel or they are obvious.  If the inventions are not novel or they are obvious, the patents should be held to be invalid.  The effective filing date of both patents is January 11, 1995.  MRIS, MRED, and their respective legal counsel will be looking for any prior art that existed  before that date, and will certainly appreciate any help from the MLS industry in establishing such prior art systems.

Two examples of potential prior art, or systems that existed prior to 1995, are the T-III Real Estate Systems touch screen consumer kiosk.  Through the kiosk and the use of a wide area network, buyers could search listings, including photos, maps, and full public records information, view electronic fact sheets, and obtain printed information.  See specification sheet and information.  A second example of prior art is a patent issued on July 16, 1991 for a method for locating available real estate properties for sale using a database of properties in a central location and remote stations.  The system employed drill-down mapping.  See the patent at http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PTXT&s1=5032989.PN.&OS=PN/5032989&RS=PN/5032989 .

There are many reasons MLSs need to be aware of these cases, but there are two in particular.  First, MLSs can provide information regarding the existence of prior art.  Although the identity of prior art could have a direct positive impact on each MLS, the second reason is more directly applicable.  The scope of the claims in these patents is very broad.  Although MRIS and MRED have been included in lawsuits, there is nothing to suggest the CIVIX will not pursue other defendants and other lawsuits.  If an MLS is using a system that fits within the broad claims of the patents, there is always the risk of being sued.

For MLSs that license vendor and other online systems for their own use, and use by their subscribers, it is critical to review the applicable license agreements to determine if the vendor will indemnify the MLS, and its subscribers, for any patent infringement claims.  If there is indemnification coverage in the license agreement, then at least the MLS can have some assurance that it has indemnification protection.  However, it is not the end of the discussion.  Many vendors are thinly capitalized and do not have the resources to pay for the defense of a patent infringement case, and if damages were awarded, it is highly unlikely they would have the financial ability to pay the damage award.

If a vendor or other license agreement does not have indemnification language, then the options are fairly limited.  The MLS is on its own to protect itself, and if applicable, its subscribers.  If there is concern that the system being licensed to the MLS may fall within the patent claims, and the patents have not been proven to be invalid, the MLS may want to look for another system, and discuss with the vendor or licensor an early termination of the license agreement for the potentially infringing system.  Another option may be to limit the use of the system in such a way that it is not potentially infringing.

Patent infringement needs to be taken seriously.  Unfortunately it is very difficult to identify patents that may be problematic, and then determine if a system in use is potentially infringing.  MLSs need to exercise caution in using systems, negotiating license agreements, and consider providing assistance in finding prior art.

If you are aware of any prior art, please email Russ Bergeron, chief executive officer of MRED, at russ.bergeron@mredllc.com.

John H. Rees

Callister Nebeker & McCullough

10 East South Temple

Suite 900

Salt Lake City, UT 84133

801.530.7388

jhrees@cnmlaw.com

 


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