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2011-06-01 17:50:38

NAR/CIVIX Settlement

 

"Time is of the essence," a popular phrase in real estate contracts, now has new meaning in connection with a patent infringement claim being asserted by a company named CIVIX against MLS Associations across the country. A number of MLSs have received notification of the claim and several, including Realtor.com and MRIS, have already been involved in litigation and have ended up licensing the patent. Last month, a group of about 50 MLSs asked NAR to negotiate a settlement of the claim in an effort to avoid extremely costly and protracted legal battles by CIVIX against individual MLSs.

At first view, the patent claim appears so broad as to not be taken seriously. That was my first reaction when I read that the patent covers MLS systems and other real estate software, and those who use them, to locate, search for and transmit to others property information about homes, such as the location, property characteristics and detail, local school district, and photos or other graphical displays of the homes.  That seems to be any type of location based search that pulls from a database. CIVIX claims that essentially all MLS systems infringe its patents.

For those interested in the complicated details of the patents, here are the original applications for the two primary patents, both of which survived a Re-examination by the U.S. Patent and Trade Office. U.S. patents 6,385,622, and 6,415,291. From the abstract: "A user can access a common database from a remote communications port, at any qualified location, to generate a map or other positional information which locates selected items of interest, e.g., businesses, stores, architectural sites, and the like."

As a result of negotiations with CIVIX, NAR notified MLS Associations that the associations now have the opportunity to make a business decision whether to contribute an amount equal to $9.06 per subscriber in return for a license that will protect them against claims from the patent holder. The alternative is to stay back and await legal action from CIVIX.

Mark your calendar for the following dates: June 18 (raise $2.5 million), July 18 (raise $5.0 million), and August 18 (raise total of $7.5 million). Those are the milestone dates by which the National Association of REALTORS (NAR) needs to collect from MLS associations up to 7.5 million dollars. That's the amount the patent holder requires under a settlement agreement with NAR in order to grant NAR the exclusive right to the patent and the ability to sublicense the patent to the "real estate industry" (with the noteworthy exceptions of Craigslist, Zillow, Trulia, Google, and Co-Star).

NAR has made available to members a number of resources to assist MLSs in making a decision. Many of the questions you might have are addressed in those resources which include a Question & Answer section. NAR strongly encourages the MLS organizations to meet with their leadership as soon as possible. Those MLSs who contribute within the June 18 milestone will receive a patent license only if at least $2.5 million is raised by that time. Those who contribute during the next milestone will receive a patent license only if at least $5.0 million total is raised by July 18. Those who contribute during the next milestone will receive a patent license only if at least $7.5 million total is raised by August 18. Time is of the essence.

Last week, NAR Counsel Laurie Janik and Industry Consultant Ann Bailey presented an informative one hour webinar on the issues along with an active Question & Answer session. That recorded webinar is available at the Law & Policy section of Realtor.org.

Some may ask: “If we went to court, would the CIVIX patent infringement claim be invalidated?” My old law school professor -- the same one who taught me about "time is of the essence" -- would have an answer to that question. His classic response would drive us crazy -- it would be "Who knows?"  Would the judge have a bad day; would the other attorney out-duel your attorney; what about the whims of the jury; would one side out-spend the other? Lawsuits are often expensive, time-consuming, and fraught with uncertainty.

Here the MLSs are being asked to make a business decision, not a legal decision. And they need to make that decision in a timely way. Time is of the essence.  

We’ll be following the progress of the NAR/CIVIX settlement opportunity over the next several months. Come join the discussions on RealTalk at www.RealTown.com.

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