Will Patent Threat Bust Real Estate Boom in Geospatial?
solution providers have looked at the real
estate industry as a huge potential market for years.What could be
better than GIS to sift through locations, prices, demographics, school
ranking and proximity to the train station all at the same time? During
the past few months, GIS applications for this sector has been
revitalized.Recently, Prudential Preferred Properties of Chicago jumped on
the Google Maps/Earth bandwagon and other, similarly powered sites have
appeared.A few weekends ago the New York Timeshighlighted
(free registration required) online tools for researching real estate
in its Technology section.
But there is a threat to all this progress in the form of a patent.
U.S.Patent Number 5,032,989
assigned in 1991, describes "a method for locating available real
estate properties for sale, lease or rental using a database of
available properties at a central location and remote stations which
use a graphic interface to select desired regions on a map of the areas
in interest.The user begins with a region where they are interested in
acquiring property and select an inner area within this region by using
a pointing device such as a mouse to designate boundaries on a map
displayed on screen.This is then zoomed in on and a second area is
selected within the zoomed region.The second area is then
cross-referenced with the database of available properties whose
approximate locations are then pictorially displayed on screen.
Information about the properties can then be obtained in textual form."
Yes, the geospatial community has been through this before.
There's that patent for moving data from GPS to GIS that appears now
and again, and has been licensed, so far as I know.And, there's a
patent for online mapping that many in the industry tried to refute by
showing prior art (evidence that the idea was in use before the patent
was assigned).So, is this a real threat?
The Real Estate Mapping Patent and Recent Lawsuit
The '989 patent described above is held by Mark Tornetta and assigned
to a holding company formed specifically to license the patent: Real
Estate Alliance Ltd., or REAL Ltd.Its URL is realpro989.com which has
been unavailable in the weeks during which I researched this article.
REAL was relatively quiet for several years, but in 2002 "a major
investor, Andrew Rooke" joined
and became president.
REAL contacted a RE/MAX agent in Pennsylvania earlier this year stating
she was infringing on the patent.She was using a service, TReND,
provided by the Multiple Listing Server, MLS.REAL put out a press
release regarding the lawsuit.She and other end users contacted by
REAL were asked to pay $10,000 in royalties each; none have paid
according to an unnamed source quoted by Realty Times in a July
14, 2005 article.
TReND, a non-profit, has retaining counsel to fight the alleged
infringement and stated the case is without merit.
The patent expires in 2008, but the licensee has six additional years
to track down and litigate past infringers who did not license the
A Valid Licensee
One company did step forward and license the '989 patent.Equias
Technology Development is the exclusive USA licensee of '989 "Real
Estate Search Method and System."
CEO Scott Tatro, the comany's CEO, wants to "make the technology
legally available to the real estate community through its portal, FindAHome.com." (The domain is
owned by a company in Denmark, though Tatro claims control of it.) The
website is just a placekeeper at this time; further developments are
expected by the end of the year.According to an article
in Red Herring, "Subscribers to Equias' site will be able to wipe the
legal slate clean of any past or present liability."
Tatro contacted Directions to suggest we cover the story of the
patent and the "huge industry cover-up." Tatro is making the rounds for
his case this fall.In this RIS Media interview
from October he tells his story in some detail.
Tatro has an interesting history that's interwoven with the patent.In
1994 he founded The HomeSearch Information Network, a searchable index
of real estate available for sale across the United States.Four years
later, in 1998, Microsoft bought the company's assets.In 2000
off HomeAdvisor as HomeAdvisor Technologies Inc.but retained
It was at HomeSearch, while researching a consumer offering built
around the index, that Tatro and his company were approached by
Tornetta regarding the patent.After consulting with its experts,
HomeSearch licensed the '989 patent.
Tatro stayed involved with the patent after the sale and performed
significant due diligence.He felt strongly that the patent was valid
and the industry was ignoring it.He formed Equias LLC, to take
advantage of the intellectual property he'd licensed back in 1995.As
he explains in the interview, "Our agreement allows us to take the
exact same license that REAL is offering agents at a fee of $10,000,
and provide it to agents who use our licensed system at a much lower
cost, paid for over time." Equias recently approached the National
Association of Realtors about a bundled license for its members, but
National Association of Realtors
Tatro contends that the National Association of Realtors (NAR) is not
stepping up to the plate and is in fact participating in a cover up of
sorts.Here's his argument, which is echoed in this anonymous post
to a blog (second comment - the long one).
Tatro asserts that NAR has been aware of the '989 patent for more than
10 years.In fact, he maintains, executives from HomeStore, the
operating business for the organization's website, homestore.com, spent
$2 million researching this and other patents.The conclusion must have
been that there was a need for a license since NAR met with REAL to
discuss a license for NAR's Realtor.com and its 1.14 million members.
That negotiation did not yield a license.Instead, says Tatro,
HomeStore recoded the website to remove the infringement by cutting out
some of the steps defined in the patent.He points out that NAR has
since maintained that it does not infringe on '989 and never has.
Further, he says, NAR has told its members and others not to bother
with licensing the patent.
Microsoft and another company for infringement of the '989 patent in
1998, but those suits were dropped.One source reports,
judge threw the case out because it was filed in the wrong name." A
second source, Lawrence Husick, an attorney for REAL maintains that
"Tornetta eventually dropped the suits because Microsoft and Cyberhomes
[the other defendant] each had discontinued the services that allegedly
infringed the patent" according to an article
in Inman News.
Is the Patent For Real? Peter Zura is a blogger and registered patent attorney based in
Chicago.He's been keeping an eye on this story and raises some
"Evidently, REAL must has some kind of deal with
Scott [Tatro] and his company regarding this patent, since there is no
reason for him to plug the '989 patent in this manner (he's merely a
licensee)." That's true.However, by speaking out on the patent issue
Tatro is getting a whole lot of free advertising for his soon to be
revealed service and licensing deal.Zura also raises the issue of REAL
going after end users.While this might bring in some money quickly, in
the end, he suggests those who "put together the databases" may well be
In a second post
on the matter Zura concedes that REAL may have a case
but indicates two issues with which the company will need to contend:
the stop and start litigation (suit in 1998 dropped and then another
springing up in 2005) and the fact that the patent was granted before
the Internet was mature as development platform.
The standing of the patent is for lawyers and potentially a court to
decide.Tatro explains that he did due diligence on the patent and
found it solid; that's why he says he decided to license it.The
partners in REAL and Equias must feel there's value in their investment
in this intellectual property and most likely expect some money to come
their way in due time.It has also been asserted
that HomeStore has
expressed interest in investing in REAL (< $10 million), for
Those who have been sued claim no infringement.Some may have perhaps
altered their offerings to limit liability.And, some have readied
their legal staffs.Clearly, a whole long list of real estate mapping
sites might be considered to infringe on the patent.I suspect we'll
hear more about this in the coming months, especially as FindaHome.com