Patents cover popular online mapping of homes for sale and potential damages could run into the billions of dollars

February 28, 2008

By Josh Epstein (View author info)

In a dramatic expansion of a legal battle pitting the rights of pioneering inventors and consumers against the real estate industry's notorious and unauthorized use of patented methods used by millions of consumers to locate real estate on line, the nation's largest real estate firms, home builders, and industry umbrella groups are being subject to suit for patent infringement in a case pending in Los Angeles federal court.

Real Estate Alliance Ltd. ("REAL") and inventor Mark Tornetta today announced that REAL, which owns Tornetta's patents (Nos. 4,480,576 and 5,032,989), has moved in U.S. District Court in Los Angeles to sue:

• The National Association of Realtors (NAR), with approximately 1.3 million real estate broker and agent members nationwide;

• Nationwide real estate brokerage firms, including RE/MAX and Keller Williams Realty;
• Home builders, such as Pulte Homes and Ryland Group;
• The National Association of Home Builders (NAHB);
• Enterprise computer software providers to the real estate industry, including Fidelity National • Real Estate Solutions, First American Corporation, and others;
• MOVE, Inc., the company that operates flagship real estate websites such as Realtor.com, • • MOVE.com, HomeBuilder.com, RentNet.com, and SeniorHousingNet.com; and
• More than 25 other defendants representing nationwide classes of claimed infringers: real estate brokers, agents, multiple listing services, new home builders, and rental property owners/managers.

These companies would be sued as part of five nationwide proposed class actions, in a full range of claims designed to secure industry-wide compensation for intentional, massive, and ongoing patent infringement. The claims in the suit are for direct infringement, contributory infringement, and inducement to infringe. The suit seeks compensatory as well as treble damages.

Tornetta's patents, "Real Estate Search and Location System and Method," were applied for in 1986, and granted by the U.S. Government in 1989 and 1991, when both the Internet and personal computing were in their infancy. They cover user-friendly mapping methods "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." The patents also cover certain online usage involving a "drilldown" feature, under which specific areas can be displayed in greater detail.

It is believed that hundreds of billions of dollars in real estate transactions have been and continue to be facilitated by the unlawful infringement of Tornetta's patents; MOVE's websites, including www.realtor.com, attract an estimated 10 million unique visitors every month, and list more than three million homes for sale on any given day. NAR acknowledges the importance of Internet-based searches in today's real estate market; the organization estimates that three of every four homebuyers search for a home online and one in four find the home on the Internet that they ultimately purchase.

"We have tried for quite some time to use non-litigation means to secure the just compensation we are due for the industry's flagrant and uncompensated use of my invention," Tornetta said. "We can not wait any longer and intend to seek the full amount the law permits from each and every person and company that has infringed on the patents that protect our intellectual property." Tornetta said that he has long tried to persuade companies and Realtors to license his invention, but has been routinely rebuffed, even as they continue to infringe on his patent.

To assist in the industry-wide effort, REAL has turned to William R. Huff, of the investment management firm bearing his name. Huff is the financial advisor to one of REAL's principal members. In turn, REAL has retained the international law firm of Proskauer Rose LLP to head, manage, and lead the major litigation effort. Dubbed by Crain's Business and others as a "litigation powerhouse," Proskauer, with approximately 750 lawyers, is renowned for mounting many of the largest and most successful cases in the intellectual property arena, including the recent class action against YouTube and Google, filed on behalf of owners of copyrighted content led by UK's top soccer league, the Premier League, and US music publisher Bourne & Co.

"Proskauer feels privileged to join forces with our long-time client Bill Huff and the legal team representing REAL," said lead counsel Louis M. Solomon, who also co-chairs Proskauer's Litigation Department. "We intend to prosecute vigorously all claims available to REAL and Mr. Tornetta under U.S. patent laws and to secure for them the maximum available damages and compensation." Solomon noted that REAL's previous offers to settle and grant licenses to use the Tornetta patents have been withdrawn and are no longer available.


SOURCEL Erin Howard

Linden Alschuler & Kaplan, Inc.

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