Congress must stand with innovators against patent trolls

Technology is a vital part of the real estate business, where faster and more convenient service – including interactive maps that allow potential home-buyers to find properties and even the provision of Wi-Fi – can mean the difference between a long and arduous search and helping someone quickly locate their dream home. However, in providing these services, real estate professionals can become top targets for those who abuse loopholes in the patent system to file frivolous litigation, many times based on weak patents that never should have been granted in the first place.

Abusive patent litigation remains a serious threat for real estate professionals and other Main Street businesses of all sizes across the country. However, my organization, the National Association of Realtors, has successfully fought back by utilizing a legal tool that adds an extra layer of protection against this type of litigation.

{mosads}In 2012, several of our members received demand letters and had patent litigation lawsuits filed against them by Data Distribution Technologies (DDT), a patent troll and subsidiary of the General Patent Corporation. DDT does not invent or produce anything using patents, but instead profits from acquiring patent rights and enforcing them against third parties, often demanding payments from their targets under the threat of a long and costly legal battle. In this case, the patent at issue involved the use of a computer to send emails to consumers about information in a database when a data point of interest to them changed – for example, when the price of a certain property went up or down. Even though the patent did not address any particularly innovative concept, DDT could weaponize it to target companies within and outside of the real estate space.

As many real estate businesses are small and medium-sized enterprises, patent trolls know that they often lack the resources to mount a defense, even if they have a valid case that they have not infringed on the patent. One study found that for a small or medium sized company to defend itself against a patent troll case in court, it would spend an average of $1.75 million. For a small realty office, that can mean the difference between paying the extortive settlement price and remaining open, and having to lay off employees or close its doors for good.

Because of the vital importance of this issue to the livelihoods of our members, NAR decided to step in and help them defend against this abusive allegation. After reviewing the patent at issue, we determined it did not warrant patent protection and filed a petition for Inter Partes Review (IPR) with the U.S. Patent and Trademark Office (USPTO), concurrently filing suit against DDT in Federal District Court seeking a declaration that the patent was invalid because it did not cover patentable subject matter. This two-pronged approach showed DDT we were prepared to fight and would not give in to their demands, and they quickly settled. In a further victory for our members, DDT agreed under the terms of the settlement not to enforce its patent against any business in the real estate industry.

Our story ended successfully, but not all businesses that face such litigation have the time and resources to assess and counter the meritless claims brought against them. For us and for many companies in our position who wish to fight back, the IPR process is an incredibly important resource that allows the USPTO to fairly reevaluate patents of questionable validity that likely should not have been granted in the first place. IPR serves as a meaningful tool for USPTO to holistically improve patent quality and address existing poor-quality patents that often are leveraged by trolls.

What’s more, it is much less expensive than the costs of litigation, an important consideration for resource-strapped small companies. In 2016, more than 40 percent of patents challenged through the IPR process have been asserted in court by a patent troll. Ultimately, pressure from the IPR we initiated led the patent troll to back away from its suits against our members rather than defend itself from challenges to its patent.

This process offers a clear path for associations to defend their members against patent trolls, and we hope more organizations will do exactly that.

Now that some in the patent space are seeking to weaken IPR, it is important that Congress and patent policymakers understand how important this process is to us and our members, as well as to countless other small businesses across the country who may fall victim to the extortive tactics of patent trolls. We caution legislators against any weakening or revision of the IPR process, for the sake of America’s innovators, technology-users and job-creators.

Katie Johnson is the general counsel for the National Association of Realtors.

The views expressed by contributors are their own and are not the views of The Hill.