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Real Estate

Reyne Stapelmann: Patent Trolls Affecting Realtors and Small Businesses

Realtors across the country have received threatening letters and lawsuits from law firms representing patent holders.

These letters or lawsuits demand licensing fees to use common business tools such as drop down menu’s on websites and the scanner function on a copier.

Patent Assertion Entities (Patent Trolls) buy vague patents and use them to turn everyday business practices into potential lawsuits.

Realtors and other small businesses have been the victims of these trolls. The Patent Trolls do not actually manufacture the products nor supply the services covered by the patents in question.

In 2011, Boston University Law Professor Michael J. Meurer and Law Lecturer James Bessen authored an important study, "The Direct Costs from NPE Disputes," on the economic impact of Non-Practicing Entities (NPEs), more commonly known as "patent trolls."

It was an over $83 billion-dollar a year problem, according to the study, and it continues to cast a pall on businesses, particularly small ones, because it forces them to divert resources away from their core activities to focus on patent issues.

In a typical scenario, a patent troll sends out a demand letter in bulk without knowing whether the business receiving it is actually infringing its patent or is even a liable party to a lawsuit.

The issue attracted high-profile media attention two years ago after a company called MPHJ Technologies, using dozens of shell companies, sent out 16,000 letters related to the use of scanning technology to companies, some of them real estate brokerages, that demanded payment of a licensing fee.  

The company, which has just one employee, settled with the Federal Trade Commission last year.

The National Association of Realtors (NAR®) encourages that you seek legal counsel if you receive a letter alleging patent infringement.

Chloe Hecht, associate counsel for NAR®, gives some options to responding to patent infringement claims:

» Demand additional information

» ignore the letter or deny infringement

» declaratory judgment action

» challenge patent validity

» joint defense group

» negotiate settlement or license fee

As an executive committee member of the United for Patent Reform coalition, NAR® will continue to actively advocate for patent reform and will work closely with committee members to strengthen the bill as it moves to consideration by the full House of Representatives.

H.R. 9 is scheduled for House floor consideration later this summer. Congress must pass this common-sense comprehensive patent litigation reform to protect main-street businesses and Realtors from patent troll abuse.

*Taken from the National Association of Realtors.

Reyne Stapelmann is a broker associate with Berkshire Hathaway Home Services, California Properties and the 2015 president of the Santa Barbara Association of Realtors. Contact her at [email protected] or 805.705.4353. The opinions expressed are her own.

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