When you buy a house, it’s nice to know where the local schools are, where the closest park is, where a nearby grocery is. So realtors commonly embed tools on their websites to show you a map of these “points of interest” in the area around a house for sale.
Unsurprisingly, using technology leads to non-practicing entities suing the realtors. In this case, a pair of Texas-based realtors.
Asking For Help
“POI Search Solutions LLC” sued two different Texas-based realty companies. POI claims to be “a Texas limited liability company with its principal place of business in Marshall, Texas.” Marshall, of course, is the epicenter of the Eastern District of Texas, meaning that POI likely placed itself in Marshall in order to try to prevent defendants from transferring cases out of the Eastern District. (That tactic might not work so well anymore, thanks to the Federal Circuit’s recent Cray decision.)
In response to the lawsuits, the realtors asked the Texas Association of Realtors and the National Association of Realtors for help in defending themselves. Even though IPRs are significantly cheaper than litigation, generating billions of dollars in savings, they still cost $100,000 on average just to file the IPR. The National Association of Realtors agreed to help fund the defense.
But instead of funding the realtors’ lawsuit defense, or paying for them to file an IPR, the Texas Association of Realtors took matters into their own hands; they filed a petition for inter partes review against the POI patent.
Points Of Interested Parties
The PTAB determined that the petition showed the POI patent was likely invalid. POI filed substitute claims, saying that if the PTAB made a final determination of invalidity, then the substitute claims should be allowed instead. POI did this, instead of asking to amend their existing claims, because if they amended their existing claims, they wouldn’t be able to obtain damages for actions taken before the amended claims issued—meaning they’d get nothing from their ongoing lawsuits against the realty defendants.
POI also tried to get the IPR dismissed because the Texas Association of Realtors had allegedly failed to identify all real-parties-in-interest. They claimed that the realtors themselves, and the National Association of Realtors, should have been named, even though they had no ability to control the IPR proceedings.
The PTAB disagreed with the patent owner (by this time, POI had given up, dismissed their lawsuit, and sold their patents to a patent holding trust) on all fronts. It concluded the Texas Association of Realtors had named all relevant parties. (Although, if the problematic Stronger Patents Act were to pass, that likely wouldn’t have been the case – the Texas Association of Realtors might have been required to list all realtors who pay dues to them. The PTAB also ruled that the existing claims were invalid. And the proposed substitute claims weren’t patentable either, both because they were obvious over the prior art, and because the original patent didn’t actually describe what the claims contained.
Defending a lawsuit or filing an IPR is a huge expense for your average company. Even with the less expensive IPR procedure available, small and medium-sized companies might still be inclined to settle. Fortunately, trade associations like the Texas Association of Realtors can act on behalf of all of their members. This is particularly useful in defending against the kind of patent plaintiff who files lawsuits aiming to extract nuisance-value settlements from a large number of defendants, relying on the high expense of defending a lawsuit. Absent this strategy, we might see more small companies abandon improving their services using technology, preferring to avoid lawsuits.
By banding together through an association, the members of the targeted group of companies can defend their common interest without requiring each member to bear the full brunt of defense. In other words, IPR can help provide an efficient defensive strategy against non-practicing entities for multiple smaller defendants.
And as we’ll see in our next IPR success story, IPRs aren’t just a tool for realtors or for trade associations—manufacturers can use them to defend their customers as well.