Robert Drummer of iMapp is a guest posting today. I thought the subject matter timely so I hope you enjoy!

Unless you’ve been living under a rock, you’ve heard about the CIVIX-DDI patent fracas. In a nutshell, CIVIX-DDI has a patent on “systems and methods for remotely accessing a selected group of items from a database” or, more simply: Internet search with geo-location.

The NAR previously settled with CIVIX-DDI which included REALTOR.com operator MOVE and now, two years later, they have negotiated a $9.06 per member license on behalf of the member MLSs that were not covered by the NAR’s previous settlement. To my non-attorney mind this begs the question: Why weren’t the NAR members considered/covered in the first settlement?

Rather than risk additional legal expense and exposure, the NAR is now offering this license. While it’s possible the patent could be defeated (more on that later), a business decision was made; pay the license and move on. This questionable strategy creates an opportunity for other patent trolls to come out of the woodwork seeking master licenses with the NAR. As Rob Hahn said “There is a reason the USA doesn’t negotiate with terrorists”.

Laurie Janik, General Counsel at National Association of REALTORS®, informed me that they have reached the first milestone payment of $2.5 million dollars. Those MLSs (along with their members, vendors and affiliates) participating in the first round will be granted a license from the NAR. If you plan to participate, it seems prudent to make sure you are in the first round and that NAR receives your payment and paperwork no later than 5pm CST on June 16th, 2011.

If an MLS chooses to wait for the second or third round, they may be at risk of being excluded from the license. CIVIX-DDI may choose to accept whatever payments are received in those rounds, but that is entirely the decision of CIVIX-DDI.

The license runs with the MLS. That means if the MLS changes vendors in the future, those vendors will be covered under the license granted to the MLS. It is my understanding that in this scenario the ousted vendor receives no protection, other than that provided to their previously licensed MLS accounts.
Part of the agreement negotiated by the NAR includes a lawsuit cease-fire until August 17, 2011. After that date, any MLS that is not sub-licensed through the NAR could become a target for litigation from CIVIX-DDI. Ask MRED and MRIS how the litigation route went (not good, as they are paying more per member along with legal fees).

Here’s where it gets interesting for the Vendor Alley reader:
Most of these MLSs have provisions in their vendor contracts for indemnification. If the MLS decides to pass on the license and gets sued by CIVIX-DDI, the vendor may be liable for some or all of the legal expenses related to defense of the lawsuit. We’ll have to wait until August 17th to see which MLSs and vendors face possible exposure to a lawsuit.

Until then, there is still a chance that the remaining claims in the patents are overturned on reexamination. There are facts relating to prior art that have not been presented in the previous reexaminations:
In the 2006 reexamination, a reference was made to the Xerox PARC Map Viewer (Page 5 – Steven Putz, Interactive Information Services Using World-Wide Web Hypertext, First International Conference on World-Wide Web ISTL-QCA-1994-03-01, 1994 (EXPO 25440-EXPO 25447)

It’s my understanding that this paper and its public presentation were too late to be considered prior art as the cut-off date was in January of 1994. However there was a June 1993 public invitation to use the Xerox PARC Map Viewer and to my knowledge this invitation was not presented in either the 2006 or 2011 requests for reexamination. There is a public description of the Map Viewer service which was used extensively by public users in the second half of 1993.

This prior art would seem to cancel the patentability of claims 20 and 26 (using the Internet) as the Xerox PARC Map Viewer is purely related to using the Internet for geographic search and map production.

The 2011 re-examination denial does not raise the specifics of this prior art. In the 2011 reexamination, the examiner appears to focus on the use of the “Internet”. While not explicitly disclosed in ARACO (as proposed by the 2011 reexamination), the “Internet” appears to be extremely clear in this Xerox PARC instance as it was being used to respond to thousands of Internet map requests in 1993.

How this was missed is still a mystery. We’ll wait to see if this makes a difference for either Yahoo or Hotels.com, both of which are currently fighting lawsuits related to CIVIX-DDI and have taken the time to investigate our discoveries and the viability of the Xerox PARC information.
If this prior art changes the situation and the patent claims are overturned, our industry will have needlessly spent between $2.5M and $7.5M, paid by a combination of MLSs, their vendors and ultimately, the members of the NAR.