Over the years, NAR has had its fair share of legal battles. Currently, there are a few big and interesting cases involving NAR that could have dramatic impact on the real estate industry. Here’s an update on three cases that are in the works.
US vs NAR
This is the famous case brought by the Department of Justice (DOJ) against NAR’s Virtual Office Website (VOW) and Internet Data eXchange (IDX) policies. (Note: NAR has changed the name VOW/IDX to Internet Listing Display or ILD.) There are two main issues at the core of this suit which is likely to go to trial this summer.
- The IDX opt-out policy is what started the case. The policy allows brokers a blanket opt-out option to keep their listings from being displayed any competitor’s web site. NAR policy also allows brokers a surgical opt-out option where a broker can opt-out of a particular competitors IDX feed (e.g., I will not allow my listings to appear on Swann Realty’s site). The DOJ thinks there should be no opt-out option and that ALL listings should be available for ALL brokers to display.
- NAR policy, as proposed, only allows ILD privileges to brokers actively engaged in real estate sales and leasing. In other words, anyone who simply gets the ILD data for the sole purpose of generating leads and is not otherwise involved in real estate would be banned from ILD. The DOJ wants listing data to be like the water that flows from your tap – available to all.
(My prediction: split decision. NAR wins on #1 and loses on #2)
David Berry vs the Entire REALTOR® Organization
I am NOT talking about Dave Berry the fabulous writer for the Miami Herald. This is David Berry the lawyer who has made a career of suing NAR. He has tried to have the term REALTOR® declared generic, attacked MLS membership rules, and numerous other wacky lawsuits. Recently he tried to get a ballot initiative in Maine to legally require all listed properties for sale to be placed in his Open MLS system. NAR and several state associations have fought many legal battles against Mr. Berry. I cannot remember any victories for Berry over the years, but I would suspect he must of won at least one of the hundreds of suits he’s filed against NAR.
Now the California Association of REALTORS® is suing Mr. Berry for legal harassment. If there ever was a case for “English Rule” where the loser pays, Mr. Berry would be the poster boy.
REAL vs NAR
REAL is a company that has established a patent on a basic search technique used for real estate on the web. It is incredible to see what you can get a patent for today, but that’s another post for another day. Anyway, REAL’s patent is something that is used by just about every real estate search engine in every MLS and national aggregation site. Picture this web site : a map of the entire country allows you to draw a circle and drill down to the state level. Then another circle and you drill to the city level and then the street level. Most MLS’s call that a parameter search. REAL has filed a patent infringement lawsuit against everyone they can think of including NAR, REALTOR.com, individual brokerages, and a few large MLSs.
Before I filed this post, I applied for a patent on the process of making comments on Blog posts, so just be forewarned that you could be included in my class action suit if you comment on this post.
Short Sale Disclosure Coming to an MLS Near You
In other “legal” news, NAR is working on policy that would allow MLSs the option to require the disclosure of a probable short sale in the MLS. The thought is that a short sale is a pertinent fact that a buyer has the “right” to know. Based on Virginia disclosure laws, I’d agree, but of course there are lots of caveats to disclosure. In any case, the policy will be optional to local MLSs and not a mandate from NAR (at least that is the current thinking).
(This post is based on my notes form a legal briefing during a recent NAR meeting. It is simply my account of the presentation and not based on any official release from NAR.)
Jay says:
Short sale disclosures should definitely be mandatory….
2 exceptional articles on them by local bloggers:
http://blog.franklyrealty.com/2008/02/va-short-sales.html
http://www.justnewlistings.com/arlington-virginia-blog/jay-seville/what-the-hell-is-a-short-sale-in-northern-virginia/show/
You’re probably right on your predictions….
April 3, 2008 — 6:00 pm
Christina says:
I also believe that Short sales like forclosures should be attached with mandatory disclosures. Thanks for the update about NAR and the DOJ. Will Real Estate agents ever be able to keep anything private about their business or will we be forced to share every little detail with the general public? I wonder if IBM had to do this?
April 3, 2008 — 7:02 pm
Dave Barnes says:
As a consumer, I hope the NAR (and all its members) die a horrible painful death.
Monopolies are bad.
Competition is good.
April 3, 2008 — 7:45 pm
Sean Purcell says:
Thanks for the updates Dave. I usually find myself disagreeing with NAR more than agreeing, but I enjoy the debate. I wish you and every member a cantankerous, ripe old age. 🙂
April 3, 2008 — 8:03 pm
Dave Phillips says:
Dave B., as a compasionate and serious jester, I would suggest you seek therapy for the demons that are tormenting your soul. I truely wish you the success at getting beyond the pain you are in. Best of luck and may god bless you and heal your heart.
April 4, 2008 — 12:28 pm
Paul Clewell says:
Your tongue-in-cheek treatment of the REAL VS NAR LEGAL ISSUE is a discredit to your otherwise informed commentary.
FIRST:
There are at least 3 separate patent infringement cases against MOVE and NAR. Its a pattern of arrogance and ignorange that deserves a closer look.
SECOND:
REAL in particular has endured the NAR and MOVE attempting to financially filibuster the courts with nearly $4 million dollars to defend a single agent against an allegation of infringement. It’s only a $10,000 license…how does that math work?
The manner in which MOVE and the NAR attempt to defend these infringement actions has brought about substantial angst by the Federal Judges who have extensively commented on their tactics, in addition to motions for perjury, and destroying evidence which have already resulted in rulings of sanctions.
THIRD:
The patent in question is a 1991 patent with a 1985 priority date. MOVE executives have admitted that the patent is being widely infringed throughout the industry, and so has the counsel for the NAR. They didn’t take a license because they “felt the patent-holder didn’t have the financial staying power to enforce their patent”.
If there was some disqualifying factor that made the patent unenforceable, this kind of money and time would have found it. That motion was filed and subsequently dismissed. All that’s left for MOVE and the NAR is delays, deception, and denial.
Their arrogance and ignorance have directly contributed to the liability that 5 CLASS ACTIONS, which likely include more than 400,000 representatives, will be forced to pay if REAL prevails.
April 18, 2008 — 9:00 am
Dave Phillips says:
Paul,
Thanks for the inside information on the REAL vs REALTORS patent case. I’m sorry you did not appreciate my sarcastic humor about the completely broken patent laws. While I’m sure you are well within the law and may have a good case, it is just wrong what folks are being allow to patent these days.
Maybe you were the first to come up with this basic search technique, but maybe you were just the first person crafty enough to think about putting a patent in on it. Please let me know how that happened. Either way, MY OPINION is that such basic processes should not be allowed to be patented at all. I’m old school in that I think true inventions should be allowed to be patented, but a basic string of ideas should not. I’m sure you disagree and I appreciate that there is a good chance that I am wrong on this. Maybe I should apply for a patent in being wrong. Or would that make it right?
April 18, 2008 — 9:26 am
Paul Clewell says:
Dave,
Your humor doesn’t escape me, I enjoy it. However, your premise (the one you assert I would disagree with) of a “basic string of ideas” being patented frivolously by the US gov’t… is something we should all decry.
However; this patent, with only an hour or two of research by an average person, will reveal itself to be far beyond that rudimentary aspersion.
May of 1985 was around the introduction of the first version of Windows. Talk about basic ideas. A series of icons that represent the format or relational hierarchy for information or code. “Clickable graphics instead of code strings”. C’mon XEROX and others were all over and around it years before, but “REAL” innovation was still patentable by Gates and others.
This REAL vs NAR patent cost well into the 6-Figure$ and consisted of years of code writing, and hundreds of pages of detailed documentation. It was reviewed for years with access to all of the published and patented GIS and Data exchange knowledge of the day before it was approved.
YOU’RE RIGHT, the concept is SO SIMPLE. Once awarded, how could anybody (like the NAR or MOVE) reasonably say that their mapping of available real estate on a zoomable map DOESN’T infringe. Using that method…breaks the law.
The trouble with patents really isn’t the ineptitude of the patent office; but rather, it is today’s “big business” acceptance of tactics that force an individual patent holder to reprove and defend EVERYTHING again… when facing literally $millions in legal resources and clever administrative delay and destraction tactics.
Check out this case and that’s what you’ll find. If the patent was unenforceable this would have been over with years ago. These tactics are NOT designed to correct a patent oversight, or disprove the actual application of the method amongst the alleged infringers. It is simply “BUSINESS” as usual for the NAR and MOVE. Except this time…the young inventor/student who spent years of his life and most of his income to create and file his patent didn’t just go away!
The problem is that MOST individual inventors don’t have that sort of resilience and good fortune, and more often than not, big businesses like the NAR and MOVE simply outlast or out maneuver the inventor to ulitmately hijack JUSTICE.
April 18, 2008 — 11:40 am