Kenny Rogers may have put it best in his award-winning song, “The Gambler,” sometimes “you’ve got to know when to walk away.” That’s the option that Smarter Agent LLC took when it backed out of its three-year long legal feud with Real Estate Webmasters recently.
In an exclusive interview with RISMedia, Real Estate Webmasters CEO Morgan Carey announced that his company turned the page on its courtroom battle with the technology patent licensing business, which has been suing them for patent infringement since 2019.
The latter filed a notice of dismissal with prejudice in U.S. District Court for the Western District of Texas Waco Division last week, according to Carey.
“We fought them quite aggressively until we made them give up, and hopefully this is the last time, because they are currently suing other companies,” Carey says.
Smarter Agent’s decision to drop its lawsuit comes after three years of the two companies duking it out over allegations that Real Estate Webmasters violated eight of the former company’s patents related to geographic searching.
In its original filing, the New Jersey-based company notes that it developed and sold mobile app services and products to real estate brokers and brokerages “generally related to location-aware search engines and related storage technology.”
According to Smarter Agent’s initial court filing, the company took issue with Real Estate Webmasters creating personalized apps that allowed clients to “search all homes, condos and lots for sale” in their respective markets.
Smarter Agent LLC split into two separate entities in 2013—Smarter Agent LLC and Smarter Agent Mobile. The former focused on patent licensing and the latter on mobile technology. In 2018, Keller Williams acquired Smarter Agent Mobile.
According to Carey, Smarter Agents LLC held onto its patent and began suing real estate tech companies for infringement shortly after splitting into two companies.
Bert Greene, managing partner at Duane Morris LLP’s Austin office and legal counsel for Real Estate Webmasters, says that the lawsuit “just came out of the sky.”
“There was no advanced warning,” Greene says. “There were no letters sent ahead of time saying ‘you need to take a license to our patent,’ or anything like that. They just hit Real Estate Webmasters with a lawsuit completely out of the blue.”
The move was par for the course, according to Greene, who says that Smarter Agent LLC has made a habit of filing patent infringement cases against other real estate tech companies.
“It’s a fairly controversial issue in the patent litigation world that I live in, but you have companies like Smarter Agent that exist to just sue companies,” he says. “They are not a functional company at this point. They are just trying to monetize these patents.
“It’s controversial because a lot of these companies with that business model are effectively looking to settle these cases and not fight them,” Greene adds.
While that approach has proven effective in some cases, Smarter Agent hit a wall when it tried suing Zillow and several other companies in 2010 which Greene says secured a significant win when they successfully challenged the validity of the company’s older patents that were at issue in that particular lawsuit.
According to Carey, the loss was primarily due to Smarter Agent’s patent being “overly broad,” to the point where it didn’t apply to the real estate tech companies they targeted.
“You would’ve hoped that’s where it ended,” Carey says.
Since its bout with Zillow, Smarter Agent has obtained additional patents and taken on other companies in addition to REW, including HomeAway, Redfin and OJO Labs. The cases against Redfin and OJO Labs remain pending.
Carey suggests that the company’s continued litigious behavior has stifled the innovation and investment in app development in the real estate tech sector.
“If I’m a start-up, and I look to start a real estate app, I’d run the other way if I read about all these lawsuits,” Carey says. “No one has built any apps in the last five years. Many brokerages could have a lot of great apps, but everyone else had to worry about these guys suing them.”
While Real Estate Webmasters has claimed its own legal victory, Carey is hopeful that their win could encourage other companies still battling Smarter Agent to hold the line.
“We are basically saying that enough is enough, and we will help anyone that this has targeted,” he says.
Greene applauded Real Estate Webmasters’ courtroom win as well.
“This was a rare situation where you had a company in Real Estate Webmasters that was not willing to play that game,” Greene says. “Morgan stuck to his guns and was willing to fight because he knew he was right. In the end, he was vindicated.”
Smarter Agent LLC and Keller Williams did not immediately respond to RISMedia’s request for comments on this story.
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