A positive step toward an open market
Score one for the little guy.
Suit and counter-suit continue between the California Association of Realtors® (CAR) and PDFfiller, Inc., a Massachusetts-based provider of paperless document management software. CAR produces forms, some of which have been filled out using PDFfiller software.
Magistrate Judge Marianne Bowler allowed CAR’s $136 million trademark and copyright infringement lawsuit against PDFfiller to continue, rejecting PDFfiller’s claim that at least part of the litigation is baseless. The court noted that PDFfiller’s website contains at least 64 works copyrighted by CAR.
But more revealingly, in her 73-page opinion, the judge rejected CAR’s request to throw out the software provider’s countersuit which accuses the trade union and its affiliates of unlawful antitrust violations.
In March, Judge Bowler allowed three months for the discovery process between the litigants to continue. If the litigation were to proceed to trial, it would likely occur around 2019.
Editor’s note – Connor Wallmark, first tuesday President and Production Manager, was subpoenaed by both participants to testify at a full-day deposition on April 23rd, 2018.
first tuesday is not a party to the litigation, but as a competitor, does publish real estate forms used for the same purpose as CAR forms.
CAR brought its original suit against the innovative PDFfiller in June 2016. The bullish California union claims PDFfiller broke trademark and copyright laws when web crawlers created by PDFfiller accessed full and partial CAR forms that were uploaded to the internet by members of a small Association of Realtors (AOR) board. As is the case with all PDF documents brought into the versatile PDFfiller ecosystem, the forms are then filled out and modified with its proprietary software.
Perhaps a bit of clarity into the functioning of PDFfiller is needed to get a full sense of the picture. At its core, PDFfiller is designed to search for digital documents available on the internet and allow its users to digitally fill them out and transmit them.
PDFfiller does not publish forms and is industry agnostic, also catering to industries separate from real estate such as health care and tax. Thus, PDFfiller itself did not consciously single out and upload CAR forms into its platform – its web crawlers happened upon forms posted to the internet by handful of blasé CAR members.
Like few CAR adversaries before it, PDFfiller has refused to submit quietly to CAR’s aggressions.
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Instead, PDFfiller is fighting back. It denied any copyright or trademark violations and returned with a counterclaim against CAR and a third-party complaint against CAR subsidiary Real Estate Business Services, Inc.® (REBS).
In its response, PDFfiller sets it crosshairs on CAR’s monopolistic tendencies, accusing the trade union and its affiliates of unlawful antitrust violations by strangling the open accessibility of real estate forms throughout California.
Editor’s note – At deposition, first tuesday attested to its own personal experience with this monopolistic behavior. CAR’s bundling of forms with membership in 2002 decimated first tuesday forms sales (yes, you read the word “sales” correctly – we used to sell before we started giving them away). Over the course of multiple years, this bundling eliminated the ability of third-party form publishers such as first tuesday from competitively selling forms in California.
PDFfiller’s antitrust allegations include:
- monopolization, both attempted and actual;
- unlawful tying of CAR real estate forms to the proprietary zipForm® software;
- conspiracy in restraint of trade; and
- violation of the Cartwright Act and the Sherman Antitrust Act.
PDFfiller also claimed CAR’s lawsuit was “pressed for an improper, malicious purpose,” namely to prevent PDFfiller from competing with zipForm® in the California real estate forms market.
In March 2017, CAR attempted – unsuccessfully – to have its opponent’s attorneys disqualified. Plaintiff CAR told the court that one of the attorneys with DLA Piper LLP, which represents PDFfiller, had worked for the California trade union in the past, creating a conflict of interest. District Judge Indira Talwani rejected the request, stating the attorney in question was not involved in the PDFfiller suit and, in any case, had retired January 1, 2017.
zipForm® is also owned in part by Texas Association of Realtors (TAR), which filed a lawsuit in December 2016 mimicking CAR’s allegation. PDFfiller described that suit as “sham litigation” brought against it at CAR’s urging, signaling the association may be acting out of malice.
California brokers and agents shouldn’t be tied down
In addition to monopolization, PDFfiller alleges the unlawful tying of previously separate products through zipForm® software.
A tying arrangement occurs when an agreement is entered into between a vendor and a purchaser in which the vendor sells a product or service to the purchaser conditioned on their purchase of a different (tied) product or service. In this context, real estate forms are one thing, and the software through which one may choose to use them is quite another.
Editor’s note – This fact may strike the reader as patently clear and intuitive. CAR forms themselves pre-dated the existence of zipForm® by many years. Many of our more experienced readers can well remember the days of purchasing printed form booklets in cumbersome legal pads from their local AORs. Also, CAR continues to publish and make print forms available to its members who prefer to work with tactile documents and sign with real ink outside the hassle of zipForm or other digital platforms.
Further, legal real estate forms which exist entirely independently of software are made freely available by Realty Publications, Inc. (RPI) dba first tuesday. RPI forms can be used with whatever software is preferred by the user.
We promote user choice – not cloistered paranoia. [See the RPI Form Download page]
Forms, both digital and physical, can certainly exist separately and “untied” to software – we ourselves are a testament to this fact.
Joel Singer, CAR’s Chief Executive Officer (CEO), is also President and (until recently) CEO of zipLogix®, which produces the zipForm software. Though the use of zipLogix is primarily used by California union members, zipLogix is a registered Michigan LLC. Their filing is available here.
As stated in PDFfiller’s third-party complaint against REBS:
The unilateral refusal of CAR (including its wholly owned subsidiary, (Defendant REBS) to make access to CAR EFRE available without zipForm® is unlawful exclusionary or predatory conduct and, in combination with Defendants’ agreements, constitutes monopolization or attempted monopolization of the market for PTM (paperless transaction management) Software for EFRE (electronically fillable real estate forms) software in California.
According to PDFfiller’s complaint, requiring licensees to use proprietary zipForm software in order to engage with CAR forms (two otherwise separate and autonomous products) constitutes an unlawful tying of products, for which the purchase and use of one is dependent on the purchase of the other.
CAR membership costs $600 or more annually, according to documents filed with the court. Access to the documents library and zipForm is included in that sizeable cost. Non-members who wish to use CAR’s documents are required to purchase the right to use zipForm at a cost of $999 a year.
PDFfiller offers an alternative to zipForm® that costs as little as $72 a year. Other competing providers offer similar document management software – sometimes at little to no cost.
But again, if you choose to use the sacrosanct CAR forms and want to do so in a variety of more innovative software platforms, you’re out of luck.
CAR forms are available in print form to members and non-members only. Prices vary, but are always high.
History repeats itself, again
Recall that the last time CAR got territorial over forms, dotloop, another online document management company, succumbed to the trade union’s strong-arm tactics to restrict access to its forms library.
Dotloop provided similar services as PDFfiller. Dotloop eventually tucked tail and bowed to CAR’s sizeable market power, precluding its members from loading CAR “standard” forms into its robust platform.
CAR never went so far as to sue dotloop, perhaps because of dotloop’s expedient acquiescence — a power dynamic eerily similar to a bully and victim.
Remember, forms are one thing, and forms software is another.
Agents who don’t want to go into debt can access truthfully free forms from the RPI (Realty Publications, Inc.) Forms Download page. Contrary to popular belief, real estate forms do not need to be bought through trade union membership to be legal or viable.
Editor’s note – As part of discovery, first tuesday produced a tome of emails from form users and students who report their experience with legions of real estate practitioners who suffer from this misconception and refuse to acknowledge offers written on non-CAR forms.
Perhaps most importantly, RPI forms do not contain clauses which increase the risk of litigation or work against the best long-term interests of the buyer, seller and broker, such as attorney fee provisions and forfeiture of deposit clauses.
Further, RPI forms do not have to be confined to an antiquated document management system tethered to the cloud for all purposes. They’re your forms — use them as you like, whenever and wherever that may be. RPI forms are fully compliant with California law and available for zero dollars and zero membership fees, no password required — and no threats.
Editor’s note – When the suit was filed in June 2016, CAR was represented by William Gantz and Tony Lu of Dentons, which describes itself as a “global law firm.” Dentons withdrew in October 2016 and was replaced by William Berkowitz, Brandon Bigelow and Caleb Schillinger of Seyfarth Shaw, which operates a Los Angeles office. Both firms are no doubt costly.
first tuesday will continue to follow this story and bring updates to our readers.
