We’ve commented in the past on how San Francisco-based Trulia appears to follow in the wake of its larger Seattle-based rival, Zillow.

For the most part, Zillow has turned the other cheek, outflanking its competitor in areas such as mobile, mortgages and also becoming the first to complete an initial public offering.

But now, as Trulia prepares for its own public offering, Zillow is going on the offensive.

Zillow this week filed a suit against Trulia, alleging that its rival infringed on Zillow’s home valuation patent, the same patent used to protect its Zestimate service. The Zestimate has been a critical, and controversial, part of Zillow’s business almost from day one. It filed for a patent on the automatic home valuation technology in 2006, receiving patent 7,970,674 in June 2011.

Trulia announced its own home valuation service last September, dubbing it Trulia Estimates.

“Trulia’s blatant and ongoing copying of Zillow’s innovative approach to home valuation infringes Zillow’s patent and Zillow is entitled to damages and an injunction against further infringement,” the suit says. (Full copy below).

The patent suit comes at a critical time in the battle between the two companies. Just last week, Zillow raised $147 million in a public offering, following a successful IPO last year.

Trulia, meanwhile, filed for its own public offering earlier this year and is waiting to make the jump on to Wall Street.

Interestingly, Redfin rolled out its Home Price Tool — designed to help home owners get a better idea of what their property is worth — earlier this year. We’ve reached out to Redfin to see if they’ve been contacted by Zillow, and we’ll update this post as we hear more.

Here’s the full copy of Zillow’s 8-page complaint, which was filed in U.S. District Court in Seattle Wednesday. A Zillow spokeswoman declined to comment on the suit, saying that they do not “specifically comment on ongoing litigation.”

GeekWire’s initial report on Trulia’s launch of Trulia Estimates titled Trulia takes a swipe at the heart of Zillow, launches its own home valuation tool” is cited in the Zillow lawsuit, with the company using it as an example of reports at the time indicating that Trulia’s service was similar. Other reports from Property Portal Watch and Online Marketing Group also are cited.

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Comments

  • http://twitter.com/nparekh00 Nikesh Parekh

    I can’t comment on the validity of the patent suit, but a smart move by Zillow to sue Trulia RIGHT before they hit the road for their IPO roadshow. Trulia is now going to be forced to talk to investors about Zillow and the lawsuit against Zillow significantly more than they would like to, wasting 10-15 minutes of 30-45 minute presentation with an investor. Smart.

    • http://www.NeighborCity.com Jonathan Cardella

      Hi Nikesh,

      Smart, maybe. Nefarious, definitely… I agree with you that derailing the IPO was Zillow’s motive. Here’s my diatribe on the topic that I left on Inman;

      This is a desperate and thinly veiled strategy by Zillow to derail Trulia’s IPO, as evidenced by the timing of the complaint. Zillow has known about Trulia’s AVMs for over a year, yet waited until the IPO filing to file its suit.

      While this is merely conjecture on my part, it is highly unlikely that this is a mere coincidence. The intention behind the timing of this suit must be to diminish the value of Trulia in the minds of investors, thereby sabotaging the IPO at a time when Trulia is most vulnerable. If I am correct in my assumptions, this is a disgusting tactic that should be met with a fierce counter-complaint by Trulia, especially if the IPO or valuation collapses before it comes to fruition.Further, if Trulia’s AVM feature was truly damaging to Zillow, they would have filed claim by October, perhaps November last year and then amended their complaint as needed, once they got their ducks in a row. This smacks of litigation filed in bad faith, in my untrained opinion (I am not a lawyer).Zillow’s AVM patent is a perfect example of the nonsense coming out of the USPTO. In order to be eligible for patent protection, a patent must be New or Novel, Useful, and Non-Obvious. Zillow’s patent only fulfills one of those requirements (usefulness). Brokers and appraisers have been doing property valuations/”CMAs” for many decades, as have appraisers, albeit they were done manually. Simply automating this process does not make it new or novel. And I would love to hear Zillow argue that an AVM was non-obvious in 2006. In fact, institutional investors have been using AVM technology since the late 1990’s.The USPTO routinely errs in granting patents that do no comport with US IP laws. A patent isn’t “hardened” until it is challenged via litigation. This is the first litigation involving the Zillow AVM patent and Trulia attorneys will attack this patent for not meeting these requirements. Only after this case will we know if Zillow has a patent that will stick.In conclusion, this case will be interesting because it will likely see the Zillow patent over-turned and a cross complaint from Trulia for any damages that result from the malicious timing and motivations behind this suit that seemingly go far beyond protecting IP, which is a recurrent theme in this industry, as I have learned first hand. And hopefully this skirmish will underscore the need for meaningful IP Reform in the US.

  • Thomas R.

    If you can’t beat them…sue them? Wonder what Andrew Carnegie would say about this type of “competition.”

    • Sam

      Except that Zillow is beating the crap out of Trulia – not the other way around.

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