zillow-zestimateZillow may be facing a tougher legal challenge against its longtime rival Trulia after a patent review board ruled this week that most of the claims made by the Seattle real estate company related to its automatic valuation of a property are “unpatentable.” The issue came to a head last November when MicroStrategy challenged the “674” patent, a patent that was issued to Zillow in 2006 largely around its Zestimate service.

“Taking into account Patent Owner‟s preliminary response, the Board determined that the information presented in the petition demonstrated that there was a reasonable likelihood that the challenged claims are unpatentable,” the review board said. MicroStrategy argued that the technology behind the automatic home valuation in the Zillow patent already existed.

In Sept. 2012, Zillow filed a lawsuit against Trulia, alleging that Trulia infringed on its home valuation patent, the same patent used to protect its Zestimate service. Shortly after the suit was filed, Trulia fired a legal salvo at Zillow, arguing that the case would waste judicial resources and that the patent was “invalid on its face.” Trulia, which came out with its own home valuation tool after Zillow, also noted that “abstract ideas and principles are not patentable.”

With the ruling this week by the patent review board, Zillow’s case against Trulia may be severely weakened, reports Inman News, which was the first to spot the ruling. A federal judge in Seattle delayed Zillow’s case last year pending the outcome of a separate challenge by Trulia in front of the patent review board. Trulia Estimates, a competitive offering to the Zestimate, continues to operate during the stay. Unlike the Zestimate, Trulia removes its estimate as soon as a property is listed for sale.

A spokesman for Trulia declined to comment on the ruling, while a representative for Zillow said that “the patent review is an ongoing process and, beyond that, we don’t comment.”

The “674” patent states in part:

A method in a computing system for refining an automatic valuation of a distinguished home based upon input from a user knowledgeable about the distinguished home, comprising: obtaining user input adjusting at least one aspect of information about the distinguished home used in the automatic valuation of the distinguished home; automatically determining a refined valuation of the distinguished home that is based on the adjustment of the obtained user input; and presenting the refined valuation of the distinguished home.

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  • Blah

    I like Zillow’s tool, but this seems like the right result. Patenting a home valuation tool seemed silly from the beginning. Need to end software only patents and business method type patents. They are only useful to trolls at this point.

  • Vroo (Bruce Leban)

    That claim just describes stuff that appraisers have been doing for years, just without the word “automatic”. Now trying to patent the actual calculation steps — especially if they were calculations that a human appraiser doesn’t do and couldn’t do by hand — would be something different. I suspect Zillow wouldn’t want to reveal those details though.

  • jayplanes

    Zestimate is just a lighter version of appraisal software and it is way off in many instances. A condo that I sold for $ 1,235,000 had a zestimate of about $716k, a home that I solod for $1,380,000 had a zestimate of $ 1,260,000. At present I have a 3300 sq ft home for sale for $569k and zestimate is about $ 400k though homes of 2400 sq ft with much smaller lots in the sub division are selling at about $400k.

    Appraisal software has been around 30 years. Zillow started its zestimate service around 2005. Rehashing a appraisal software and present it as an on line tool does not deserve a patent.

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