DCT
2:20-cv-00134
Karya Property Management LLC v. Resman LLC
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Karya Property Management, LLC (Texas)
- Defendant: ResMan, LLC (Utah)
- Plaintiff’s Counsel: Baker Botts L.L.P.; The Dacus Firm, P.C.
- Case Identification: 2:20-cv-00134, E.D. Tex., 04/29/2020
- Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant maintains a regular and established place of business in the district and transacts business there.
- Core Dispute: Plaintiff alleges that Defendant’s online property management software platform infringes a patent related to computer-implemented methods for completing real estate lease transactions.
- Technical Context: The technology concerns integrated, web-based platforms designed to manage the entire lifecycle of a real estate lease, from property search and negotiation to document execution, replacing older, fragmented offline processes.
- Key Procedural History: Plaintiff Karya acquired the patent-in-suit from GE Capital US Holdings, Inc. on April 15, 2020, just two weeks before filing this complaint. The complaint notes that during prosecution, the USPTO initially rejected claims based on prior art combinations but later issued a Notice of Allowance, confirming patentability.
Case Timeline
| Date | Event |
|---|---|
| 2000-11-20 | ’687 Patent Priority Date (Provisional Application) |
| ~2000 | Defendant ResMan allegedly began making/selling products |
| 2009-12-22 | U.S. Patent No. 7,636,687 Issued |
| 2020-04-15 | Plaintiff Karya acquired the ’687 Patent |
| 2020-04-29 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,636,687 - “Method And System For Completing A Lease For Real Property In An On-Line Computing Environment”
The Invention Explained
- Problem Addressed: The patent’s background section identifies inefficiencies in the commercial real estate leasing process at the time of the invention (Compl. ¶9). It notes that while some websites could match tenants with available properties, they did not support the subsequent negotiation and closing of the lease transaction, forcing parties into a less efficient “off-line” environment (’687 Patent, col. 1:38-50). The patent also highlights the limitations of systems constrained by locally available property data, which prevented users from accessing the broadest and most current information for decision-making (Compl. ¶10; ’687 Patent, col. 6:65-7:13).
- The Patented Solution: The invention is an online, integrated computing environment that manages the end-to-end leasing process. It comprises a central “property services server platform” connected via a distributed network to various “client computers” representing different stakeholders (e.g., tenants, owners, lenders, agents) and multiple property databases (’687 Patent, col. 4:40-45, Fig. 1; Compl. ¶13). This platform acts as a "Portal," aggregating tools for search, negotiation (via an electronic term sheet), lease document population, and transaction execution in a single online system, thereby streamlining the entire workflow (Compl. ¶14-15; ’687 Patent, col. 7:64-8:8). The complaint reproduces Figure 1 from the patent, which depicts this networked environment connecting a central server to various clients and databases (Compl. p. 5, Fig. 1).
- Technical Importance: The claimed invention addresses the technical problem of fragmented leasing workflows by providing a centralized, multi-party, online system that integrates data access, negotiation, and document generation, which was allegedly not a conventional approach at the time (Compl. ¶34; ’687 Patent, col. 1:49-58).
Key Claims at a Glance
- The complaint asserts independent claims 1, 10, and 17, and reserves the right to assert various dependent claims (Compl. ¶44).
- Independent Claim 1 (System): A computing system comprising:
- a property management services server hosting a leasing software module;
- at least one database coupled to the server, storing property-related data;
- a plurality of client computers (for an owner and a tenant) coupled to the server;
- wherein the owner and tenant can input information and negotiate an electronic term sheet using the module; and
- wherein the module accesses data, populates a lease agreement based on the negotiated term sheet, and presents the agreement for approval.
- Independent Claim 10 (Method): A computer-implemented method comprising the steps of:
- storing owner property characteristics in an electronic database;
- defining a tenant's property requirements using a software module on a property services server;
- identifying and publishing a matching property;
- storing a negotiated electronic term sheet;
- creating a lease agreement by populating it with property characteristics and terms from the electronic term sheet; and
- publishing the created lease agreement for review.
- Independent Claim 17 (System): A system for enabling a lease transaction comprising:
- a property management services server coupled to a network and hosting a leasing software module;
- a plurality of remote databases coupled to the server, storing property-related data;
- wherein, responsive to receiving tenant requirements, the module accesses owner property characteristics to identify a matching property;
- wherein the module stores a negotiated electronic term sheet; and
- wherein the module populates a lease agreement based on the property characteristics and the negotiated term sheet.
III. The Accused Instrumentality
Product Identification
The accused instrumentality is the "ResMan online lease management platform" and associated software and services (Compl. ¶41).
Functionality and Market Context
The complaint alleges that ResMan provides property managers of multifamily housing with property management software that includes online lease tools (Compl. ¶41). The platform is advertised as a tool to "automate even the most complex leases" and to "streamline and accelerate all leasing activities within an intuitive search-to-align leasing workflow" (Compl. ¶42, ¶18). A screenshot from the ResMan website is included in the complaint, advertising an "Online Lease Management Software" that manages leasing "within a single, user-friendly platform" (Compl. p. 18).
IV. Analysis of Infringement Allegations
’687 Patent Infringement Allegations (Exemplary Claim 10)
| Claim Element (from Independent Claim 10) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| storing property characteristics from an owner for a plurality of the owner's real estate properties in an electronic database; | ResMan allegedly stores property characteristics from an owner (e.g., Centra Partners) for multiple properties (e.g., Ashley Oaks Apartments) in an electronic database (Compl. ¶45). | ¶45 | col. 16:41-43 |
| defining a tenant's property requirements for leasing a real estate property using a software module operating on a property services server; | ResMan allegedly defines a tenant's property requirements (e.g., number of bedrooms) for leasing a property on a property services server (e.g., the Centra Partners server) (Compl. ¶45). | ¶45 | col. 16:44-46 |
| identifying with the software module a matching property from one of the owner's real estate properties... that match the tenant's property requirements; | ResMan allegedly identifies a matching property with property characteristics that match the tenant's requirements (Compl. ¶45). | ¶45 | col. 16:47-50 |
| storing in the electronic database an electronic term sheet negotiated by the owner and the tenant using the software module operating on the property services server; | ResMan allegedly stores an electronic term sheet using a software module operated on the property services server (Compl. ¶45). | ¶45 | col. 16:54-57 |
| creating a lease agreement for the matching property by populating the property characteristics from the owner... and the terms of the electronic term sheet...; and | ResMan allegedly creates a lease agreement for the matching property by populating the property characteristics from the owner (Compl. ¶45). | ¶45 | col. 16:58-63 |
| publishing the created lease agreement for review by the tenant and the owner. | ResMan allegedly publishes the lease agreement for review (Compl. ¶45). | ¶45 | col. 16:62-63 |
- Identified Points of Contention:
- Scope Questions: The patent specification frequently refers to the "commercial real estate field" (e.g., ’687 Patent, col. 1:18, 1:26), and its exemplary embodiments include office, retail, and industrial properties (’687 Patent, col. 3:25-26). The complaint alleges infringement by a platform for "multifamily housing buildings" (Compl. ¶41). This raises the question of whether "multifamily housing" falls within the scope of the patent's claims, which may depend on the construction of terms like "real property" in the context of the patent's disclosure.
- Technical Questions: The patent describes a specific workflow involving the creation and use of an "electronic term sheet" to "populate" a formal lease agreement (’687 Patent, col. 15:45-51). A key question for the court will be what evidence demonstrates that the ResMan platform performs this specific two-step process (negotiate term sheet, then populate lease from it), as opposed to a more general online lease editing or form-filling function. The complaint's allegations on this point are made on "information and belief" (Compl. ¶45).
V. Key Claim Terms for Construction
The Term: "a property management services server" (Claim 1)
Context and Importance: This term is foundational to the claimed system. Its construction will determine the required capabilities of the accused server. Practitioners may focus on whether the term requires a server that performs the full suite of integrated portal services described in the specification (search, negotiation, transaction management, decision support tools) or if it can be read more broadly to cover any server that hosts software for property management lease transactions.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The plain language of the claim recites a server "hosting a leasing software module," which might suggest the server's primary role is simply to run the software (Compl. ¶17).
- Evidence for a Narrower Interpretation: The specification describes the "property services server platform" as providing a comprehensive suite of "real estate industry services, including content, decision support tools, transaction exchanges, and access to key members of the real estate community" and operating as a "Portal" to aggregate these functions (’687 Patent, col. 4:59-62, col. 7:64-66; Compl. ¶13-15). This could support a narrower construction requiring more than just hosting software.
The Term: "negotiate an electronic term sheet" (Claim 1)
Context and Importance: This term is a critical step in the claimed process. The infringement analysis will turn on whether the accused platform facilitates a distinct "negotiation" of a "term sheet" that is then used to automatically "populate" a final lease agreement, as described in the patent.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The term could be interpreted to cover any online exchange of lease terms or drafts between parties before a final agreement is reached.
- Evidence for a Narrower Interpretation: The specification describes a specific "ball-in-court" methodology and the exchange of "bid-and-ask iterations" using a "highly-detailed template" that becomes "the central collaboration feature of negotiations" and which, upon approval, is used to "populate its standard form of lease" (’687 Patent, col. 3:57-4:5, col. 4:59-63; Compl. ¶33). This detailed description may support a narrower definition requiring this specific structured process.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement of infringement under 35 U.S.C. § 271(b), asserting that ResMan encourages infringement by its customers (property managers and tenants) through actions such as "training its customers on the use of ResMan products and services and/or promotion and/or sales" of the platform (Compl. ¶53, ¶55). The complaint also alleges contributory infringement under § 271(c), stating the ResMan platform is a "material part of the invention... especially made and/or especially adapted for use in infringement" and is not a staple article of commerce (Compl. ¶63).
- Willful Infringement: The complaint alleges ResMan has knowledge of the ’687 Patent "at least as of the time of filing this lawsuit," which supports a claim for post-suit willfulness (Compl. ¶47, ¶56). It also alleges that ResMan continued its actions "despite knowing that its actions constituted inducement infringement," which suggests a claim for pre-suit willfulness, although no specific factual basis for pre-suit knowledge (such as a notice letter) is alleged (Compl. ¶59).
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of definitional scope: can the claims, which arise from a specification focused on "commercial real estate" transactions (e.g., office, retail), be construed to cover the accused software platform, which is marketed for "multifamily housing"? The outcome may depend on how a court interprets the claim term "real property" in light of the patent's disclosure.
- A key evidentiary question will be one of technical and functional mapping: does the accused ResMan platform operate according to the specific, multi-stage workflow recited in the claims—particularly the distinct steps of negotiating an "electronic term sheet" and then using that negotiated data to "populate" a separate lease agreement—or is there a fundamental mismatch in its technical operation compared to the patented method?
- A third question relates to the Plaintiff's status and timing: given that the Plaintiff is a property management company that acquired the patent only two weeks before filing suit, the litigation may raise questions about the Plaintiff's standing as a market participant versus a non-practicing entity, which could influence litigation strategy and potential remedies.