Zillow sues Trulia over home-value software

Zillow Inc., which operates the largest U.S. real estate information website, has filed a patent-infringement suit against competitor Trulia Inc. over a software program that helps make home valuations more accurate.

Zillow claims Trulia is infringing a patent for its Zestimate home-valuation service, which lets homeowners and real-estate agents update valuations by adding information specific to a property.

About one-third of the 100 million homes in its database have been updated this way, the suit says, and it has "played a major role in Zillow's success."

The rival companies have been increasing their profiles as the U.S. housing market improves, and each has mobile applications on smartphones and tablet computers. Trulia is seeking to raise as much as $96 million in an initial public offering, according to a Sept. 7 regulatory filing, and Zillow shares have doubled since they first sold in July 2011.

In press materials, Zillow says more than 36 million unique users visited its mobile applications and websites in August. Trulia's search engine is used by more than 20 million people a month, according to its regulatory filing.

Ken Shuman, a spokesman for the San Francisco-based company, said Trulia did not comment on litigation.

Zillow, which began its website in 2006, said in the complaint filed Wednesday in U.S. District Court in Seattle that Trulia did not offer an automatic home-valuation service to users until September 2011. Trulia Estimates provides valuations based on recent sales of similar homes and information such as the number of bedrooms and bathrooms.

"When Trulia first launched Trulia Estimates, it was obvious to commentators that Trulia was merely copying Zillow," Zillow says in the suit. "Commentators accused Trulia of being a 'copycat' of Zillow's Zestimate service and predicted that Trulia's copycat version might 'ding' Zillow's Web traffic."

Zillow is seeking cash compensation and a court order that would block further use of its patented invention.

Cheaper properties, dwindling supply, and record-low mortgage costs seem finally to be boosting demand for real estate and aiding a turnaround in a market that helped trigger the recession.

The S&P/Case-Shiller index of prices in 20 cities climbed 0.5 percent in June from a year earlier, the first such gain since September 2010. And sales of previously owned homes climbed 2.3 percent in July to a 4.47 million annual rate, according to figures from the National Association of Realtors.