BizJournals: CoStar Group Cracking Down On What It Says Is Illegal Use Of Data

By Daniel J. Sernovitz] on April 18, 2014.

District-based CoStar Group Inc., the nation's largest publicly traded provider of commercial real estate data, has filed a half-dozen lawsuits in the past month targeting what it calls illegal use of its proprietary information.

In the latest action Friday, crowd-sourced real estate data firm CompStak Inc. of New York complied with a judge's ruling to turn over the identities of several "John Doe" defendants CoStar claims posted its data on five D.C. office buildings to CompStak in violation of its licensing restrictions. CoStar says it caught the alleged perpetrators by posting small pieces of false information on its database and tracking where it appeared.

CompStak, which is not named as a defendant in any of the recent CoStar cases and refutes some of the claims in CoStar's complaint, had tried unsuccessfully to block the order. It said CoStar's allegations could cause harm to its own business.

The lawsuit involving information on the CompStak site is just one of six CoStar (NASDAQ: CSGP) filed in a broad effort to protect its intellectual property. Others targeted other companies and individuals, including a Los Angeles resident who the local company claims used CoStar information in a bid to start up a competing commercial real estate information service.

CoStar spokesman Mark Klionsky said the issue is a sensitive one for CoStar, which seeks to protect the information that its researchers gather and make available only to paid subscribers.

"This is part of a broader antipiracy issue and, obviously, we take the protection of our proprietary data very seriously," Klionsky told me in an interview. "We're committed to pursuing these instances of piracy when we discover them because, obviously, it protects the value that our paying customers pay for the value. It puts them at an unfair competitive advantage when the people they compete with are competing with the same tools but not paying for them."

CoStar, in its April 1 "John Doe" complaint, said it discovered the issue when "seeded" information, or information that is deliberately false, from CoStar's database turned up on CompStak. A CoStar investigator hired to protect CoStar's legal rights found the information, which included altered data on building square footage. "The presence of this seeded data in the CompStak service constitutes the proverbial 'smoking gun' in the hands of the Doe Defendants," according to CoStar's complaint.