Crains New York: Property data gian CoStar calls rival's users thieves

By Daniel Geiger on April 18, 2014.

CoStar Group, the largest database and information provider in the country for the commercial real estate industry, has launched an anti-piracy lawsuit that a rising competitor says could upend its business.

Nearly two weeks ago, CoStar won an order in U.S. District Court requiring CompStak, a rival firm that collects leasing deal information, to turn over the identity of four of its users. CoStar alleges that those four unidentified members of CompStak—and possibly other users as well—have taken CoStar's proprietary data and shared it through the competing service.

Michael Mandel, the co-founder and CEO of CompStak, is fighting the ruling on the grounds that the CoStar data that was potentially shared, including information such as rental rates and leasing square footage, is not subject to intellectual property or copyright laws. Mr. Mandel says his firm filed a motion for the court to reverse its order to hand over the users' identity because it amounts to a blow to his firm.

Compstak is an online forum in which users can trade information about leasing transactions. According to Mr. Mandel, its operation depends on its promise of preserving the anonymity for its users who otherwise might not freely share the sensitive leasing information.

"This is anti-competitive behavior that is being done to scare our members away from using CompStak," Mr. Mandell said.

Mark Klionsky, a spokesman for CoStar, said that users of CompStak had stolen his company's data and included it in the leasing data that CompStak compiles. Mr. Klionsky said his firm ferreted out the problem by inserting false information into its leasing database as a marker, in a process called "seeding." He said that the fake data, which he says could only have come from CoStar, then found its way into CompStak listings, proving that the service's users were pilfering proprietary CoStar information.

Mr. Mandel refutes that charge, pointing out that the bad data infected more than just his service and therefore could have found its way into CompStak data unwittingly via second or third parties. According to court documents submitted by CompStak, real estate brokerage Jones Lang LaSalle was among those who pulled the "seeded"—incorrect—statistics from CoStar and used them in a report.

Mr. Klionsky denied that one of its paying customers could have ended up with the fake data.

"Seeding is a generally accepted practice in the database world and, without getting into the the specific details about how it is done, it's accomplished in a way that would not expose our paying customers to harm," Mr. Klionsky said. He also noted that the action against CompStak users was only one of eight anti-piracy lawsuits CoStar has filed around the country in the past two weeks.

"This is part of a major anti-piracy campaign," Mr. Klionsky said. "We take anti-piracy very seriously and we have technology and processes in place to track it using a variety of methods and in these cases the evidence is compelling."

Mr. Klionsky said CompStak has until April 18 at noon to turn over the names of the four users.

Correction: Michael Mandel is the co-founder and CEO of CompStak. CoStar won a court order to have CompStak reveal four of its users' identities. Mr Mandel's surname was misspelled and the number of CompStak users were misstated in an earlier version of this article published April 18, 2014.