A long legal battle between commercial real estate information giants LoopNet, based in San Francisco, and CoStar Group, based in Bethesda, Md., has heated up again. Currently, litigation is underway in three states — California, New York and Maryland — as the two companies clash over copyright, Web access and advertising issues, among others.
LoopNet lists $500 billion worth of commercial real estate properties for sale and for lease on its Web site, which has more than three million registered members, according to the company. CoStar provides marketing and information research services, and also lists available properties on its newer real estate site, Showcase.
In a statement, LoopNet says that court documents recently unsealed by the Superior Court of the State of California show that CoStar “was forced to admit to engaging in systematic and orchestrated copying of customer and property listing data from the LoopNet website.”
The unsealed documents show that CoStar management directed as many as several hundred of its employees and researchers to run tens of thousands of searches on the LoopNet site in order to identify advertisers and determine how many listings they have, LoopNet contends. The information is intended for potential sales and marketing uses, such as advertising, although mining the site for competitive purposes is prohibited by LoopNet's Terms of Use, the company says.
Among the California court documents posted on LoopNet’s Web site, one entry dated May 12, 2009, alleges that CoStar initiated a research project in February and accessed LoopNet’s Web site, using non-password-protected areas of the site to gather information about advertisers. A spokesman for LoopNet declined an interview request, saying that executives were unable to comment because of the active litigation. The company has posted information about the legal cases, however, at www.loopnet.com/litigation.
“Despite LoopNet’s characterization of what CoStar is doing or what’s happening, we actually have an agreement with LoopNet that governs how each party may make use of the other’s Web site. That agreement specifically allows CoStar to access LoopNet’s publicly available Web site,” says Jonathan Coleman, general counsel for CoStar Group. “CoStar’s position with respect to this California litigation is that LoopNet is not happy with the agreement that it signed, and is trying to rewrite that agreement by bringing this lawsuit,” the attorney adds. “CoStar is not doing anything wrong.”
The agreement was reached in 2005, following an earlier court case in California, Coleman says. “I think that even apart from the settlement agreement that we have with LoopNet that gives us the right to access their publicly available Web site, we think it’s silly that LoopNet makes this listing information available on its public Web site for all of the world to see, and that they’re trying to essentially argue that CoStar can’t look at it.”
Litigation between the two firms has been going on for at least 10 years. CoStar sued LoopNet in 1999 in federal court in Maryland for copyright infringement and other claims, in a case that involved the use of photographs. CoStar lost the direct copyright suit, although certain other indirect infringement claims were settled out of court.
Of the three current court cases, CoStar filed two, a false advertising suit in New York and a copyright infringement case in Maryland. LoopNet initiated a California case, and CoStar has filed several counterclaims, Coleman says.
The next big step for the two warring parties is an upcoming hearing in late June in California superior court. CoStar is seeking a preliminary injunction to prevent LoopNet from electronically barring access to its Web site. LoopNet blocked CoStar’s access to its publicly available site areas, Coleman says, and CoStar believes that violates the companies’ 2005 settlement agreement.
Asked whether he foresees an end to the litigation, which has cost the two companies millions of dollars, Coleman says he hopes the cases can be resolved soon. “In these economic times these companies should be spending their time serving the shareholders and the clients as opposed to litigating.”