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CoStar sues “John Doe” CompStak Responds.

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Press Release. 4/17/2014

CompStak Files Emergency Motion to Protect Its Members Against Costar Group

 

Yesterday, in the United States District Court for the Southern District of New York, CompStak, the nation’s largest independent database of commercial lease comparables, filed a motion asking the court to postpone and reconsider a discovery order directing CompStak to release the names of several of its members to CoStar Group.  CompStak’s motion is an effort to protect its members against meritless claims by CoStar Group, as noted in recent court filings and press releases.

 

Two weeks ago, CoStar Group filed a “John Doe” lawsuit and asked the court to direct CompStak to disclose the names and addresses of four CompStak members.  CompStak believes that CoStar’s effort to learn the names of CompStak’s members and sue them is actually an attempt to discourage commercial real estate professionals from using databases that compete with CoStar.  CompStak also believes that CoStar’s lawsuit violates an FTC Consent Order (entered to resolve a lawsuit over CoStar’s anticompetitive acquisition of LoopNet).

 

CoStar alleges that these four CompStak members have committed copyright infringement and breach of contract by furnishing CompStak with information  originating from CoStar’s database.  In response, CompStak has provided assurances and sworn declarations from the members in question, stating that CoStar’s claims are “entirely false,” and that none of the members copied any of the information in question from CoStar.  CompStak’s CEO, Michael Mandel also submitted a signed declaration under oath, stating that in conversations with the CompStak members in question, each stated that he or she did not take any information from CoStar.  Mr. Mandel further pointed out that the alleged infringed information is publicly available in the CRE community, including in widely-disseminated press releases and research reports.  Lastly, Mr. Mandel noted that CompStak’s members could not possibly have taken photographs from CoStar and provided them to CompStak, because CompStak’s database contains no photographs whatsoever.

 

CompStak firmly believes that CoStar’s lawsuit is meritless and anticompetitive.  These concerns have been brought to the attention of the Federal Trade Commission, as both the company and its members have spoken with the FTC.   CompStak believes that CoStar’s actions violate the FTC Consent Order, which prohibits CoStar from:

 

… [D]iscriminat[ing] against, penaliz[ing] or otherwise retaliate[ing] against a Customer because the Customer … provides or considers providing CRE Listings or CRE Information obtained or derived by the Customer from a source other than a CoStar Database.

 

CoStar has gone to great lengths to publicize its judicial actions through press releases and newsletters.  In its papers filed with the Court, CompStak argued that these pronouncements indicate that CoStar’s true motivation is not to protect its copyrights, but rather to publicly discourage real estate professionals from using competing services.

 

CompStak’s CEO, Michael Mandel noted, “We know that our members only share information with CompStak that they fairly obtain from their work as CRE professionals, and not from the CoStar service, and we’re disappointed that CoStar would resort to intimidation to prevent our members from using CompStak.”

 

While Mr. Mandel is hopeful that the District Court will grant CompStak’s motion, he noted that CompStak’s efforts to protect its law-abiding members is paramount.  “Suing your own customers is not the way to ensure long term customer happiness,” noted Mr. Mandel.  “We believe that our members are savvy enough to read through CoStar’s baseless allegations, and to feel confident using CompStak’s service.  We are a service created by CRE professionals, for CRE professionals, and our members know that there is nothing more important to CompStak than the trust and faith of our members and customers.”

 

Finally, Mr. Mandel opened an invitation to CoStar Group to communicate directly.  “I have called CoStar’s CEO Andy Florence on several occasions, with no response.  I have also told his in-house counsel that CompStak is prepared to do everything we can to ensure that CoStar’s data never makes its way onto CompStak.  However, we will continue to do everything in our power to protect our members who are merely sharing publicly available information.”

 

 

photo credit: <a href=”http://www.flickr.com/photos/joegratz/117048243/”>Joe Gratz</a> via <a href=”http://photopin.com”>photopin</a> <a href=”http://creativecommons.org/licenses/by-nc/2.0/”>cc</a>

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  • BobSchecter

    The last gasp of breath from a soon to be extinct dinosaur. In 10 years, everything will be everywhere on the Internet, and the only value these mega-sites will bring is their evaluation, analysis and interpretation of the information. CoStar has the lead, but it seems they’re not all that confident that they have the upper hand. Rather than embrace and outpace their competition, they’re trying to kill them – that never goes well.

  • Scary and sad. I feel so bad for Compstak having to expend so much money on legal fees! It is a total shame, if everyone is innocent.

    • Aziz Akin

      The big boys (CBRE, Cushman, JLL….) should all withhold data from CoStar. There is nothing that says they have to publish everything on CoStar for free, only to have to buy it back through CoStar subscriptions. These folks should instead enter into a partnership with Xceligent and create a truly viable competitor to CoStar.

      • There’s a reason this hasn’t happened. It’s because the brokers want something more proprietary. For all the complaining about the lack of an alternative, they won’t support something new.

      • Then Xceligent becomes the next CoStar and the cycle begins again.
        And I agree, in 3 years “everything will be everywhere on the Internet, and the only value these
        mega-sites will bring is their evaluation, analysis and interpretation
        of the information.”

  • Rich

    Is there a CoStar alternative?

    • dukelong

      Brokers

    • Craig Severance

      How about an investor centric site that is free for brokers to use. It would still allow brokers to list properties privately (for free) or more broadly (if desired . . . also for free). The site would cater to the needs of investors (from whom small fees would be charged) while also satisfying the needs of brokers. Having bought several $ billions of commercial real estate, I never once used CoStar and can’t understand what benefit they provide (to investors). Here are some ideas I’ve scribbled down descriptive of an investor centric platform that, unlike Costar, would create value for investors: http://youtu.be/ZFC05rVFHeg

  • Lowell Peabody

    “Soon to be extinct” in ten years? That’s fast in the real estate world but a lifecycle in tech is more like 3 years and I wouldn’t be surprised to see many changes in that short a time. Regarding Comstak and Costar, doesn’t this all sound familiar? One of the last big legal defenses was Loopnet and look where that got them? Acquired… Costar has no good lease comp system, perhaps they are beating up Compstak to soften them up for integrating their technology into Costar?? It’s happened before..

    • Vicky Salizar

      Compstak is not being beaten up. They are going after them to have them release the identities of the “perpetrators”, which a judge compelled CompStak to do on Friday.

      CoStar actually has a whistleblower program where you get $50K if they file suit, or 100% of the net proceeds they are able to recover.

      Anyways, people have been saying this company will be gone in x # of years for a while. As much as I’d like to see them gone, unless a fundamental shift occurs in the way CRE data is stored, exchanged, and disseminated, this company isn’t going anywhere. It’s up to the “big boys” to do something, but they generate way to much money off relationship accounts than they do one-off transactions, therefore they don’t have a huge incentive to do something about it, and withholding data only hurts their clients.

      So, the moral of the story is learn to find a way to generate revenue either without having to rely on CoStar, or if you do, generate so much money that you don’t care.

      • Lowell Peabody

        Agreed Vicky. “Beat up” really was meant from a suspected Costar perspective. Always interesting to watch, especially as this is starting out pretty much along the lines of Loopnet. Frankly what’s more important are the points you made regarding figuring out how to generate revenue.

  • Janice Sangster-Phalen

    And Loopnet uses my photos, how is this fair? When the CoStar rep calls to beat up on Loopnet usage, it is a comedy.