In a high-stakes copyright dispute with far-reaching implications for commercial real estate, a CoStar competitor failed to prove that the data giant holds a monopoly and prevents brokers from sharing their data with rival firms.
Commercial data startup CREXi filed 14 counterclaims in August after CoStar sued the Los Angeles-based company in 2020, alleging copyright infringement.
CREXi — which is backed by Mitsubishi Estate Company, Industry Ventures and Prudence Holdings — is a platform for commercial real estate listings that competes with CoStar’s LoopNet.
LoopNet applies a watermark to photos. CoStar found that these watermarked images were being displayed on CREXi and sued to recoup damages.
In the counterclaims, CREXi argued that many brokers use LoopNet as a de facto repository for their images, and accused CoStar of anti-competitive activity by preventing brokers from using those images elsewhere.
Judge Consuelo Marshall in California’s Central District court ruled Thursday that CREXi failed to prove any anticompetitive activity.
“Whether brokers have become dependent on LoopNet and thus choose not to maintain additional copies of listings apart from what is on LoopNet is not anticompetitive conduct by CoStar,” she wrote. “If CREXi wishes to do business with brokers, CREXi can advise brokers to use their own images, not the modified images listed on LoopNet or linked through LoopLink.”
CREXi also argued that CoStar holds a monopoly in many markets, based on the dollar volume of listings on the site relative to the total commercial real estate sales in those markets.
The judge said that CoStar’s business is providing listing services in a market — not selling property — and therefore CREXi’s analysis didn’t prove a monopoly. Judge Marshall granted CoStar’s motion to dismiss the claims with prejudice, which means they can’t be brought again.
CREXi does, however, have the right to appeal. A representative for CREXi did not immediately respond to a request for comment.
CoStar’s general counsel, Gene Boxer, wrote in an email that CREXi’s competition claims were “long on hyperbole, but utterly devoid of substance.”
“CREXi’s allegations were always simply a smokescreen, a vain attempt to divert attention from CREXi’s industrial-scale scheme of copyright infringement and misappropriation, which it wielded against CoStar using a web of offshore agents,” he wrote. “We have obtained injunctions against four of those agents, and in the process uncovered damning evidence of CREXi’s willful misconduct.”
The case is being closely watched by the industry, because CoStar has a reputation for aggressively litigating against competitors.
The company in 2016 filed a copyright infringement lawsuit against Xceligent, which ended up in bankruptcy. CoStar was awarded a $500 million judgment in that case, based on more than 38,000 violations. Last summer, CoStar sought an injunction against a former employee who created an Instagram meme page poking fun at the company and its executives.
CoStar alleges that CREXi has stolen more than 50,000 images. The copyright infringement trial is scheduled to begin in March 2024.
Correction: A previous version of this story stated that CoStar sued over photos that brokers uploaded to LoopNet, which then applied a watermark. Brokers do upload photos to LoopNet, but those photos were not the basis for CoStar’s lawsuit.
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Back in court: CoStar sues rival over “massive” copyright infringement