CoStar Prepared To Sue Thousands Of 'Freeloaders' Who Use System Without Paying
After winning a yearlong legal battle with its largest competitor over alleged data theft, CoStar Group is now turning its attention toward individual users stealing access to its platform.
CoStar CEO Andy Florance, on a quarterly earnings call Monday, said he is prepared to take legal action against the thousands of "freeloaders" who use CoStar without a valid license.
On the call, first reported by The Real Deal, Florance said CoStar believes 10,000-plus people are using the service illegally, and he suggested it could be as much as three times that. He said the company is now contacting the first 1,000 firms it believes accessed the system improperly. CoStar will first ask those users to pay back fees and sign up properly before taking it to the courts.
"If those efforts fail to correct the problem, we plan to seek monetary judgements," Florance said. "We're pretty good at that. We never want to litigate, but it is the reality of our business."
D.C.-based CoStar has filed at least 32 lawsuits since 1999, according to a review of court documents, with most of them claiming copyright infringement. Its most recent legal battle against Xceligent ended in December when the competitor shut down operations and filed for Chapter 7 liquidation. Florance in February said CoStar spent $13M last year on the Xceligent lawsuit and expected to incur another $4M in Xceligent-related legal fees in Q1.
Florance said the efforts to crack down on individual users accessing CoStar illegally will be significantly less expensive than going after its largest competitor. He said the vast majority of illegal users will not require litigation, and after the company shows it is willing to sue, even fewer people will refuse to pay back fees.
"Someone that is using CoStar illegally and producing reports and printing out photos is subjecting themselves to potentially hundreds of thousands of damages under the law," Florance said. "So we think it'll cost a little bit, but nothing like we spent last year in Xceligent."
