Online real estate market provider CoStar Group has sued former Homesnap founder Guy Wolcott and three others for allegedly stealing trade secrets related to its online information platform feeding its various marketplace products, including Homes.com and Apartments.com, according to court documents obtained by HousingWire. The filing of the suit was first reported by Inman News.
The technology at the center of CoStar’s offering is “CoStar Sync,” which “allows data from locally stored databases to be rapidly and efficiently accessed through CoStar’s multiple product platforms,” the complaint reads.
“This provides CoStar with a major competitive advantage over its competitors by creating superior products and substantially reducing CoStar’s operating costs.”
CoStar acquired Homesnap in late 2020 for $250 million in cash, with $7.8 million each going to Wolcott and former Homesnap CEO John Mazur, according to the complaint.
All named defendants, including Wolcott and Mazur, were “either involved in the development of CoStar Sync or had access to substantial confidential and proprietary information regarding CoStar Sync and its development,” the complaint alleges.
All the former employees named in the suit went on to start a new company, Happening Technology, with CoStar alleging that they did so “with the apparent intention of repurposing the proprietary and confidential information they had access to and worked with at CoStar so that Happening Technology could offer competitive technology and services to CoStar’s competitors.”
The complaint details that after starting the new company and platform, Wolcott traveled to the Washington, D.C. headquarters of CoStar to pitch an agreement between the companies to Frank Simuro, CoStar’s chief technology officer and Adam Kleiner, its VP of software development.
Following his presentation, Wolcott allegedly said in an email that his new company was also engaged in dialogue with Black Knight, which competes with CoStar in the real estate and property data business.
“Based on Wolcott’s presentation, Simuro and Kleiner realized that Happening Technology’s product was developed using CoStar’s trade secrets and confidential information, including the CoStar Sync technology that the former employees worked on or had access to during their employment at CoStar,” the complaint reads.
It continues: “Indeed, in his presentation, Wolcott claimed many of CoStar’s trade secrets as if they were conceived of and owned by Happening Technology.”
CoStar alleges that all named defendants breached their agreements not to disclose confidential company information when separating from CoStar, and not to “solicit or recruit CoStar employees for other causes,” the complaint alleges.
CoStar says it has been “severely and irreparably harmed” by the alleged actions of the defendants, adding that prior engagement between counsel for both companies did not lead to a solution, ultimately requiring this legal action which was filed in the U.S. District Court for the District of Columbia.
CoStar seeks “preliminary and permanent injunctive relief enjoining Happening Technology from further misappropriation of its trade secrets and [to compel] the former employees from further misuse of CoStar’s confidential information and breaches of the agreements,” according to the complaint.
CoStar also seeks monetary damages stemming from the costs and legal fees resulting from the suit.
Representation for Happening Technology, Wolcott, Mazur and the other defendants have yet to file a response to the complaint in court as of Monday afternoon. When reached by Inman, Wolcott expressed confidence that the facts will determine “no misappropriation or copying has taken place,” he said in an email to the outlet.
In a statement provided to HousingWire, a spokesman for CoStar Group expanded on the company’s perspective in the suit.
“It is unfortunate that a small group of former employees sought to capitalize on their time at CoStar Group by taking the hard work and innovations of others here at CoStar Group, and attempted to pass it off as their own,” the spokesperson said. “We have therefore filed suit to protect CoStar Group’s intellectual property and our employees’ innovations. In the meantime, CoStar Group will continue to focus on innovating its ever-improving products that deliver the maximum value to our clients.”
Editor’s note: This story has been updated with a statement from CoStar Group.
