CoStar Challenges LoopNet's Statistics

BETHESDA, MD-CoStar is questioning its main competitor’s way of calculating how many current users it has. The company filed a suit in the US District Court in the Southern District of New York. The case is called CoStar Group Inc. v. LoopNet Inc.

Specifically, the suit is challenging the number of “registered members” LoopNet reports it has to its customers and investors. As of Nov. 2007, LoopNet claimed to have 2.5 million registered members, CoStar notes. CoStar’s position is that LoopNet is implying that it has 2.5 million current users, when the active number of users is much lower. The 2.5 million statistic, in other words, is a cumulative total of everyone who has ever registered at the site during the past 12 or so years the firm has been in existence, according to CoStar’s complaint.

“We believe it is misleading to tell customers that when you put [a listing] in LoopNet it will be instantly exposed to 2.5 million viewers,” CoStar Group’s president and CEO Andrew Florance tells GlobeSt.com.

Florance points to statistics provided by comScore Inc., an Internet audience and ratings service, which finds that the number of people who signed into LoopNet declined by 10%, from 573,790 in Q4 ’06 to 514,303 in Q3 ’07.

A LoopNet spokesperson declined to comment to GlobeSt.com, citing ongoing litigation. However, in a prepared statement released to the media, the company denied the allegations and said it plans to vigorously defend itself. It also pointed to earlier litigation it initiated against CoStar, CoStar Group and CoStar Realty Information on Nov. 15, 2007 in the Superior Court of the State of California “for breach of contract, violation of the California Comprehensive Computer Data Access and Fraud Act and unfair competition arising from CoStar’s unlawful use of LoopNet property listings and listing information.” Florance says the two suits are completely unrelated and denies the allegations.

According to LoopNet’s complaint, CoStar misappropriated LoopNet’s property listings and listing information from its website and reproduced the information on its own website. It also, according to the suit, contacted LoopNet’s customers to convince them to use CoStar’s service.

In that suit, LoopNet also alleged that CoStar misrepresented that it independently compiled data and photographs that in fact were copied without authorization from the LoopNet website. Both suits are seeking injunctions against the other as well as damages.