First American CoreLogic has filed suit against Foreclosure.com and is no longer providing the site with data, claiming that information it provided under a licensing agreement was showing up on at least 77 unauthorized Web sites.
Foreclosure.com's founder denies that it was the source of any data leaks, and says the lawsuit stems from First American CoreLogic's attempts to grow its competing business.
A predecessor of First American CoreLogic, First American Real Estate Solutions, and Foreclosure.com's data aggregator, Live Data Group, entered into a licensing agreement in July 2005.
In a Dec. 29 complaint, attorneys for First American CoreLogic said the agreement gave Live Data Group access to the company's database, which includes information on more than 140 million residential and commercial properties.
First American CoreLogic maintains that the agreement gave Live Data Group the right to use the database to create property and preforeclosure reports, and provide them to end-users of three password-protected Web sites: Foreclosure.com, ForeclosureFreeSearch.com and ForeclosureDatabase.com.
The agreement also gave Live Data Group the right to distribute its reports through approved co-branded partner sites, with written consent from First American CoreLogic, the company said.
In September, First American CoreLogic said it discovered the data it provided to Live Data Group was appearing on Web sites not authorized under the license agreement. The company alleged that the data appeared on the unauthorized sites embedded in "iFrames," which allows hypertext markup language (HTML) documents from one site to be inserted into another.
First American CoreLogic demanded access to Live Data Group's systems and records to perform a compliance audit. Live Data Group "stalled, delayed, postponed, and ultimately hindered and prevented" a proper audit, First American CoreLogic claims in its lawsuit.
Brad Geisen, the owner of Live Data Group and founder and chief executive officer of Foreclosure.com, called the lawsuit "frivolous," and characterized it as part of an attempt by First American CoreLogic to create a competing site or "bully" him into buying more data.
In an attempt to discover who was leaking the data to unauthorized sites, Geisen said First American CoreLogic apparently "seeded" some of its data with unique identifying characteristics, such as extraneous periods or commas in specific data fields.
But the same "seeded" files were fed to four different companies, Geisen said, making it impossible to determine who was supplying the files to unauthorized sites. First American CoreLogic, he said, "doesn't know where (the leak) came from."
Geisen said Live Data Group allowed a compliance team from First American CoreLogic to come in "for a whole week and check out what we did. Everything was 100 percent in compliance, but they wanted to see our source code. We said that's a trade secret, we're not going to give it to you."
The source code would have allowed First American CoreLogic to see how Live Data Group collects additional property information it uses to supplement the data it previously obtained through the licensing agreement, Geisen said, as well as proprietary information about the company's affiliates.
Geisen questions whether First American CoreLogic's intent in filing the lawsuit was to "muscle us into buying another $1.2 million in data we didn't need, or find out our trade secrets and go after us even harder" through a competing service, RealQuest.com.
Calls and e-mails to an attorney representing Santa Ana, Calif.-based First American CoreLogic and a spokeswoman for the company were not returned.
In its complaint, First American CoreLogic says it notified Live Data Group on Oct. 9 that the company had breached the licensing agreement, giving the company 30 days to come back into compliance.
Although the licensing agreement wasn't scheduled to expire until July 2009, First American CoreLogic said it stopped providing services to Live Data Group when the Florida-based company failed to take steps to come into compliance.
Geisen said Live Data Group has been able to collect the information once provided by First American CoreLogic on its own.
"It wasn't like anything they had was any great secret," Geisen said. "It's property tax roll information."
But Live Data Group is accused not only of violating the licensing agreement by selling data received from First American CoreLogic to third parties, but also of revealing trade secrets. First American CoreLogic maintains that its database is "a unique source of information and a competitive advantage" for the company.
The company says it processes data on about 4 million real estate and related transactions each month, and claims to have compiled records on 450 million historical transactions, including 3.5 billion document images and information on 100 million active and paid-off loans and mortgages.
First American CoreLogic is seeking compensation and punitive damages, and to recover all profits obtained by Live Data Group and Foreclosure.com -- an amount the company claims exceeds $1 million.
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