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In late 2020, CoStar announced a big deal that would help accelerate the commercial real estate giant’s foray into the residential world: The $250 million acquisition of real estate search portal Homesnap.
Nearly three years later, CoStar is now suing the founder of the company it acquired, accusing Guy Wolcott of hiring away former Homesnap employees from CoStar to aid him in a new business venture, after those employees had been exposed to proprietary CoStar trade secrets.
The lawsuit, filed Wednesday in the U.S. District Court for the District of Columbia, alleges that Wolcott and the former Homesnap employees used knowledge of the inner workings of the CoStar Sync data-transfer system to fast-track a similar platform at a new company called Happening Technology.
Wolcott on Monday denied that his tech copied CoStar’s platform, but declined to go into further detail due to the ongoing lawsuit.
“I won’t comment on an ongoing legal matter, but I am confident that once the facts have been shared, it will be clear that no misappropriation or copying has taken place,” Wolcott wrote in an email to Inman.
The founder of Homesnap left CoStar in April of this year and is now said to be the chief executive officer and a director of Happening Technology, according to CoStar’s filing.
“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,” a CoStar Group spokesperson told Inman in an emailed statement. “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.”
The lawsuit alleges that in July, Wolcott met with CoStar executives to pitch them on Happening Technology’s own data-transfer platform. CoStar alleges some of the functionality in Wolcott’s platform was already a trade secret of CoStar Sync.
“Through Wolcott’s presentation and subsequent information learned about Happening Technology’s product, CoStar has concluded that Happening Technology copied CoStar Sync and is using CoStar’s confidential information and trade secrets to develop its own product,” CoStar claimed in its filing.
In a later email, the filing alleges, Wolcott said he was having similar conversations about the technology with Black Knight, a CoStar competitor.
CoStar has also named Wolcott’s new company and three former employees — including former Homesnap CEO John Mazur — as targets of the litigation.
Though CoStar does not provide specific examples of how its trade secrets might have been used in the development of Happening Technology’s data-transfer product, the company says its suspicions arose in part due to the speed with which the new platform was developed, and the involvement of multiple former Homesnap employees who spent time at CoStar following the acquisition.
“Through such use of CoStar’s trade secrets and confidential information, Happening Technology managed to ‘develop’ this revolutionary technology in only six months — a fraction of the time it took CoStar to develop the technology in the first instance,” the filing alleges.
In the filing, CoStar is asking the court to order the defendants to cease marketing their data-transfer platform, “including by removing from public access any materials” discussing the new technology. It’s also potentially seeking monetary damages.
Happening Technology had yet to file a response to CoStar’s claims late Friday.
Editor’s note: This post has been updated to include statements from Guy Wolcott and CoStar Group.