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CoStar Goes Further Into Attack Mode After Xceligent Shakeup

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In the hours after Xceligent parted ways with founder and longtime CEO Doug Curry, CoStar — the $9B data giant, dominant commercial real estate data figure and Xceligent's legal adversary — went on a marketing blitz.

Rather than tell customers about a new product or program, CoStar sent electronic messages late Tuesday night, and print materials Wednesday morning, highlighting its case that Xceligent is stealing its intellectual property, making claims around Curry's exit Xceligent representatives said are "patently false."

At 10:20 p.m. Oct. 24, nearly four hours after news broke about Curry's ouster, some CoStar subscribers received an email from the D.C.-based data giant with the subject line "Update from CoStar." In it, CoStar commends Xceligent's board for "doing the right thing" by letting Curry go, and repeats many of the claims it has made against its data rival.

"[Curry's] perverted philosophy says it was anti-competitive for CoStar to secure our computer servers to stop foreign companies from high volume theft of our content," the message reads. "It seems obvious that Xceligent's board did not find Doug's denials credible. Why would you?"

In an interview with Bisnow Tuesday evening, new Xceligent Chairman Frank Anton said, "There is absolutely, positively no connection" between Curry's termination and the ongoing legal battle.

That battle took a step forward earlier this week when Pennsylvania-based RE BackOffice, an Xceligent contractor being sued by CoStar for stealing its data, agreed to a penalty and admitted intellectual property theft at Xceligent's behest. 

"At Xceligent's direction, [RE BackOffice's] operations team used measures to circumvent CoStar's security measures and thereby hack into CoStar sites in order to populate the Xceligent databases with content copied from CoStar," the court filing states.  

CoStar sent mailings to New York City commercial brokers filled with allegedly damaging testimony and news stories about Xceligent.
CoStar sent mailings to New York City commercial brokers filled with allegedly damaging testimony and news stories about Xceligent.

In response to CoStar's aggressive tactics in the wake of Curry's departure, Xceligent released a statement, exclusive to Bisnow, calling the latest ruling another in CoStar's anti-competitive bag of tricks: suing a small company and intimidating them into a settlement.

"Xceligent executives did not instruct any vendor to conduct any illegal activity. Indeed, just as we suspected, RE BackOffice simply chose to settle rather than fighting an industry giant like CoStar," Xceligent's statement reads.

RE BackOffice CEO Harbinder Khera issued a statement in conjunction with Xceligent's rebuke, apparently disputing its own court statements.

“RE BackOffice is not responsible, nor have we aided anyone in any mass copyright infringement," Khera said in the statement. "We have reached an amicable resolution in order to avoid the unnecessary distraction, which will keep us from taking care of our clients.” 

Wednesday morning, some commercial brokerages in New York City received a mailing from CoStar, images of which have been provided to Bisnow, laying out negative stories and claims against CoStar, a letter from three senators to Attorney General Jeff Sessions regarding a sex trafficking case that has loose affiliations with Xceligent's overseas contractors and anonymous sworn testimony from former Xceligent employees.

Both companies had set up websites and paid social advertising campaigns in an effort to get members of the commercial real estate industry on their side. With Curry, who vowed to take Xceligent's fight against CoStar "all the way," now on the sidelines, and Xceligent's new chairman declining to call CoStar a monopoly, the future of the battle seemed in question.

In Xceligent's latest missive — which includes an updated statement from Anton denouncing CoStar — the company made it clear it has little intention of backing down from the multimillion-dollar legal battle just yet.

“I am absolutely committed to the fight against CoStar’s increasingly desperate attempts to stifle competition in our industry," Anton said in the new statement. "Their recent cynical legal attack on one of our vendors, and their attempts to smear Xceligent by erroneously connecting the departure of Doug Curry with their campaign of dirty tactics, represents a new low.”