It would be an understatement to say there’s no love lost in the escalating real estate portal feud being waged by Homes.com and Realtor.com., as the two companies have major differences of opinion regarding the veracity of allegations in the continuing lawsuit saga.
The most recent flare-up started in a relatively civil manner in June, when the CEOs, CoStar’s Andy Florance and Realtor.com’s Damian Eales, disputed each other’s home-search site-traffic numbers, with a few corporate insults exchanged for good measure.
Then on July 2, Realtor.com parent Move, Inc. filed a lawsuit in the U.S. District Court in California, claiming that a former employee now working for CoStar stole proprietary information helping Homes.com expand its burgeoning business.
Florance and CoStar General Counsel Gene Boxer, in interviews with RISMedia, ridiculed the maneuver, calling it an attempt to deflect public attention from Realtor.com’s losing ground to Homes.com. Realtor.com would not return fire, saying the filing spoke for itself.
The opposing parties could not be much further apart regarding the seriousness of the lawsuit, legitimacy of claims made, potential for trial, reason for the action taken or many other issues, leaving it open for public and industry speculation as to what is likely to occur going forward. With neither side showing any signs of backing down—at least right now—further escalation or drawn-out court proceedings seem possible.
Meanwhile, CoStar employee James Kaminsky, formerly with Move, now finds himself a defendant who, Move says in its initial filing, “systematically invaded Move’s secure computer systems, secretly exfiltrated Move’s trade secrets, and spied on Move’s real-time confidential electronic documents to give CoStar a massive unfair competitive advantage and to help CoStar increase traffic to its competing real estate listing website.”
But Boxer notes that the 31-page filing does not allege that CoStar as a company was directly involved with the data theft—though Move’s lawsuit claims that CoStar benefitted from Kaminsky’s intrusion and therefore “vicariously accessed ” sensitive data.
“If you read the complaint carefully, even though they name him and they name CoStar, there’s not a single allegation of anything that CoStar did wrong,” Boxer says.
In addition to its formal complaints, Move took a page from CoStar’s sentiments by including in its filing various quasi-mocking opinions of its own:
- “Having built up market and investor expectations to a fever pitch with its public pronouncements of supposed success, CoStar is desperate to boost traffic to Homes.com.”
- “According to every independent third party source Move can identify, Realtor.com has for years been the second most-visited residential real estate listings website in the U.S., behind Zillow and ahead of Redfin. By every independent third-party measure, Homes.com is last among the top four.”
- “Desperate to increase its presence as a leading real estate listings site, CoStar has done everything it can to try and boost its website traffic.”
While those may be merely zingers, other accusations read very seriously.
At the heart of the lawsuit is Move’s contention that Kaminsky, who for nearly a decade headed up Realtor.com’s News & Insight group, with, according to the complaint, “knowledge of nearly every facet of the business, including strategy, organizational structure, and operational details.” Kaminsky, Move asserted, referred to the group as “an essential branding and monetization engine for Realtor.com.” Also, according to the filing, Kaminsky “brazenly and repeatedly misappropriated Move’s confidential and trade secret information to give Homes.com a massive jump start in setting up (a similar group).”
“As he departed Move, Mr. Kaminsky stole confidential business information, sending it to his personal email account on the last day he had access to Move’s computer system,” the complaint continued. “He established surreptitious, undetected ongoing access to allow himself (and, thus, CoStar) to spy on Move’s highly confidential documents stored on protected computer systems. Then, attempting to cover his tracks, Mr. Kaminsky deleted nearly a thousand files from his Move computer and wiped clean his entire browsing history before returning the device to Move.”
The lawsuit appears to indicate that Move is ready to prove, via email and computer evidence, that Kaminsky did what the company claims. Florance and Boxer would not or could not address whether or not Kaminsky did in fact do what Move said. Instead, they focused on what they insist any such information might mean to CoStar, insisting that he is in a role at the company that has nothing to do with anything of any consequence when it comes to overall strategy or financial impact. On the contrary, they say he is in a relatively powerless position, mostly writing about condos in New York. Thus, they feel the lawsuit has no merit.
“The concept that somehow he’s involved with the content strategy, development of strategy or implementation of strategy for Homes.com is an entirely false narrative,” said Boxer. “The content and our strategy was developed years ago. It’s been executed under someone who’s two levels above where James is in the organization.
“We haven’t done any forensics, but we know what’s in our system, and whatever data they’re saying he may or may not have taken we don’t have. So what is the strategy that possibly could be relevant to overall monetization? The whole thing is absurd. They’re investing in advertising and they have a monetization strategy, and we invest in advertising and we have a monetization strategy, but there’s no linkage to the guy whatsoever.”
Florance adds that “clearly editing condo descriptions is not in any way the design of Homes.com, or sensitive intellectual property.”
So where does Kaminsky stand at CoStar now? RISMedia emailed a request to speak with him but a spokesperson replied, “Ideally, we would prefer not.”
Boxer pointed out that while Kaminsky was specifically targeted in the filing, CoStar was not, and explained that the company has new employees sign documents prohibiting them from bringing information from previous employers to CoStar.
“Every employee that comes on board CoStar has (to) sign a restrictive covenant agreement, which includes confidentiality,” he said. “They’re told explicitly that whatever you have (left) behind is yours. We don’t want any of that stuff. But there’s nothing that he could have possibly taken that is of any consequence to us in his current role. And he was not hired to do anything that was even relevant to what he did before.”
Boxer said CoStar would do its due diligence and seek a motion to dismiss the case. But he admitted that he could not predict what would happen next.
“To be honest, we have no idea,” he said. “So I don’t want to get into the nuances of what our next steps are. There are multiple things we can do. We can fight venue, we can seek to dismiss, but that’s not the story. The story is that this is not based on economic damages. This is a PR stunt.”
Will Kaminsky have to hire his own legal counsel?
“Generally in situations when an employee is targeted by a lawsuit (along with) the name of the company, until we determine there’s a conflict, we believe that our outside counsel can represent us and the employee,” Boxer said. “If it turns out down the line that he needs his own counsel, he may decide to get his own counsel.”
