In a lawsuit filed in February 2008 at US District Court in Manhattan, Bethesda, MD-based CoStar charged that LoopNet "has engaged in a systematic--and successful--campaign to communicate the false impression that it has a vast, and constantly growing, number of users." Attorney Steven Zalesin, representing CoStar at a hearing last week, told Daniels that LoopNet's figure of 3.2 million registered members is a cumulative number representing all who have signed up for the San Francisco-based company's database since it began in 1995, and that LoopNet's monthly web traffic is considerably smaller.

These 3.2 million members, Zalesin said, "are not users of their website. They're overstating their user base" by as much as 10 to one. However, Daniels questioned whether this statement was misleading enough to cause irreparable injury to CoStar and noted that the company had not conducted a survey quantifying how many would-be users were persuaded by the statement to opt for its competitor.

Zalesin, a trial attorney with the New York office of Patterson, Belknap, Webb & Tyler, argued that "registered member" was a term coined by LoopNet and is not synonymous with "active user." Many of the registered members may have signed up years ago and not visited the website since, he said. "I have no problem saying to you that someone who hasn't been there in six months is not a user," Zalesin told Daniels.