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Judge Nixes Injunctions for CoStar, LoopNet

NEW YORK CITY-The two leading property databases each claimed the other used deceptive marketing practices; a federal judge didn't agree.

By Paul Bubny | Updated on February 17, 2009

NEW YORK CITY-A federal judge has denied petitions for preliminary injunctions sought by competing online property databases CoStar Group and LoopNet. Each firm argued in court that the other engaged in deceptive marketing practices, but US District Judge George Daniels did not grant an injunction to either company, according to court papers filed on Friday. Calls to CoStar and to LoopNet’s attorneys on Tuesday were not returned by deadline.

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.

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