Three years after acquiring consumer residential portal Homesnap for $250 million, CoStar is now suing the company’s founders, claiming they stole company secrets and poached employees as they attempted to launch what appears to be a rival product.
Filed last week in federal court, the suit names Guy Mazur, Thomas Goff, Guy Wolcott and Jeffrey Repanich as defendants, along with Happening Technology, Inc, a Maryland-based company formed in January 2023.
Wolcott was the founder of Homesnap, while Mazur was its CEO. Just a week before Happening Technology was registered as a corporation in Maryland, CoStar announced that it would be essentially killing off the Homesnap brand, merging assets with another residential portal it owned, Homes.com.
The lawsuit demands injunctive relief, including that Happening Technology cease marketing products that have utilized CoStar trade secrets, as well as requesting an unspecified award of damages.
CoStar lawyers are also requesting a forensic audit to remove its trade secrets from tech created by Happening Technology.
RISMedia attempted to contact Happening Technology representatives through a phone number provided on public disclosures forms. Messages left at that number were not returned at press time.
A CoStar Group spokesperson called it “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.”
“We have therefore filed suit to protect CoStar Group’s intellectual property and our employees’ innovations,” the spokesperson said.
According to the lawsuit, Repanich was a principal engineer at CoStar, who was asked to take “a leading role” implementing a new CoStar residential data transfer product shortly before resigning. Goff worked on the same product, and resigned the same day as Repanich in late 2022, the lawsuit says.
Mazur, who had continued to oversee Homesnap and CoStar’s other residential platform, Homes.com, departed the company along with Wolcott in early 2023.
Wolcott, Goff and Repanich are now listed as executives on an SEC form filed by Happening Technology, while Mazur is listed as a director. Another person listed as a director of the company, William E. Savage Jr., is not named in the suit.
This past summer, Wolcott set up a meeting and pitched Happening Technology’s new platform directly to his former employers at CoStar, “(i)n an apparent effort to convince CoStar to bless (the) misappropriation and misuse of CoStar confidential information and trade secrets.”
After that presentation, made to CoStar CTO Frank Simuro and VP of Software Development Adam Kleiner, Wolcott allegedly sent a follow-up email claiming he was already having “similar conversations” with Black Knight, a CoStar competitor.
Simuro and Kleiner “realized” that the platform Wolcott was pitching had been built with CoStar trade secrets. After CoStar lawyers reached out to the former employees alleging breach of contract, the defendant’s lawyers handed over documents “improperly retained” from their time at CoStar, including photos of whiteboards with strategic plans for the data transfer technology.
At press time, the defendants had not responded to the lawsuit in court.
The lawsuit comes as CoStar has begun to see its influence and marketshare grow in the residential space. In a recent interview with RISMedia, CoStar Founder and CEO Andy Florance credited the company’s commitment to a speedy, technically sound and reliable online platform as part of the reason its Homes.com platform has grown to compete with portal giants like Zillow and Redfin.
This is a developing story. Stay tuned to RISMedia for updates.