CoStar Loses in Software Dispute

An Irvine commercial real estate software developer has won a court dispute with CoStar Group Inc. over his selling software that can manipulate proprietary CoStar data.

San Diego Superior Court Judge S. Charles Wickersham ruled mostly in favor of software developer Andrew Blount in Blount’s dispute with national commercial property data supplier CoStar Group.

Wickersham’s ruling acknowledges that a key element of a permanent injunction limiting Blount’s activities is too broad.

Wickersham authorized that injunction five years ago while overseeing a dispute over Blount’s activities as he departed from Comps Infosystems in 1996. Comps later merged into CoStar, which now is a publicly traded company offering a database of commercial real estate in- formation in 50 metropolitan areas.

Blount, meanwhile, established RealHound.com, an Irvine software company specializing in programs that help commercial real estate professionals track and analyze market and property data and customize related reports.

RealHound’s clients include several large commercial real estate services companies and property owners active in Southern California--many of which also buy information from CoStar.

Bethesda, Md.-based CoStar earlier this year asked the court to find Blount in contempt for allegedly violating the injunction, which among other restrictions prohibited him from developing or selling computer programs able to manipulate, read or even interface with CoStar’s proprietary data.

Blount’s attorneys at Perkins Coie argued that certain restrictions in the injunction constitute unlawful restraint of trade and said their client would have to “refrain from writing database management software altogether” in order to comply with the order.

CoStar’s attorneys from Luce Forward Hamilton & Scripps argued in court filings that Blount “attempts to piggyback on [CoStar’s] confidential and proprietary information by selling a software program which loads and manipulates [CoStar’s] information in direct violation of the permanent injunction.”

Wickersham agreed with Blount’s attorneys that the section of the injunction pertaining to Blount’s software-development restrictions was too broad and ordered that section stricken from the injunction.

CoStar said in a statement that the company was “deeply disappointed” by the ruling.

CoStar’s stock fell 15 cents to close at $21.67 on Nasdaq.