XCELIGENT, A DAILY MAIL GROUP COMPANY, IS

CONDUCTING AN INDUSTRIAL-SCALE OVERSEAS IP THEFT OPERATION

Xceligent, a Daily Mail Group company, has been caught stealing and reselling CoStar’s content on an industrial scale. Hundreds of Xceligent employees and agents created over 3,000 CoStar Group accounts and requested information from CoStar websites over 1.7 million times. They were notified over 600 times that what they were doing was wrong, yet continued to bombard the site using masked identities. The Daily Mail Group, which owns Xceligent, is a multi-billion dollar company that has all the resources necessary to enable Xceligent to invest in the U.S. to build content honestly. Instead, Xceligent has paid an army of workers in the Philippines and India low wages to hack into CoStar and steal content. 25 million people go online and use CoStar products every month to facilitate more than a trillion dollars annually of real estate leases, sales and mortgage originations. CoStar has created tens of thousands of U.S. jobs and has paid billions of dollars of U.S. salaries and taxes to create the essential content needed by the U.S. commercial real estate market. In an effort to encourage robust competition, the Federal Trade Commission brokered the sale of Xceligent, a company founded in 1999, to the Daily Mail Group. But by setting up a massive piracy operation, Xceligent threatens to stifle the ability of U.S. companies to compete. U.S. companies cannot survive if foreign competitors steal their work using low paid, offshore labor, and then dump it back into the U.S. at a fraction of its true cost.

XCELIGENT, A DAILY MAIL GROUP COMPANY, HAS BEEN CAUGHT STEALING AND RESELLING COSTAR’S CONTENT ON AN INDUSTRIAL SCALE

Hundreds of Xceligent employees and agents created over 3,000 CoStar Group accounts and requested information from CoStar websites over 1.7 million times.

Xceligent rotates its IP addresses and uses anonymizers and proxy services, like TOR, CyberGhost and HideMe, to covertly access CoStar’s websites.

On Xceligent’s publicly available website, CoStar found nearly 10,000 instances of its copyrighted photos and data.

This is just the tip of the iceberg. Based on this pattern of theft, a comprehensive review of Xceligent’s databases is expected to reveal tens of thousands of additional instances of CoStar content.

Xceligent associates have admitted that Xceligent’s business model is “unethical” and involves “steal[ing]”.

Xceligent uses foreign agents to implement its scheme. After reviewing the evidence, judges in India and the Philippines found probable cause and ordered the search and/or seizure of Xceligent’s agents’ computers.

THEFT BY NUMBERS

100+ times tripped LoopNet’s

abuse prevention system

10,000 instances of CoStar data and photos on Xceligent’s website

1.7+ million

requests for information to LoopNet

3,000+ accounts used to gain unauthorized

access to CoStar products

XCELIGENT CONTINUED STEALING DESPITE REPEATED NOTICE FROM COSTAR

45,000+ new requests for information after

receiving notice of their breach

600+ times notified that they were

in breach of LoopNet’s terms and what they were doing was ILLEGAL

XCELIGENT EMPLOYEES ADMIT TO STEALING FROM COSTAR AND BEING TOLD TO COVER THEIR TRACKS…

Xceligent managers specifically instructed me and my colleagues to crop out the watermark on any image that we copied from the internet, including the CoStar watermarks on photos we copied from LoopNet. The removal of watermarks was part of the training I received at Xceligent.”

- Former Xceligent Employee

“ [Xceligent] constantly get[s] blocked out of LoopNet…[the Xceligent researchers then] get unblocked to steal [CoStar’s] information.”

- Former Xceligent Employee

“

Xceligent’s method of building its business is based on “stealing” CoStar information, a practice that is “unethical.” - Former Xceligent Employee

“

…WHICH IS NOT ENTIRELY SURPRISING: XCELIGENT’S CULTURE OF THEFT STARTS AT THE TOP

“[W]hat [Xceligent Top Level Management] do . . . is within very questionable and ethical boundaries with both their investors and the IRS, not to mention their customers. [There is] [a]bsolutely no professionalism within the company. . . . [They are] [n]ot honest about data integrity, accuracy of the ‘numbers’, geographies, etc., when presenting to potential customers at all levels.” - Former Xceligent Employee

After working for a multibillion dollar company before joining Xceligent, I cannot even begin to understand how this company is still being supported by DMGI and that they have not seen through the cloak and veil that they are investing in.”

- Former Xceligent Employee

“ 90% of [Xceligent’s] updates are made based off of information from our largest competitor’s [i.e., CoStar’s] websites - per our customers’ request.”

- Xceligent Employee

“

XCELIGENT MANAGERS, NOT BROKERS, INSTRUCTED RESEARCHERS TO COPY COSTAR CONTENT

When I was unable to obtain information about those properties directly from brokers, Xceligent managers . . . instructed me, and other researchers, to access LoopNet listings and copy all of property listing information (e.g. rate, square footage) to populate Xceligent’s databases.

- Former Xceligent Employee

“

XCELIGENT MANAGERS DEVISED A PROCESS FOR CIRCUMVENTING LOOPNET’S SECURITY MEASURES

I was told by management, including [Chief Research Officer] Nate Lipowicz, that access to LoopNet was ‘business critical’ for Xceligent and I was instructed to change the Xceligent IP address in order to re-gain access to LoopNet.”

- Former Xceligent Employee Because Xceligent researchers spent so much time every day on LoopNet, they would be blocked by the site for excessive use. Xceligent management made sure that we had workarounds. For example, the IT department installed a TOR browser on many researchers’ computers to hide their identity from LoopNet.”

- Former Xceligent Employee

“

“

XCELIGENT USED COSTAR AND LOOPNET CONTENT TO OPEN NEW MARKETS

Xceligent did not get property information for these markets in the right way. Instead, when launching these markets, Xceligent Market Analysts including myself initially populated the Xceligent databases using information that we copied mainly from LoopNet. We did so because that was what Xceligent managers told us to do.” - Former Xceligent Employee

“

THIS ISN’T THE FIRST TIME XCELIGENT HAS STOLEN COSTAR’S DATA – IT’S IN THEIR DNA

…could prove that the information they were using was not CoStar’s information.”

– Former Xceligent Director of Client Services, Cinnamon Trimmer

“

Xceligent was forced – on the advice of its attorneys – to purge its entire database of all San Diego listings because there was no way that they

XCELIGENT READILY ACKNOWLEDGES THIS BEHAVIOR IS UNETHICAL AND BAD FOR THE INDUSTRY . . . JUST ASK ITS CEO

We don’t want people downloading our aggregate data set we’ve spent over $100 million building and sending it off because that wouldn’t be right for the industry.” - Doug Curry, Xceligent CEO

Source: Xceligent Demonstrates The Power Of Big Data At CCIM Thrive, 10/31/16 http://www.globest.com/sites/ccim/2016/10/31/xceligent-demonstrates-the-power-of-big-data-at-ccim-thrive/

“

XCELIGENT PAYS AND TRAINS FOREIGN CONTRACTORS WHO STEAL COSTAR CONTENT

EVIDENCE SEIZED FROM XCELIGENT’S AGENT’S COMPUTERS CONFIRMS A STEP-BY-STEP GUIDE TO STEALING COSTAR CONTENT

1.  Xceligent managers travel to the Philippines to train their foreign workers at Avion.

2.  Xceligent teaches its foreign workers at Avion how to circumvent CoStar’s abuse monitoring technology.

3.  Xceligent oversees “audits” that instruct its foreign workers to copy and rewrite CoStar content for integration into Xceligent’s databases.

4.  Avion researchers crop photos to remove watermarks before uploading to Xceligent.

5.  Xceligent pays Avion to “research” CoStar’s content.

6.  None of these actions are broker-directed.

XCELIGENT SENIOR LEADERSHIP VISITS THE PHILIPPINES TO TRAIN, DIRECT AND MANAGE THE FOREIGN RESEARCH TEAM

Source: Avion Files

Xceligent – Corporate Trainer / Research Manager

Xceligent – VP Research

Xceligent – Research Director Xceligent – Research Managers

Xceligent – Research Director Xceligent – Research Manager

XCELIGENT TEACHES AVION RESEARCHERS HOW TO BYPASS COSTAR’S SECURITY MEASURES AND PROVIDES THE NECESSARY SOFTWARE

Source: Avion Files

Guys you can use TOR browser to access Loopnet…

– Avion Skype chat log

“

Good Morning [sir,] I believe that Brent [Hansen, an Xceligent manager] sent you sir an email regarding a software that shall be used by a couple of our agents in accessing [L]oop[N]et. . . . If you have the copy sir if it would be possible to forward it to the ITs. Thank you sir and have a great morning.

– Avion Skype chat log

“

SKYPE CHATS IN AVION’S FILES SHOW DAILY DISCUSSIONS ABOUT BYPASSING COSTAR’S SECURITY MEASURES

Source: Avion Files

Skype chat 7/15/15 10:34AM: “We currently are unable to access loopnet through any sort of proxy site as an alternative. TOR isnt working well.”

Skype chat 7/15/15 10:35AM: “Leslie Houston: LoopNet blocks us after so many hits from our IP Address and we have to switch IP Addresses. Do you know if you guys have more than 1 IP Address?”

Skype chat 7/16/15 6:04AM: “So to increase their production, it would be better for us to reset the IP unless loopnet bans all of Phil. IPs.”

Skype chat 7/17/15 5:00AM: “If just incase TOR for loopnet is not working, try kproxy.com or other proxy browser nor server, try to use also Mozilla browser, clear history, inform us of any message prompted by your browser if you can’t access the said site.”

Source: Avion Files

When LoopNet access was denied, Avion used kproxy to gain access… just as Xceligent instructed.

AS XCELIGENT AND AVION KNOW, ACCESS TO LOOPNET IS COVERED BY TERMS PROHIBITING COMPETITIVE USE

Source: Avion Files

AVION’S ACCESS WAS REPEATEDLY BLOCKED FOR VIOLATION OF THESE TERMS AND CONDITIONS

Source: Avion Files

Screenshot captured on Avion computer

UNDETERRED BY THE ACCESS DENIED BLOCK, AVION AND XCELIGENT FIND NEW WAYS TO GET TO LOOPNET

Source: Avion Files

Hope Proxy is a free anonymous proxy.

UNDETERRED BY THE ACCESS DENIED BLOCK, AVION AND XCELIGENT FIND NEW WAYS TO GET TO LOOPNET

Source: Avion Files

FilterBypass is a “safe, secured web proxy.”

SCREENSHOTS CAPTURE AVION SELECTING TEXT FROM LOOPNET IN ORDER TO COPY IT

Source: Avion Files

SCREENSHOTS CAPTURE AVION INPUTTING CONTENT LIFTED FROM LOOPNET INTO XCELIGENT’S CDX DATABASE

18 Commerce Dr. open on LoopNet. 18 Commerce Dr. being edited in CDX.

DUAL MONITOR SCREENSHOT CAPTURES AVION COPYING LOOPNET CONTENT AND ADDING TO CDX

Town West Center, Indianapolis, IN 46254 - being added to CDX

Town West Plaza, Indianapolis, IN 46254 – viewed and screenshotted on LoopNet

“AUDITORS” INSTRUCT AVION RESEARCHERS TO COPY FROM LOOPNET BUT AVOID DETECTION BY REPHRASING THE CONTENT

Source: Avion Files

AVION RESEARCHERS RELY ON FILES STOLEN FROM COSTAR’S SUBSCRIPTION DATABASE TO BUILD CONTENT FOR XCELIGENT

Spreadsheet found in Avion’s files

Identical export file from CoStar databases

“AUDITORS” ALSO INSTRUCT THOSE RESEARCHERS TO CROP PHOTO WATERMARKS

Source: Avion Files

IT’S NO SURPRISE AVION’S FILES CONTAIN COSTAR WATERMARKED PHOTOS, PRE-CROPPING

Source: Avion Files

1.  Replaces CoStar logo with similar looking CommercialSearch logo

2.  Crops out CoStar logo without replacing it

3.  Crops out CoStar logo and replaces it with similar looking CommercialSearch logo

4.  Uses the ‘snipping tool’ to create a lower resolution copy

5.  Carelessly adds the CommercialSearch logo where CoStar’s logo still exists

XCELIGENT MANIPULATES COSTAR’S COPYRIGHTED PHOTOS TO PASS THEM OFF AS XCELIGENT'S OWN

XCELIGENT STEALS CONTENT: COVER-UP TACTIC #1 REPLACES COSTAR LOGO WITH SIMILAR LOOKING COMMERCIALSEARCH LOGO

A CoStar copyrighted photo of a commercial building located at 1344 South Apollo Boulevard, Melbourne, FL 32901, appears on CommercialSearch (with a CommercialSearch logo instead of a CoStar logo)

Example of image editing process: Cropping Tool

XCELIGENT STEALS CONTENT: COVER-UP TACTIC #2 CROPS OUT COSTAR LOGO WITHOUT REPLACING IT

The image is cropped precisely to exclude only the original logo. CommercialSearch logo placed to the left of the tree.

CoStar logo to the right of the tree.

CommercialSearch cropped image

XCELIGENT STEALS CONTENT: COVER-UP TACTIC #3 CROPS OUT COSTAR LOGO AND REPLACES IT WITH SIMILAR LOOKING COMMERCIALSEARCH LOGO

XCELIGENT STEALS CONTENT: COVER-UP TACTIC #4 USES THE ‘SNIPPING TOOL’ TO CREATE A LOWER RESOLUTION COPY

The CoStar logo remains on the image with the CommercialSearch logo placed adjacent to it.

CoStar logo

XCELIGENT STEALS CONTENT: COVER-UP TACTIC #5 CARELESSLY ADDS THE COMMERCIALSEARCH LOGO WHERE COSTAR’S LOGO STILL EXISTS

Photo still contains CoStar’s logo

UNDETERRED BY COSTAR’S LAWSUIT, XCELIGENT AND AVION CONTINUE THEIR WILLFUL INFRINGEMENT

Stolen photo on CommercialSearch.com in May 2017

LoopNet screenshot found in Avion’s files

XCELIGENT TRIES TO HIDE THE PAYMENTS IT MAKES TO AVION TO STEAL COSTAR CONTENT

Xanivo (an anagram of “Avion X”) is a company owned and operated by Avion’s CEO and COO, registered in the Seychelles and based in Hong Kong

Source: Avion Files

THE DAILY MAIL GROUP, WHICH OWNS XCELIGENT, IS A MULTI-BILLION DOLLAR COMPANY THAT HAS ALL THE RESOURCES NECESSARY TO ENABLE XCELIGENT TO BUILD CONTENT HONESTLY

THE DAILY MAIL GROUP HAS THE FUNDS & RESOURCES TO ENABLE XCELIGENT TO BUILD A COMPETITIVE PRODUCT FAIRLY

$3.2 billion Current market cap

$2.3 billion 2015 Revenue

$362 million 2015 Operating profit

XCELIGENT WRONGLY ATTEMPTS TO RELY ON THE FTC CONSENT ORDER TO JUSTIFY ITS THEFT

Xceligent betrayed the FTC, which brokered the sale of Xceligent to the Daily Mail Group to encourage robust competition.

Nothing in the FTC brokered deal allows for Xceligent’s misconduct yet that is exactly Xceligent’s response to CoStar’s lawsuit.

CoStar worked closely with the FTC and complied with the Consent Order signed in late 2012 related to the LoopNet acquisition. The Order makes clear that CoStar may take legal action to prevent misappropriation of its content, and expressly states that:

Nothing in this Order shall be construed to prohibit or prevent [CoStar] from requesting any legal or equitable relief or remedy of any kind in any action commenced in state or federal court or in any arbitration proceeding.”

THE FTC ORDER IS NOT A LICENSE FOR XCELIGENT TO STEAL FROM COSTAR WHILE PRETENDING TO COLLECT INFORMATION FROM BROKERS

CoStar paid over $880 million to buy LoopNet. Any argument that it is acceptable for a competitor to take data and photographs from LoopNet on a wholesale basis defies logic. Xceligent is perfectly free to obtain broker content from brokers, and brokers are free to provide their content to Xceligent. What Xceligent cannot do is use CoStar resources to build its competing business. Xceligent’s suggestion that the lawsuit impedes brokers from marketing their listings with CoStar competitors is a smokescreen. The mountain of evidence from the Philippines shows that Xceligent “researchers,” directed by management, systematically copy CoStar content from CoStar’s website and subscription database, and use elaborate schemes to cover their theft. This is not about broker uploads or broker sites – this is deliberate and unlawful freeriding on a competitor.

COSTAR PLAYS A VITAL ROLE IN THE U.S. ECONOMY

Users around the world rely on CoStar’s data. 25 million people go online and use CoStar in a month to facilitate more than a trillion dollars annually of real estate leases, sales and mortgage originations. CoStar’s customers include:

COSTAR PLAYS A VITAL ROLE IN THE U.S. & GLOBAL ECONOMY

Real estate brokers Owners Developers Property managers Retailers

Vendors Appraisers Lenders State & federal government agencies

COSTAR HAS BEEN CONSISTENTLY PRAISED FOR ITS GROWTH, INNOVATION AND CONTRIBUTIONS TO THE COMMUNITY

2015 PHILANTHROPY AWARD 2016 CITIZENSHIP AWARD

…AND IS A MAJOR EMPLOYER IN THE U.S.

CoStar has created tens of thousands of U.S. jobs and has paid billions of dollars of U.S. salaries and taxes to create its content. CoStar continues to generate new, high-paying American jobs as it innovates and grows. CoStar’s Richmond, VA facility has created over 500 jobs in the five short months since it opened.

U.S. companies like CoStar cannot survive if foreign competitors steal their work using low-paid, offshore labor, and then dump it back into the U.S. at a fraction of its true cost

COSTAR’S TRACK RECORD OF SUCCESSFULLY PROSECUTING THOSE WHO STEAL ITS CONTENT AFFIRMED

A federal judge in California ordered a competitor who copied CoStar’s listings and photos to pay $10,000 per day, per photo if further copyright infringement occurs. On top of the judgment, the competitor will also immediately pay CoStar $10,000 per stolen listing AND $10,000 per infringed photo. Read the coverage here: http://www.costargroup.com/costar-news/details/apartment-hunters-held-liable-for-publishing-stolen-listings-from-costar-group-s-apartments.com

MEDIA CONTACT JOELE FRANK, WILKINSON BRIMMER KATCHER DAN KATCHER / JAMIE MOSER / JONATHAN KEEHNER 212.355.4449