The media company that published a controversial article about alleging racy photos and troubling questions from the past regarding a presidential candidate’s wife who afterwards became the First Lady of the U.S. issued an apology and paid $2.9 million after a successful libel suit by Melania Trump. The First Lady originally sued The Daily Mail, a tabloid newspaper from the United Kingdom, for the articles published about her during the campaign last year. Newspapers like The Daily Mail are known for testing the limits of free press rights versus the rights of celebrities to protect their reputation from libelous reporting to sell newspapers and get ratings for news programming. Libel suit for the most egregious of journalistic behavior are supposed to be the check and balance keeping news outlets responsible in their journalism.
Then The Daily Mail and its parent company is another matter entirely beyond the matter of irresponsible journalism. Libel is essentially publishing articles that defames, or in essence, steals someone’s reputation, often a public figure who depends on their good name for their livelihood. But further questions are raised when a media company not only engages in that behavior but allegedly steals intellectual property as well.
The Daily Mail is owned by a company called Daily Mail and General Trust, owned by Lord Rothamere, who avoids paying British taxes by claiming residence in France. Well known tax scofflaw Rothamere owns a large “castle” in the Wiltshire countryside in the UK but claims is as “non-dom” under British law, which means he claims to not live there and therefore be exempt from paying British taxes.
The Daily Mail and General Trust owns a company called Xceligent, whose owns website describes them as “Xceligent is a leading provider of verified commercial real estate information across the United States. Our professional research team pro-actively collects: a comprehensive inventory of commercial properties, buildings available for lease and sale, tenant information, sales comparables, historical trends on lease rates and building occupancy, market analytics, and demographics. This information assists the real estate professionals, appraisers, owners, investors, and developers that make strategic decisions to lease, sell, and develop commercial properties.”
A competitor of Xceligent has filed a lawsuit alleging massive theft of intellectual property. Andrew Florance’s $6.6B firm alleges Xceligent stole and resold CoStar’s content on “an industrial scale,” finding more than 10,000 instances of copyrighted photos and data on Xceligent’s public website.
CoStar also alleges in the suit that Xceligent created more than 3000 CoStar accounts to obtain information and used low-wage Filipino and Indian workers to hack the website. CoStar claims Xceligent rotated IP addresses, used anonymizers and proxy servers and refused to stop its theft despite more than 600 notifications of illegal activity.
Many former employees and associates have condemned the alleged stealing of intellectual property by Xceligent, which employs 1300, and allege unethical tactics and leadership, admitting to stealing contact including an Xceligent director who stole Phoenix market data from her husband’s CoStar account, the lawsuit also alleges.
Improperly accessed CoStar databases and stolen IP for profit are also among the allegations contained in the CoStar lawsuit against Xceligent. The claim is Xceligent improperly accesses CoStar’s databases in order to steal CoStar-copyrighted photographs and proprietary real estate data in breach of contract and in violation of state and federal law. After it copies, en masse, CoStar’s intellectual property— generated by CoStar researchers at enormous cost—Xceligent integrates the stolen intellectual property into its own, lower-priced rival products. A preliminary review of the publicly available content on Xceligent’s website reveals no fewer than nine thousand instances of copyrighted CoStar photographs, copied and published without permission, and hundreds of unique CoStar proprietary data values stolen from CoStar’s databases.
A raid of a Xceligent facility in Philippines involved two planes, 14 vehicles, sheriffs and lawyers, computer forensic experts and armed guards with their firearms discreetly tucked away in shoulder bags, that resulted in finding evidence confirming intellectual property theft by Xceligent. CoStar had a court order to search the facilities of a company called Avion, for evidence of IP theft. The search of Avion facilities, eight hours from Manila, found 262 hard drives containing 35 terabytes of data.
Evidence of sex trafficking as well as IP theft was found in the search of Avion, including evidence Backpage used Avion to drum up business in the sex trade overseas, undermining its claim that it does nothing more than host and moderate ads. “We got 1.7 million photographs,” Curtis Ricketts, senior vice president of CoStar, told NBC News of the December 2016 raid. “It was building picture, building picture, porn, porn, prostitute ad, building picture and then — bang! — a picture that couldn’t be anything other than, you know, child pornography.”
The evidence found showed Avion, a company used by Xceligent, to be an alleged criminal enterprise. The material seized by CoStar shows Avion worked to promote adult ad business on behalf of Backpage overseas, including in the United Kingdom and Australia. An Avion manual, describing how to engage in illegal activity involving use of fake IP and email addresses, was found in the searches.
A company that attempt to, in essence, steal the good name of the First Lady of the United States finds itself accused of stealing far more and engaging in alleged illegal activity. When foreign companies steal intellectual property, there are limited remedies available to hold them accountable under U.S. or International Law. American companies are often the victims of intellectual property theft and there are no easy answers on how to punish the perpetrators. This is increasingly a major problem for U.S. economic growth and the rule of law. Our economy is based so much on the success of U.S. firms that innovate and create new products and services, for which intellectual property is extremely important, and that success is threatened by overseas companies stealing the most innovative ideas.
If the allegations are correct, this company is stealing IP on a massive scale to repackage and sell for substantial profits the very property stolen. While the libel suit by Melania Trump and its multi-million award might be quite eye opening, the other activities of this media company might soon get a whole lot more attention.