Zillow Group and Compass settle no-compete dispute between real estate heavyweights

Compass’ smart real estate sign. (Compass Photo)

Zillow Group and Compass have settled a pair of lawsuits that accused the SoftBank-backed high-tech brokerage of stealing Zillow intellectual property and poaching employees with non-compete agreements.

The two companies submitted a “stipulation and proposed order of dismissal with prejudice” in federal court Wednesday morning, agreeing to each pay their own attorney fees. Dismissal with prejudice means that the case is essentially over, as Zillow will not be able to file the claim again in the future.

Zillow issued the following statement on the case: “We are pleased to have reached an agreement with Compass that allows Zillow Group to continue our work streamlining real estate transactions for consumers in a fair, competitive environment.”

A Compass spokesperson said: “Compass and Zillow share common goals, to improve the real estate industry for consumers and agents. The two companies have agreed to resolve their differences and look forward to working together to help the entire real estate ecosystem.”

Details of the settlement were not available.

(Bigstock Photo)

The suits, filed in Washington state court and federal court in April, allege that Compass hired three Zillow employees — Robert Chen, former head of machine learning at Zillow; Michael Hania, a former Zillow enterprise sales executive; and Chester Millisock Jr., a former Zillow software engineer — who previously signed contracts with 12-month non-compete and non-disclosure clauses.

Zillow also accused the employees of stealing trade secrets and confidential info such as customer lists, sales data, and highly technical information before they left to Compass.

The settlement with Zillow comes the same day Compass was hit with a lawsuit from Realogy, the largest brokerage conglomerate in the U.S. The suit includes allegations of stolen confidential information, price-fixing, collusion and unfair business practices.

This past December, New York-based Compass opened a West Coast engineering outpost in Seattle. It aimed to hire at least 100 engineers to work on a variety of projects to aid Compass real estate agents, including marketing tech, new media, web and mobile, security, streaming, image and video processing, search, data science and artificial intelligence.

Compass’ tech teams are led by Joseph Sirosh, a former Microsoft and Amazon executive with an extensive background in artificial intelligence. Under Sirosh, Compass is staffing up its tech operations in both Seattle and New York, including some high-profile executive hires.

Non-compete agreements are a lightning rod in the tech industry, with proponents claiming they protect trade secrets and critics arguing they stifle innovation. A bill imposing new restrictions on non-compete agreements passed both houses of the Washington state legislature earlier this year.

Zillow was on the other end of a non-compete lawsuit a few years ago with Realtor.com operator Move Inc. and the National Association of Realtors over Zillow’s hiring of two former Move execs, Errol Samuelson and Curt Beardsley. Move, owned by Rupert Murdoch’s News Corp, alleged that the former executives stole trade secrets and later tried to cover up their actions by destroying files and other evidence.