BidPrime, SmartProcure Lawsuit Highlights the Competitive Nature of Government Bid Space

BidPrime has accused SmartProcure of scraping thousands of bid listings from its database. SmartProcure doesn't deny doing it, but contends it didn't keep the data and did nothing wrong — and that BidPrime is trying to "disrupt" SmartProcure's business.

by / June 21, 2018

BidPrime, a Texas startup that offers government contracting bid listings online, is suing similar startup SmartProcure for allegedly stealing those listings from its database — but SmartProcure says it did so at the behest of customers and never used them as part of its own commercial service.

BidPrime filed a lawsuit June 5 against SmartProcure in the U.S. District Court for the Western District of Texas, alleging that the Florida company obtained access to a series of legitimate user accounts in order to find and copy more than 52,000 bid listings from its database.

Stephen Hetzel, BidPrime’s head of operations and co-founder, said in a June 11 interview that the company isn’t sure what SmartProcure did with the data. At the very least, he said, the bids represent a list of the company’s data sources.

“At this point we don’t know what information they put out there for their subscribers, but we do know that our bid data that did get scraped had a large number of unique data sources from where we capture those bids,” Hetzel said.

After that interview, SmartProcure asserted in a court filing that it hadn’t put the bids on its own database. The ordeal, according to SmartProcure’s complaint, is the result of a customer asking the company how its bid information compared to that of BidPrime’s. The customer sent SmartProcure her login credentials for her BidPrime account, which SmartProcure used to scrape information for comparison purposes, according to the document. Later, another BidPrime customer did the same.

The scraping was done with a bot that a SmartProcure employee created. The employee declared to the court that he excluded the bot’s outputs from SmartProcure’s database, and the company is working with a third-party firm to image computers to lend evidence to that claim.

BidPrime is challenging the consent of the customers, and Hetzel told the court that he spoke personally with both customers. The first, according to the filing, told Hetzel that she never gave SmartProcure her credentials or asked them to download BidPrime information. The second told Hetzel that she “never thought of stealing data from BidPrime.”

BidPrime is asking the court for a jury trial and is seeking damages from SmartProcure. It also asked the judge for a temporary restraining order against SmartProcure — to stop it from accessing BidPrime, among other things — but the judge dismissed that motion without weighing in on the merits of BidPrime’s allegations.

SmartProcure is arguing in court that BidPrime never contacted SmartProcure or its CEO, Jeffrey Rubenstein, to tell them they were doing anything wrong. The first time they heard from BidPrime was when the company filed its lawsuit.

The company is asserting that BidPrime’s lawsuit, as well as the accompanying press release it sent out announcing the lawsuit and a security update it sent to customers laying out its accusations against SmartProcure, amount to a smear campaign.

“Defendants have not ‘hacked’ or ‘illegally accessed’ Plaintiff’s website in violation of the Computer Fraud and Abuse Act (‘CFAA’) or otherwise. Likewise, Defendants have not taken any property or data owned by Plaintiff, much less any ‘trade secrets,’" SmartProcure's filing reads. “Rather, Plaintiff’s allegations appear to be part of a calculated attempt to disrupt SmartProcure’s relationships with its customers and potential customers, which has unfortunately enjoyed some early success.”

Through the lawsuit, BidPrime also effectively published Rubenstein’s home address on the Internet. The address, along with several types of contact information for Rubenstein, were published in the complaint, which BidPrime attached with its press release announcing the lawsuit.

Hetzel said the company included the information because it was relevant to the way Rubenstein accessed BidPrime’s information.

“We believe most of the infractions occurred from his home IP address,” he said.

His company asserts in filings that SmartProcure used aliases and IP proxy services when accessing BidPrime, “conduct [that] does not conform with authorized user behavior.” SmartProcure’s filings simply state that using aliases doesn’t break any laws or BidPrime’s terms of service.

The bid-aggregating space is a competitive one, with BidPrime facing several competitors like BidNet and Find RFP. SmartProcure only got into the arena recently, after making a name for itself focusing on the purchasing part of the process — that is, BidPrime’s core business was finding notifications of opportunities, while SmartProcure’s core business was centered on opportunities that had been awarded.

When SmartProcure decided to tackle bid aggregation as well, it attempted to set up a partnership where it would buy information from BidPrime. The deal never went through.

It’s not uncommon for companies in competitive spaces to sue each other — last year, there was a flare-up of a similar fight in the open data space when Munetrix sued Socrata over a procurement in the state of Michigan.

Rubenstein, SmartProcure and the company’s legal team did not respond to multiple requests for comment.

Ben Miller Staff Writer

Ben Miller is the business beat staff writer for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.