• Password Sharing for Proprietary Database Leads To Large Damage Award
  • February 16, 2011 | Author: Kathryn L. Ossian
  • Law Firm: Miller, Canfield, Paddock and Stone, P.L.C. - Detroit Office
  • Today, many applications and databases are offered to end users as subscription services accessible via the Internet.  To use these services, a user pays a license or subscription fee and has a unique login and password to access the services.  Sharing that login and password information with third parties can result in hefty legal liability, as illustrated by a recent decision by a federal court in Maryland.

    The case was filed by CoStar Realty Information, Inc. ("CoStar") which operates a website containing a proprietary database useful in locating real property available for sale or rent.  CoStar charges users a subscription fee and assigns a user name and passcode to its customers.  CoStar's site also contains Terms of Use that prohibit users from sharing their login information with third parties.  CoStar filed a breach of contract and copyright infringement action against Mark Field and others, claiming that Mr. Field shared his login information with unauthorized third parties, each of whom were named as defendants.  Mr. Field and several other defendants settled with Co-Star prior to trial.

    At trial, evidence was presented that the remaining defendants' access of CoStar's database totaled hundreds of times over a 43 month period.  Ultimately, the court found that the defendants were subject to, and breached, CoStar's website Terms of Use that prohibited use of the database by unauthorized users.  The defendants were also held liable for copyright infringement for accessing copyrighted photographs in CoStar's database.  All told, CoStar was awarded breach of contract damages in the amount of $1,121,400 and copyright infringement damages of over $558,120 against the defendants.
    If your organization uses fee-based subscription services, make sure you are complying with the terms and restrictions of the governing agreement.  If you are a provider of subscription services, make sure you are monitoring and auditing users to detect non-compliance.