Borrowing another’s password to access a subscription-based website could cost millions - $900 million, to be exact. Late last year, CoStar Realty Information, Inc., a commercial real estate information services provider and developer of a comprehensive commercial real estate information database, sued one of its licensees, Copier Country New York, LLC, for breach of contract, contributory copyright infringement, and fraud for allegedly providing its subscription access codes to a third party. CoStar also named the third party, former licensee Dumann Realty, as a defendant, citing breach of contract, copyright infringement, fraud, and violation of 18 U.S.C. § 1030 as the bases for the suit. 

CoStar developed state-of-the-art software technology to compile a comprehensive database of market information and analyses as well as millions of commercial real estate photographs, and other original content, for which CoStar owns valid copyrights. CoStar licenses its information services to businesses, enabling them to conduct highly customized searches of commercial properties by entering search criteria into over 150 fields of information. According to CoStar's complaint, access to its information services is offered only to authorized users who have entered into a written license agreement with CoStar. By logging onto CoStar’s database, each user also agrees to the terms of use, which are prominently displayed on the login screen.  Both the license agreement and the terms of use restrict access to the database to authorized users, and expressly prohibit the sharing, sublicensing, and reselling of passwords. The terms of use also forbid users from accessing any portion of the CoStar database to which they have not subscribed.

The present dispute arose after defendant Dumann Realty entered into a license agreement with CoStar to access real estate information databases for the New York City market. That agreement, which provided access to fifteen Dumann employees at a price of more than $2,200 per month, expired in April 2007. Later that year, a Dumann principal attempted to enter into another agreement with CoStar, this time in the name of a “separate entity” and for fewer authorized users in order to reduce the license fee.  CoStar refused to issue the license. One month later, CoStar received an unsolicited request from Copier Country for a subscription for two authorized users to the same New York City database to which Dumann had subscribed. Copier Country purchased a subscription from CoStar for $588 per month.

CoStar sued both parties after discovering that Copier Country’s subscription was being accessed from the same computer network used by Dumann under its expired license.  Specifically, CoStar alleges that both parties breached their respective contracts: Copier Country’s license agreement forbade it from sharing its passwords with third parties, and, by logging into the database, Dumann was bound by the provision in the terms of use forbidding users from accessing databases without authorization from CoStar. 

CoStar’s complaint also claims that both parties infringed its copyrights in the “compilations of data, information, and original content” in its databases, as well as “hundreds, if not thousands” of its commercial real estate photographs. CoStar contends that by gaining unauthorized access to its products, Dumann willfully infringed CoStar’s copyrights by reproducing, distributing and/or displaying the photographs and compilations. Because CoStar attributes Dumann’s unauthorized access to Copier Country’s misappropriation of its passwords, the complaint raises a contributory copyright infringement claim against Copier Country as well. Specifically, CoStar contends that Copier Country materially contributed to Dumann’s copyright infringement by providing Dumann its access codes. 

Due to the suspicious circumstances surrounding Dumann’s attempt to obtain a less expensive subscription and Copier Country’s prompt purchase of its own license, CoStar contends that Copier Country obtained access to the database by fraud and deceit.  Likewise, CoStar brings a fraud claim against Dumann, the employees of which identified themselves as Copier Country authorized users when they gained access to CoStar’s product. Finally, CoStar claims Dumann violated 18 U.S.C. § 1030, a federal statute prohibiting unauthorized access to protected computers. CoStar is seeking injunctive relief, compensatory damages, punitive damages, and statutory damages. 

Arent Fox is continuing to monitor this case for further developments. For more information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Sarah L. Bruno
bruno.sarah@arentfox.com
202.775.5760

Carolyn S. Martorana
martorana.carolyn@arentfox.com
202.857.6343