ID and Password Sharing – Who Does it Really Hurt Anyway?

ID and password sharing of online subscription services – who does it really hurt anyway?  I mean, come-on, everyone does it….  What are they going to do to me besides eliminate my access?

Kaboom!!!  CoStar fires several large artillery rounds right through the real estate industry in its recent multi-defendant federal court case.

[CoStar Group, Inc. (Nasdaq: CSGP) announced a significant legal victory in breaking up a multi-state, multi-defendant password-sharing network that involved companies in Orange County, California, Houston, Texas, and Palm Beach Gardens, Florida. A federal court in Greenbelt, Maryland issued the verdict awarding CoStar more than $1.1 million in damages from two defendants engaged in flagrant and repeated violations of CoStar’s terms of use. The Court also ruled that CoStar was entitled to statutory copyright damages of $3,000 for each photograph infringed by the defendants.] Full Story (Case:  CoStar Realty Information, Inc. v. Mark Field d/b/a Alliance Valuation Group, et al., Action No. 08:08-CV-0663-AW & Opinion. AW-08-00663)

The basis for the suit included breach of contract (theft of service), on-going violation of CoStar’s terms of use, and infringement of copyright.  And these companies and defendants, according to the results of the suit, sure were blatant about their bad behavior across state lines resulting in a federal case filed in Maryland.  Oops….

The defendants even had the temerity to call the CoStar help desk seeking technical help on several occasions.

[With respect to Gressett, CoStar specifically alleges that Gressett used CoStar’s database without authorization from at least April 14, 2004 to February 14, 2008.  CoStar also maintains that on at least six occasions between January 2005 and October 2007, Gressett called CoStar in Maryland, representing himself as an employee of Alliance, in order to gain assistance or technical support from CoStar in order to access the database.]

But the angle in this story isn’t just about the severity of contract breach (terms of use), rather CoStar also effectively pursued the case and underlying penalties based on copyright law.    CoStar alleged the defendants infringed on the copyrights of at least sixty-seven photographs.   The separate verdicts addressed both of those with strong penalties imposed on the defendants.

[The Court entered separate verdicts of breach of CoStar's terms of use and direct copyright infringement against Russ Gressett of Houston, Texas (doing business under the name TGC Realty Counselors) and Pathfinder Mortgage Corporation, which does business in Orange County and elsewhere in California. The Court ordered Gressett to pay CoStar $683,280 for sharing his CoStar user name and passwords with several Houston-area commercial real estate companies, while separately stating that CoStar was entitled to copyright damages of $120,000 for Gressett's copying of CoStar photographs. The Court ordered Pathfinder Mortgage Corporation to pay CoStar $483,120 for using passwords assigned to another company, while separately stating that CoStar was entitled to copyright damages of $438,120 for copying CoStar copyrighted photographs. Together, CoStar is entitled to collect more than $1.1 million in damages from the two defendants.]

Interestingly, we see this loathsome misbehavior all too frequently in the residential real estate (MLS) sector.    Abuse of online MLS service against its published terms of use and subscriber agreements continues to plague the real estate industry with increasing levels of effort and resources required to monitor and enforce subscriber terms of use as a means of revenue assurance for service.  We haven’t been privy to a CoStar-type lawsuit against a MLS subscriber but the same two conditions exist.

Elizabeth Sobotka writes a compelling post about copyright ownership for MLS content including compilation, text, and photographs.    With copyright ownership established (assuming the MLS has taken the appropriate steps for copyright ownership), the MLS has the ability to hold its subscribers accountable for copyright violations.  With the correct terms of use established for its online systems, the MLS also has the foundation to pursue legal action for breach of contract due to account sharing.

The question of the day is when will the first MLS take legal action to protect its copyright and terms of use against misuse by its subscriber base?

Troy RechAbout Troy Rech
Troy joined Clareity Security as one of the founding partners in 2004. Troy is responsible for setting Clareity’s sales strategy and driving revenue growth through existing and new vertical markets. Troy is an experienced executive bringing over eleven years of strategic management consulting experience plus ten years of real estate industry experience to Clareity. Prior to joining Clareity, Troy was a Senior Regional Manager for FNIS (now Lender Processing Services) where he was responsible for sales and account management, business development and client retention in the Southeast. Previously, Troy was a strategy consultant with A.T. Kearney, where he was responsible for delivering client projects focused on strategic planning, business operations improvement, technology integration, and strategic sourcing. In his role with Kearney, Troy worked with Fortune 500 clients such as GM, Waste Management, Kimberly Clark, Sunrise Medical and others. Troy holds a Bachelor in Business Administration from Iowa State University and a Masters in Management from Northwestern’s Kellogg School of Management. Troy is married with two young sons and currently resides in Roanoke, Virginia.

  • Dccharron

    Troy
    Great Post
    As you may know, MRIS (and I am sure all its peers) support this position. Indeed, we crafted a v2.o of why copyrights are so very important in 2006. Everything in this paper http://www.mris.com/_res/downloads/MRIS_Copyright_FAQ.pdf remains eminently valid.

  • Troy Rech

    David,

    Thank you very much for the kudos. And another thanks for the link to the MRIS whitepaper – Strengthening the Foundation: The Real Estate Listing Content Copyright FAQ. Great reading!

  • Me

    anyone have a password