Found Liable of Engaging in a Multi-State Password-Sharing Network, Houston Appraiser Required to Pay $683,280 and Orange County Mortgage Company Required to Pay $438,120
Think illegally sharing passwords to online services is worth the risk? A landmark verdict handed down this week by a federal court that awarded
more than $1.1 million in damages for illegally sharing passwords may convince you otherwise.
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.
The Court handed down separate verdicts of breach of CoStar’s terms of use and direct copyright infringement against Russ Gressett, an appraiser an dreal estate broker doing business under the name TGC Realty Counselors based in Houston, and Pathfinder Mortgage Corp., which does business in Orange County and elsewhere in California.
Gressett was ordered to pay CoStar $683,280 for sharing his CoStar user name and passwords with several Houston-area commercial real estate companies. He is also separately liable for $120,000 in copyright damages for copying of CoStar photographs. Pathfinder Mortgage Corp. was ordered 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 said it is entitled to collect more than $1.1 million in damages from the two defendants.
“This verdict is a victory for CoStar’s legitimate customers who are unfairly forced to compete with those who have illegal access to CoStar’s products,” said Jonathan Coleman, CoStar’s General Counsel.
Coleman said CoStar actively monitors its service for unauthorized access. In most cases, those found to be engaged in illegal password sharing are offered settlements and the opportunity to become legitimate subscribers. But for those who repeatedly violate the online terms of use, the costs can be millions of dollars in court-ordered restitution.
“Most companies that CoStar identifies as having shared passwords agree to settlements well before lawsuits are necessary,” he said. “The password sharing in this case was so blatant that CoStar had no choice but to bring it to trial.”
Two aspects of the verdict are especially noteworthy, according to Coleman. First, the Court held that the online terms of use on CoStar’s website were enforceable against those who use CoStar’s services, even if the user never read those terms. Second, the Court found that the copies made by the Defendants’ computers during the process of viewing CoStar’s copyrighted photographs was legally sufficient to put Gressett and Pathfinder Mortgage Corp. on the hook for copyright infringement.
CoStar separately received a default judgment against Mark Field after he failed to appear to be questioned in connection with the lawsuit. CoStar said it has received information that Field has left the United States.
Another defendant in the lawsuit, Lawson Valuation Group, Inc. of Palm Beach Gardens, Florida, filed for bankruptcy. CoStar had previously settled disputes with other individuals and companies involved in the password-sharing network for a fraction of the amounts assessed against Gressett and Pathfinder Mortgage Corp.
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