WASHINGTON, Dec. 23, 2010 (GLOBE NEWSWIRE) -- For many companies, illegally sharing passwords to online services has become commonplace. However, as a landmark verdict issued by a federal court on Tuesday shows, the online terms of use that Internet users often click through have real teeth, and can turn password sharing into something that bankrupts your business or costs millions of dollars.
CoStar Group, Inc. (Nasdaq:CSGP), commercial real estate's leading provider of information, analytic and marketing services, announced today that the federal court in Greenbelt, Maryland issued a verdict awarding CoStar more than $1.1 million in damages from two defendants engaged in password sharing. The final award is the result of an investigation into a multi-state, multi-defendant password sharing network that involved companies in Orange County, California, Houston, Texas, and Palm Beach Gardens, Florida. The Court also ruled that CoStar was entitled to statutory copyright damages of $3,000 per photograph infringed by 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.
Two aspects of the verdict are noteworthy. 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 Corporation on the hook for copyright infringement.
The Court heard testimony from multiple witnesses during a two-day trial and found that Gressett had received a CoStar user name and password under the false pretense that he was an employee of Alliance Valuation Group, a Southern California appraisal company operated by Mark Field. Gressett in fact ran his own brokerage and appraisal company in Houston. The Court also found that Gressett shared his user name and password with a number of Houston-area commercial real estate firms in violation of the online terms of use posted on CoStar's website. It was Gressett's unlawful sharing of his user name and password with these other businesses that led to $563,280 of the $683,280 damages award against him.
Similarly, the Court found that Pathfinder Mortgage Corporation had obtained illegal access to CoStar over a 26-month period through a user name and password assigned to Mark Field of Alliance Valuation Group. Based on this illegal access, the Court required Pathfinder Mortgage Corporation to pay CoStar $438,120.
CoStar separately received a default judgment against Mark Field after he failed to appear to be questioned in connection with the lawsuit. CoStar has received information that Mr. Field has left the United States. In addition, another defendant in the lawsuit, Lawson Valuation Group, Inc. of Palm Beach Gardens, Florida, filed for bankruptcy. CoStar had previously settled its dispute with other individuals and companies involved in the password sharing network for a fraction of the amounts assessed against Gressett and Pathfinder Mortgage Corporation.
"The 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. Mr. Coleman continued, "The password sharing in this case was so blatant that CoStar had no choice but to bring it to trial. Most companies that CoStar identifies as having shared passwords agree to settlements before lawsuits are necessary and agree to pay much less than the amount CoStar could ultimately receive from a court."
The case is CoStar Realty Information, Inc. v. Mark Field d/b/a Alliance Valuation Group, et al., Action No. 08:08-CV-0663-AW. CoStar was represented by Michael Songer and William Sauers of Crowell & Moring's Washington, D.C. office. Pathfinder Mortgage Corporation was represented by R. Wayne Pierce of the Pierce Law Firm, LLC, and Russ Gressett was represented by Mary-Olga Lovett of Greenberg Traurig's Houston, Texas office.
ABOUT COSTAR GROUP, INC.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information, analytic and marketing services. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe with a staff of approximately 1,500 worldwide, including the industry's largest professional research organization. For more information, visit www.costar.com.
This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations, beliefs, intentions or strategies regarding the future. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. More information about potential factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including CoStar's Form 10-K for the year ended December 31, 2009, and CoStar's Form 10-Q for the quarter ended September 30, 2010, under the heading "Risk Factors." In addition to these statements, there can be no assurance that any future verdicts against individuals or entities involved in password sharing or settlements outside of court with such individuals will result in damages similar to those discussed in this release. All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements.