CoStar wins $3.6M in password-sharing case

Real estate information supplier CoStar Group Inc. won a $3.6 million judgment against three companies and their officers as part of a multistate password–sharing network.

CoStar alleged that Mark Field and his California-based Alliance Valuation Group made money “obtaining and re-selling CoStar access.” CoStar initially sought $10 million in statutory damages.

Under the final judgment entered by Judge Alexander Williams Jr. last month, Field agreed to pay $2.2 million in damages to CoStar for fraud, breach of contract and vicarious copyright infringement.

The remaining damages are split between other defendants, Pathfinder Mortgage Co. and Russ Gressett of Houston, owner of TGC Realty Counselors. Judgment was stayed against another named defendant, Lawson Valuation Group Inc., which is in bankruptcy.

The March 19 order resolves what’s left of the lawsuit that CoStar filed in U.S. District Court in Greenbelt in April 2008. Many of the claims were resolved in an order last year, following a bench trial before Williams in October 2010.

The damage award includes payment for copyright infringement by the companies for using CoStar’s photographs and revenue the company lost because access to its information was resold without compensation to it.

CoStar’s team of researchers and photographers cover the entire country to obtain information, analysis and photographs of commercial real estate properties. CoStar then provides that information, via subscription, on its password-protected website. The company reported $252 million in revenue during 2011.

The Bethesda-based company’s antipiracy unit actively pursues litigation against suspected password misuse. According to a company document, in 2008, CoStar filed seven lawsuits involving more than 100 different companies and collected $1.8 million in back fees and licensing revenue. CoStar even operates a whistleblower website that offers tipsters a 25 percent share in the recovery, if any, generated by that tip.

In Alliance Valuation Group’s case, CoStar tracked IP addresses from the various companies and determined that multiple users were logged in under the same password at the same time. In one instance, CoStar said in court filings, someone using Field’s sign-in credentials logged in at one address, then logged in 45 minutes later at another location, despite the fact the physical distance between the two sites would require well over an hour’s drive.

According to court documents, Alliance Valuation signed a contract with CoStar in November 2004 that gave Alliance 11 authorized users at a cost of $5,000 a month. The authorized users included TGC’s Gressett, who did not work for Field.

Under the terms of the contract agreed to by Field and Alliance, sign-ins were not to be provided to third party users and could not be sublet or re-sold.

In an earlier ruling in the case, the court found that Gressett ran his own brokerage and appraisal company in Houston. Gressett used the third-party sign in he got in breach of CoStar’s contract with Alliance and then shared it further with a number of other commercial real estate firms in the Houston area.

“The password sharing in this case was so blatant that CoStar had no choice but to bring it to trial,” said Jonathan Coleman, CoStar’s general counsel, in a 2010 news release.

Field did not retain counsel or appear in court at the Oct. 26, 2010 bench trial that preceded last month’s final judgment.

COSTAR REALTY INFORMATION INC V. MARK FIELD D/B/A ALLIANCE VALUATION GROUP, ET AL.

Court:

U.S. District Court, Greenbelt

Case No.:

8:08-cv-00663

Judge:

Alexander Williams Jr.

Proceedings:

Bench trial

Outcome:

Judgment in favor of CoStar — $3.68M

Dates:

Event: November 2004-April 2008

Suit filed: April 3, 2008

Bench trial: Oct. 26, 2010

Judgment: March 19, 2012

Plaintiffs’ Attorney:

Shari Ross Lahlou, Crowell & Moring LLP in Washington.

Defendants’ Attorneys:

Mark Field D/B/A Alliance Valuation Group, Pro Se; Gary Woodfield, Edwards Angell Palmer Dodge LLP in West Palm Beach, Fla. for Lawson Valuation Group Inc.; Mary Olga Lovett with Greenberg Traurig LLP in Houston for Russ A. Gressett.

Counts:

Breach of contract and direct copyright infringement.