Subscriber in Disguise
Tuesday, 25 July 2017
The unauthorized use of someone else’s subscription password can result in multi-million dollar liability. eVestment Alliance LLC offers a subscription to its trade secret protected database of investment products and performance data. An eVestment subscriber hired Compass iTech LLC to help analyze the eVestment’s data. Compass then used the subscriber’s password about 3,000 times to download information from eVestment’s database for its own benefit. eVestment discovered the activity and shut off access to the database. Compass sued for defamation and unfair trade practices. eVestment counterclaimed. eVestment was granted summary judgment on all of Compass’ claims. On eVestment’s counterclaim, a jury found that Compass deliberately misappropriated eVestment’s trade secrets and violated the Computer Fraud and Abuse Act. The jury awarded eVestment $2.5 million in compensatory damages and $1.2 million in punitive damages.
WHY YOU SHOULD KNOW THIS. Compass’ first mistake was to use someone else’s password as mechanism for unauthorized access to a competitor’s protected trade secrets. Compass’ second mistake was to race to the courthouse and file suit on a very shaky foundation. As Compass learned, a subscription to a database grants a limited right to use it under certain terms and conditions. Using someone else’s password doesn’t give you any rights. And if you use the password in order to unfairly compete with a competitor, the competitor may be able to get a multi-million dollar judgment against you. Of course, eVestment’s success resulted from carefully protecting its database with reasonable measures to restrict access to its trade secrets.