Wednesday, January 28, 2009

Blackstone Group accused of being too cheap to buy multiple FT subscriptions

Wow -- Wall Street is even worse off than we knew. According to a new copyright suit filed against famed private equity firm The Blackstone Group -- 2007 net earnings of over $1.5 billion -- Blackstone was too cheap to pay for more than a single web subscription to the Financial Times.

Here's the story, as alleged in the complaint, filed today in federal court in Manhattan: unlike all but a few newspaper web sites, the FT charges for nearly all its content, somewhere between $179 and $299 per year. The FT offers both personal subscriptions and corporate "digital licenses" whose rates are based on the number of users within the corporation. Sometime in 2002, a senior Blackstone finance and compliance officer bought an individual FT subscription with a corporate credit card. (For those unfamiliar with the lingo, a "compliance" officer is charged with making sure people inside a corporation follow the law. Oops!) But, charges the FT, the officer didn't just use the account himself; multiple others within the company -- in its offices all over the world -- accessed the FT through that one account.

The FT sued 100 "Doe" defendants (the Blackstone employees who allegedly accessed the FT site without authorization); the theory is that by accessing the site without authorization, those users made copies in violation of the FT's exclusive right to reproduce its works. The claim against Blackstone itself is for vicarious and contributory infringement, based on Blackstone's computer systems being used for the alleged infringement, and its employees allegedly furnishing the single personal user ID and password to multiple others. The FT also alleges that the Does and Blackstone violated the Computer Fraud and Abuse Act, which provides civil damages for certain forms of unauthorized access to a protected computer system. (It was the criminal provisions of the CFAA that formed the basis of the prosecution of Lori Drew in the MySpace suicide case.)

I am aware of at least one court to have held that both a copyright and a CFAA claim are viable where multiple users accessed a publication's web site where the subscription was limited to a single user. See Theraputic Research Faculty v. NBTY Inc., 488 F.Supp.2d 991, (E.D. Ca., January 25, 2007) (analysis here). A similar suit was also recently filed by CoStar Realty Information.

One last interesting note: the FT is represented by Andrew Bridges of Winston & Strawn, who is best known for representing defendants in copyright suits, including StreamCast Networks in the Grokster case and MasterCard in the suit brought by Perfect 10, the copyright plaintiff that moonlights in porn.

(h/t The Licensing Plate)

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