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Anita Ramasastry

Does an Unauthorized User of a Website Consent to Its Terms of Use, Even When the User Is "Borrowing" Someone Else's Account or Subscription? A Maryland-Based Federal Court Correctly Says Yes


Tuesday, April 21, 2009

Recently, in the case of CoStar v. Field, a federal court in Maryland was confronted with the following set of allegations: Two real estate companies accessed an online real-estate database for almost four years without authorization -- by using another subscriber's password and account. The site's owners now want to sue the companies. The website's Terms of Use (ToU) include a clause that says that all lawsuits will be resolved in the State of Maryland. Does that clause bind unauthorized users? The court said yes and, as I will explain, it was right to do so.

The issue the case raises -- whether third parties can be bound by ToU when accessing online services via another person's account or subscription -- is arising more frequently, perhaps because borrowing others' user IDs or passwords online is common. In this column, I will discuss the CoStar case and also examine other cases raising this issue.

The CoStar Case

In addition to offering some free online content, CoStar operates an Internet-accessible real-estate database for paying subscribers. Its principal place of business is Bethesda, Maryland. Its database includes photos of real property throughout the United States and related data. Subscribers can find properties for sale or rental, and research brokers.

In the recent suit, CoStar claimed that certain defendants, who were residents of Texas and Florida, accessed the database using another customer's password. CoStar contends that it properly brought suit in federal court in Maryland because its ToU select that forum, where CoStar principally does business.

CoStar allows authorized users to access the information on its database for a subscription fee. Alliance Valuation Group in California was among its paid subscribers. Like other authorized users, Alliance received a user identification number ("User ID") and a pass code to access the website. Alliance entered into two license agreements with CoStar -- the first in June 2002, and the second in November 2004, which allowed up to 11 Alliance users to access CoStar's database.

The agreements provided that Alliance would not allow third parties use of CoStar's database, and that Alliance could not share its User ID or pass code without CoStar's express written consent.

Now, CoStar alleges that Alliance shared its User ID and pass code with two other real-estate businesses -- Lawson, a Florida corporation that performs real-property valuations and appraisals; and Gressett, a Texas resident doing business as TGC Realty Counselors. Costar further contends that Lawson and Gressett repeatedly used CoStar's services, receiving the contractual benefit that was supposed to go only to Alliance without paying for its access, and that they illegally used photos from the website in violation of copyright laws. In particular, CoStar alleges that Gressett used CoStar's database without authorization from at least April 14, 2004 to February 14, 2008 – that is, for nearly four years. CoStar also alleges that both Lawson and Gresset contacted CoStar and asked for technical support for using the database, and that Gresset falsely represented himself as an employee of Alliance.

Eventually, Costar sued all three companies for breach of contract and two of the defendants are also accused of fraud. However, Gresset and Lawson objected to being sued in Maryland, and claimed that they do not have enough contacts with the state of Maryland to be subject to a lawsuit there.

Can Gresset and Lawson Be Bound By the Forum-Selection Clause In CoStar's ToU?

The issue of whether Gresset and Lawson are subject to the forum-selection clause in CoStar's Terms of Use (ToU) boils down to whether they actually assented to it.

To begin, Alliance – as an authorized user -- would have been on notice of CoStars ToU, which appears on a pop-up screen the first time a subscriber accesses the database. The subscriber must then scroll through and affirmatively accept the ToU. Moreover, after that first use, CoStar also reminded users of its ToU periodically. Hence, Gressett and Lawson would have seen the ToU at various intervals during the several years during which they allegedly used the database.

Furthermore, an authorized user must enter a valid user ID and passcode at the "Subscriber Login Area" to gain authorized access to CoStar's database – and that area contains statements asserting that by logging in to the database, the user agrees to CoStar's ToU; provides links to the ToU; and states that access is restricted to authorized users, and that the sharing of pass codes is prohibited. Thus, if Gresset and Lawson indeed accessed the site using Alliance's user ID and passcode, they would have seen the warnings and the reference to the ToU.

The Specific Provision at Issue: The Forum Selection Clause

Alliance's ToU also warns unauthorized users against using the site if they lack the authority to be bound by the agreement, and it contains a forum selection clause that provides that the user consents to the jurisdiction of federal and state courts located in Maryland for any action to enforce the ToU's provisions: The clause reads as follows:

You irrevocably consent to the jurisdiction of the federal and state courts located in the State of Maryland, and to the jurisdiction of the federal and state courts located in any State where you are located, for any action brought against you in connection with these Terms of Use or use of the Product.

In the Maryland federal court in which it brought its suit, CoStar argued that Lawson and Gressett had consented to jurisdiction in Maryland by using the database, by accepting the ToU when accessing the database, and by perpetrating continuous tortious conduct in Maryland for their private business purposes. The court agreed – noting both the site's initial requirement that an authorized user accept the ToU, and the fact that, since "neither Lawson nor Gressett deny accessing CoStar's database over several years," they would have "had to periodically assent to the Terms of Use in the almost four years they accessed CoStar's database."

Other Courts Have Reached Similar – and Also Correct – Conclusions Regarding the Enforceability of Terms of Use

The CoStar court noted in its opinion that other courts had reached the same conclusion regarding the enforceability of ToU. In Burcham v. Expedia, Inc., an attorney used Expedia, a travel website, to book his hotel and the attorney then tried to sue Expedia in Missouri, invoking Missouri consumer law. He claimed that Expedia had misrepresented the amenities for a hotel room he had booked on the site.

In response, Expedia supplied an affidavit which showed that Burcham's booking had been made by a process under which an Expedia user was presented with a legend stating "By continuing on you agree to the following terms and conditions." Beneath the legend, the full text of the ToU was displayed.

After being confronted with this evidence, Burcham noted that he did not recall seeing the ToU on Expedia. He also suggested that he might have used the site from a shared computer at his law office without checking to see if a prior user of the computer was already logged on with a different User ID. He claimed that a prior user might have clicked past the ToU, but the ToU were never presented to him. The court, however, determined that Burcham still had to comply with the ToU's forum selection clause, even if he had accessed the account while logged in as another user.

The Costar court also cited another case, Motise v. America Online, Inc. There, a parent had signed up for an AOL account, accepting AOL's user agreement, and his stepson apparently shared the account. The court held that the stepson, too, was bound by AOL's user agreement for forum selection purposes – even if the stepson was not asked to view, and did not assent to, the agreement. The court found that the stepson was a "sublicensee," with the stepfather being the direct licensee – and the stepson's derivative rights were limited by the stepfather's direct rights. The court noted that to rule otherwise would mean that users could avoid AOL's Terms of Service "simply by having third parties create accounts."

In sum, decisions like these should put us all on notice that even if we are borrowing someone else's account, we are still bound by the same online user agreement that binds the original user. Put another way, using the account and accessing a service is enough to create implied consent to a site's contract – even if we have never read a word of that contract.

Anita Ramasastry, a FindLaw columnist, is the D. Wayne and Anne Gittinger Professor of Law at the University of Washington School of Law in Seattle and a Director of the Shidler Center for Law, Commerce & Technology. She has previously written on business law, cyberlaw, computer data security issues, and other legal issues for this site, which contains an archive of her columns.

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