• by Ray Schultz , Columnist, June 17, 2020

To get the gossip out of the way, Vinod Gupta has paid $10 million to satisfy a breach-of-agreement judgment against him won by his former company, Infogroup.

He paid the amount after losing an appeal to the U.S. Court of Appeals for the Eighth Circuit, according to a document filed on May 26.

What is not clear at deadline is a resolution of the $11.2 million judgment levied against Gupta’s firm DataUSA in the same case for allegedly copying the Infogroup database, a verdict also upheld by the appeals court. Gupta had appealed after the U.S. District for the District of Nebraska denied a motion for a new trial. 

But the outcome may have ramifications for all data owners and compilers, and could lessen the impact on the ground of the Supreme Court’s 1991 Feist decision. That's our interpretation, anyway. 

Here’s the backstory.

Vin Gupta is the larger-than-life character who created Infogroup, took the company public, acquired a dozen or so mailing list firms and was a friend and supporter of Bill Clinton.

In 2008, Gupta left Infogroup, and signed a separation agreement in which he was paid $10 million and given various other benefits. Two years later, he founded DatabaseUSA.

In the suit filed in 2014, Infogroup charged that Gupta breached the the contract, including its non-disparagement clause, partly by telling a reporter that Infogroup could not compete in the marketplace: “They have no leadership, no brains and their product is obsolete.” And the jury agreed with Infogroup, according to the appeals decision written by Circuit Judge William Duane Benton and issued on April 27. 

Perhaps more importantly, the jury found that DatabaseUSA had committed copyright infringement because it copied the Infogroup database, Benton writes. 

Among the compelling factors was the discovery of Infogroup’s seed names in the DatabaseUSA database, according to Benton's narrative. 

DatabaseUSA destroyed its database in 2014 after Infogroup won a preliminary injunction against it. This prevented a name-by-name comparison of the two databases, as DatabaseUSA wanted, Benton continues. 

These are complex matters, difficult to explain to a jury, or even a judge. And one must ask: Can you copyright what is, in essence, a mailing list, even one with seeds in it?

DatabaseUSA argued that Infogroup’s copyright “revives the now-discredited ‘sweat of the brow theory’ that hard work alone merits copyright protection,” according to the appeals decision. 

(This reporter saw the sweat that goes into it during a journalistic visit to Infogroup’s facility in Omaha in the Gupta era: A floor full of workers was busy calling every name in the database and checking their information.)

That brings us to the question: Is Feist kaput?

Feist concerned the copying of names and phone numbers out of an old-time white pages directory. SCOTUS said you could not claim copyright protection for a mere collection of facts.

This is especially true if the copying party alters the data in any creative way, a lawyer once explained to me.

But that decision may be rendered moot by technology. Recycling an email list, or a list of any type, would cause compliance issues under GDPR and CCPA.

The copier would have to note unsubscribes on the file and other privacy choices. And there would be a problem because use by the offending firm clearly would not be permission-based.

What's more, there are multiple digital sources feeding the big databases in today's real-time environment. A copying of a list, if it were even possible, would be tagged a breach. 

For that matter, even copying out of a telephone book would cause privacy issues these days. 

But back to list industry gossip. The district court trimmed the initial award against DatabaseUA from $39.6 million to $11.2 million, the higher figure being DatabaseUSA’s revenue from 2011 to 2018, minus overlap and commissions.

The court subtracted revenue following 2014, after which there was no infringement alleged. It' not clear if the case involved B2B or B2C data or both. 

In the interest of full disclosure, this reporter did some work for an Infogroup subsidiary, Edith Roman, several years ago after Gupta had left the firm.