North America Photon Infotech, Ltd. v. ZoomInfo LLC

Background

Photon purchased access to ZoomInfo’s marketing databases under an End User License Agreement. The agreement required Photon to stop using and destroy ZoomInfo’s data when the agreement ended, keep the data confidential, and prevent third parties from accessing it. Photon’s authorized access ended on May 16, 2018.

The court had previously ruled for ZoomInfo on liability for its breach-of-contract counterclaim. It found that Photon breached the agreement by continuing to use ZoomInfo’s data after May 16, 2018, and by providing some of the data to Packyge. The remaining issue was the amount of damages, which the court decided after a bench trial.

Evidentiary Rulings

The court excluded all of Photon witness Sanjiv Lochan’s testimony. Photon had not identified Lochan in its required disclosures, and the court found that Photon’s earlier production of emails mentioning him did not tell ZoomInfo that Photon might use him as a trial witness or identify the subjects of his testimony. The court found no adequate explanation for the omission, prejudice to ZoomInfo, and no practical possibility of reopening discovery or continuing the trial.

The court denied ZoomInfo’s request to exclude portions of Michael Levine’s testimony, except that it would not consider his testimony in a way prohibited by the rule governing settlement discussions. The court granted Photon’s request to disregard the portion of ZoomInfo’s pretrial memorandum addressing attorneys’ fees because fees were to be considered after damages. It denied Photon’s request to strike portions of Samantha Montgomery’s testimony, finding that the testimony was based on her personal knowledge rather than hearsay.

Findings About Unauthorized Use

ZoomInfo used unique “seed records”—records containing generated names and contact information linked to ZoomInfo or its affiliates—to track data downloaded by each customer. ZoomInfo’s records showed 420 emails sent to seed-record email addresses associated with Photon between May 17, 2018, and August 13, 2020. Because there were no such emails from November 1, 2018, through June 30, 2019, the court found that Photon’s unauthorized use lasted 19 months: about five and one-half months from May 17, 2018, through October 31, 2018, and about thirteen and one-half months from July 1, 2019, through August 13, 2020.

The court also found that emails sent by Mark Thompson, an employee of Packyge, showed that Photon provided Packyge access to certain ZoomInfo data. Packyge was not a ZoomInfo customer or an authorized user under the agreement, and the court found that Packyge used the data for about two months.

Damages Analysis

The court measured damages by the market value of ZoomInfo’s rights to control the use and distribution of its data. Photon had paid $47,920 for its first year of service after discounts, while ZoomInfo had offered Photon renewal prices ranging from $49,000 to $60,000 per year. The court selected $60,000 per year as the best measure of market value because it reflected the price ZoomInfo described as near the average paid by customers for similar services and was more representative than the unusually large discount offered to encourage a long-term relationship with Photon.

The court reduced that annual value by 10 percent to account for data becoming outdated without continuing updates. It did not make an additional reduction for the absence of customer support because the trial record did not show that Photon experienced technological problems or establish the value of that support. The resulting value was $54,000 per year, or $4,500 per month.

Applying the monthly rate to 19 months of Photon’s unauthorized use and two months of Packyge’s use, the court awarded ZoomInfo $94,500. The court rejected ZoomInfo’s request to presume that Photon continued using the data through trial because ZoomInfo had not shown that Photon destroyed or concealed evidence, violated a discovery order, or acted with the intent required for an adverse inference. The court also declined to charge Photon for full one-year subscriptions because ZoomInfo had not shown that one-year subscriptions were mandatory.

Disposition

The court concluded that ZoomInfo was entitled to $94,500 in damages. It granted ZoomInfo’s motion in limine in part and denied it in part, granted Photon’s motion in limine in part and denied it in part, and granted the identified sealing requests. The court directed the clerk to close the motions in limine and scheduled a later conference concerning remaining attorneys’ fees issues.