Contract – Data distribution – Third parties

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Where a plaintiff has moved for a preliminary injunction to prevent the defendant from distributing the plaintiff’s data to third parties, the motion should be allowed because the plaintiff has shown a likelihood of success on the merits of its claim that the defendant violated section 2.1 of the parties’ contract.

“Plaintiff ZoomInfo Technologies LLC (‘ZoomInfo’) has moved for a preliminary injunction against Defendant Salutary Data LLC (‘Salutary’), seeking to enjoin Salutary from distributing ZoomInfo’s data to third parties. … Salutary has also moved for injunctive relief seeking to enjoin ZoomInfo from terminating or otherwise breaching the parties’ License Agreement (the ‘Agreement’). …

“ZoomInfo is a publicly traded company that helps businesses sell and market their products and services directly to other businesses by providing licensed access to its business-to-business contact database. … ZoomInfo’s customers pay fees to access the database, with some customers paying hundreds of thousands of dollars per year for access. … Salutary is a boutique provider of U.S. business contact records, offering a curated multi-supplier-sourced database of business contact records to its customers. …

“In December 2015, Zoom Information Inc., a predecessor-in-interest to ZoomInfo, and Salutary entered into an Agreement permitting Salutary to sublicense ZoomInfo Data to Salutary’s own customers (‘Customer Subscribers’). … The Agreement defines a ‘Customer Subscriber’ as ‘an individual or organization provided access to [Salutary’s] Products including for use as part of Customer Subscriber lead generation products and services.’ … The Agreement was amended five times, … and restricts Salutary and the Customer Subscribers’ uses of ZoomInfo’s data. … ZoomInfo alleges that in violation of Section 2.1 of the Agreement, Salutary entered into numerous agreements with Customer Subscribers that permitted the Customer Subscribers to re-distribute ZoomInfo Data to third parties and did not limit the use of same as required in the Agreement. …

“… On March 8, 2021, ZoomInfo terminated the Agreement under Section 4.2. …

“The parties do not dispute that the Agreement is a valid contract. The only dispute is whether Salutary breached the Agreement by, among other things, permitting its Customer Subscribers to resell ZoomInfo Data to end users, in violation of Section 2.1(b), or if ZoomInfo was in breach for terminating the Agreement because Salutary did so. …

“… As Salutary concedes that its Customer Subscribers are ‘third-party redistributors’ who are relicensing, reselling and redistributing ZoomInfo Data to their end customers, … in violation of Sections 2.1(a), 2.1(b) and 2.1(h), which prohibits Customer Subscribers from access and review of ZoomInfo Data for other than their own individual, internal use, and bars reproducing, distributing, displaying, selling, publishing, broadcasting or circulating ZoomInfo Data to any third-parties, … or modifying, licensing, bartering or selling any content provided by ZoomInfo, id., the Court concludes that ZoomInfo is likely to succeed on the merits of its breach of contract claim.

“Given the Court’s reasoning above, the Court concludes that ZoomInfo is reasonably likely to succeed on its claim that the Customer Subscribers’ use of ZoomInfo Data violated Section 2.1, thereby rendering Salutary in breach of contract and permitting ZoomInfo to terminate the Agreement under Section 4.2. Accordingly, Salutary’s motion for preliminary injunction, under which Salutary argues ZoomInfo is in breach of contract for terminating the Agreement, is unlikely to succeed on the merits. …

“… Given that the ZoomInfo Data loses value through lost exclusivity and may be sublicensed to ZoomInfo competitors without the imposition of Agreement restrictions, the distribution and sublicensing of ZoomInfo’s data by third parties undermines the business itself. Accordingly, ZoomInfo’s injury ‘is not accurately measurable or adequately compensable by money damages.’ … Weighing the alleged harms in tandem with ZoomInfo’s likelihood of success on its breach of contract claim, … the Court concludes that ZoomInfo has made an adequate showing of irreparable harm. …

“… There is a public interest in the upholding the terms of contracts entered into by the parties, or, at least, no friction between the injunction that the Court will allow ZoomInfo and the public interest.

“Having considered all of the factors above, the Court allows ZoomInfo’s motion for preliminary injunction as to its breach of contract claim. … The Court will enter a preliminary injunction Order that requires Salutary to comply with Section 4.4 of the Agreement.”

ZoomInfo Technologies LLC v. Salutary Data LLC (Lawyers Weekly No. 02-141-21) (13 pages) (Casper, J.) (Docket No. 21-cv-10396-DJC) (April 21, 2021).

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