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Communications Communications Communications Communications –––– Part 1Part 1Part 1Part 1

We Know the InternetWe Know the InternetWe Know the InternetWe Know the Internet

Bennet KelleyBennet KelleyBennet KelleyBennet KelleyBennet KelleyBennet KelleyBennet KelleyBennet Kelley

Internet Law CentInternet Law CentInternet Law CentInternet Law CentInternet Law CentInternet Law CentInternet Law CentInternet Law Centerererererererer

bkelley@Internetbkelley@Internetbkelley@Internetbkelley@Internetbkelley@Internetbkelley@Internetbkelley@Internetbkelley@InternetLawLawLawLawLawLawLawLawCenter.netCenter.netCenter.netCenter.netCenter.netCenter.netCenter.netCenter.net

In the Beginning . . .

There was California . . .

“We are saying that unsolicited e-mail cannot be sent and there are no loopholes . . . We don't differentiate and there are no loopholes . . . We don't differentiate between Disney and Viagra.

If you go out and rent a list of e-mail addresses, by definition you are not a legitimate business. You are the person we are trying to stop.”

Former California State Senator Kevin MurrayAuthor of SB 186

84 days later . . .

President George W. Bush signing the CAN-SPAM Act (Dec. 16, 2003).

CCCControlling the ontrolling the ontrolling the ontrolling the AAAAssault of ssault of ssault of ssault of NNNNonononon----SSSSolicited olicited olicited olicited PPPPornography ornography ornography ornography AAAAnd nd nd nd MMMMarketing arketing arketing arketing ActActActAct

CAN-SPAM Act of 2003

CAN-SPAM IS . . .

• An antiAn antiAn antiAn anti----fraud and disclosure fraud and disclosure fraud and disclosure fraud and disclosure statutestatutestatutestatute

• Applies to an email where the Applies to an email where the Applies to an email where the Applies to an email where the “primary purpose” is commercial “primary purpose” is commercial “primary purpose” is commercial “primary purpose” is commercial advertisement or promotion of a advertisement or promotion of a advertisement or promotion of a advertisement or promotion of a product or serviceproduct or serviceproduct or serviceproduct or service

CAN-SPAM DOES NOT . . .

• “Can Spam” “Can Spam” “Can Spam” “Can Spam” –––– except for wireless spamexcept for wireless spamexcept for wireless spamexcept for wireless spam

• Include a “Do Not Email Registry”Include a “Do Not Email Registry”Include a “Do Not Email Registry”Include a “Do Not Email Registry”

• Impose an “ADV” labeling requirementImpose an “ADV” labeling requirementImpose an “ADV” labeling requirementImpose an “ADV” labeling requirement

product or serviceproduct or serviceproduct or serviceproduct or service

• Applicable to bulk and single Applicable to bulk and single Applicable to bulk and single Applicable to bulk and single emailsemailsemailsemails

• Create a general private right of actionCreate a general private right of actionCreate a general private right of actionCreate a general private right of action

• Generate stimulating cocktail party Generate stimulating cocktail party Generate stimulating cocktail party Generate stimulating cocktail party conversationsconversationsconversationsconversations

Regulatory Timeline

2004: 2004: 2004: 2004: FTC Final Rule on Adult LabelingFCC CAN-SPAM Rules

2005: 2005: 2005: 2005: FTC (1) Final Rule on Primary Purpose of Email; and

(2) Proposed Discretionary Rules

2006200620062006:

2007:2007:2007:2007:

2008: 2008: 2008: 2008: FTC Final Discretionary Rules

Determining When

CAN-SPAM Applies

CANCANCANCAN----SPAMENCLATURESPAMENCLATURESPAMENCLATURESPAMENCLATURE

SENDERSENDERSENDERSENDER --means a person who initiates a commercial e-mail and whose product, service, or Internet web site is advertised or promoted by the message.

INITIATE INITIATE INITIATE INITIATE -- means to originate or transmit, or procure the origination or transmission of, such an e-mail message.

PROCUREPROCUREPROCUREPROCURE --------means intentionally to pay or PROCUREPROCUREPROCUREPROCURE --------means intentionally to pay or induce another person to initiate the message on one's behalf, while knowingly or consciously avoiding knowing the extent to which that person intends to comply with this Act.

CAN-SPAM Principal Requirements

� FTC: must give the recipient enough

information to know who is sending the

message

From Line

� Not deceptive to use multiple domainsKleffman v. Vonage Holding Corp. (C.D. Cal. 2007).

� Not misleading to use non-corporate address

where domain may be checked using “Who

Is” Gordon v. Virtumundo, Inc. (W.D. Wash. 2007)

� Fake address can get you in the dog house.

Must Be a Sender Must Be a Sender Must Be a Sender Must Be a Sender

Under CANUnder CANUnder CANUnder CAN----SPAMSPAMSPAMSPAM• Name must be in the “From” Line

Designated Sender Rule

Cannot designate Cannot designate Cannot designate Cannot designate NonNonNonNon----SenderSenderSenderSender

• Must be Responsible for CAN-SPAM compliance

• Dropped requirement that Designated Sender be in control of the content or the mailing list used

12

Subject Lines

• Senate Report

– test is whether the person initiating the message knows test is whether the person initiating the message knows test is whether the person initiating the message knows test is whether the person initiating the message knows that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a that the subject heading would be likely to mislead a reasonable recipient about a material fact regarding the reasonable recipient about a material fact regarding the reasonable recipient about a material fact regarding the reasonable recipient about a material fact regarding the content or subject matter of the messagecontent or subject matter of the messagecontent or subject matter of the messagecontent or subject matter of the message

• “New MySpace Phone” subject line misleads consumers by creating false sense of sponsorship by MySpace.

– MySpace, Inc. v. The Globe.com, Inc. (C.D. Cal. Feb. 27, 2007)MySpace, Inc. v. The Globe.com, Inc. (C.D. Cal. Feb. 27, 2007)MySpace, Inc. v. The Globe.com, Inc. (C.D. Cal. Feb. 27, 2007)MySpace, Inc. v. The Globe.com, Inc. (C.D. Cal. Feb. 27, 2007)

• “Free Gift” subject lines violate CAN-SPAM– FTC v. Adteractive, Inc. (C.D. Cal. 2007)FTC v. Adteractive, Inc. (C.D. Cal. 2007)FTC v. Adteractive, Inc. (C.D. Cal. 2007)FTC v. Adteractive, Inc. (C.D. Cal. 2007)

Opt-Out Mechanism

• Opt-Out Basics– May offer options, but total optMay offer options, but total optMay offer options, but total optMay offer options, but total opt----out must be out must be out must be out must be

one of themone of themone of themone of them

– 10 days to remove10 days to remove10 days to remove10 days to remove

– No further use of email address after optNo further use of email address after optNo further use of email address after optNo further use of email address after opt----out out out out

– Separate Business Units: Separate Business Units: Separate Business Units: Separate Business Units: OptOptOptOpt----out for Saab not optout for Saab not optout for Saab not optout for Saab not opt----out for all of GMout for all of GMout for all of GMout for all of GM

• Discretionary Regs– Cannot impose any conditions on optCannot impose any conditions on optCannot impose any conditions on optCannot impose any conditions on opt----out out out out

requests (e.g, fee or provide information)requests (e.g, fee or provide information)requests (e.g, fee or provide information)requests (e.g, fee or provide information)

CAN-SPAM Plaintiffs

� No Consumer Private Right of Action

� FTC & State AGs

� Internet Access Service Provider (IASP)� Adversely Effected by Violation

� Must demonstrate substantial harm

15

� Civil Penalties� $25 – $250 per email

� $2 million maximum

� Damage Adjustments� Treble damages if willful

� Reduction if violation occurred despite commercially reasonable efforts to maintain compliance”

Faux ISPs Established to Prosecute

CAN-SPAM Actions

� Small, free service can qualifyHypertouch v. Kennedy-Western University, 2006 WL 648688 (N.D. Cal. 2006)

� But must demonstrate substantial

CAN-SPAMIGATORS

� But must demonstrate substantial

harm - e.g., bandwidth, hardware, connectivity,

overhead, staffing or equipment costs Asis Internet Services, v. Optin Global, Inc., 2008 WL 1902217 (N.D. Cal. March

27, 2008 )

Sender Liability

� FTC unsuccessful in seeking strict liability

� Advertiser liable if “actual knowledge, or by consciously avoiding knowing” about affiliate violationsabout affiliate violations

� Strict anti-spam policies and policing of affiliates defeated allegation of intent.Hypertouch v. Kennedy-Western University, 2006 WL 648688 (N.D. Cal. 2006)

– No duty to investigateAsis Internet Services, v. Optin Global, Inc., 2008 WL 1902217 (N.D. Cal. March 27, 2008 )

CAN-SPAM PREEMPTS ALL

STATE REGULATION OF

EMAIL EXCEPT STATE LAWS

• Regulating falsity or deception in email

• Not specific to email, including State trespass, contract, or tort law; or

• Other State laws to the extent that those laws relate to acts of fraud or computer crime

• Misrepresentation must be materialOmega World Travel, Inc. v. Mummagraphics, Inc. (4th Cir. 2006).

• States cannot dictate form of from lineKleffman v. Vonage Holding Corp. (C.D. Cal. 2007); Gordon v. Virtumundo, Inc.(W.D. Wash. 2007).

Rulings On State Spam

Regulation

• Courts split on whether state regulation must be based on traditional notions of fraud

• Yes. ASIS Internet Service v. Optin Global, Inc. (N.D. Cal. 2008); Hypertouch v. ValueClick, (LA Super. Ct. May 4, 2009).

• No. ASIS Internet Service v. Vista Print (N.D.Cal. 2009).

• First Amendment requires that it not impinge non-commercial emailVirginia v. Jaynes (Va. 2008).

TOP 5 TIPSTOP 5 TIPSTOP 5 TIPSTOP 5 TIPS

�#1 #1 #1 #1 –––– Always assume CAN-SPAM applies

�#2 – The Grandmother Rule

�#3 – The Hand Grenade Rule�#3 – The Hand Grenade Rule

�#4 -The Academy Rule

�#5 – The Einstein-Dilbert Conundrum

Selected Cases: CANSelected Cases: CANSelected Cases: CANSelected Cases: CANSelected Cases: CANSelected Cases: CANSelected Cases: CANSelected Cases: CAN--------SPAM ActSPAM ActSPAM ActSPAM ActSPAM ActSPAM ActSPAM ActSPAM Act

Advertiser LiabilityAdvertiser LiabilityAdvertiser LiabilityAdvertiser LiabilityAdvertiser LiabilityAdvertiser LiabilityAdvertiser LiabilityAdvertiser Liability

�� ASIS Internet Services, v. ASIS Internet Services, v. OptinOptin Global, IncGlobal, Inc., 2008 WL ., 2008 WL

1902217 (N.D. Cal. March 27, 2008 )1902217 (N.D. Cal. March 27, 2008 )

�� HypertouchHypertouch v. Kennedyv. Kennedy--Western UniversityWestern University, 2006 WL , 2006 WL

648688 (N.D. Cal. 2006)648688 (N.D. Cal. 2006)

�� US v. US v. CyberheatCyberheat, 2007 U.S. Dist. LEXIS 15448 (N.D. Ariz. , 2007 U.S. Dist. LEXIS 15448 (N.D. Ariz.

2007)2007)

�� US v. US v. ImplulseImplulse MarketingMarketing, No. CV05, No. CV05--1285RSL (W.D. 1285RSL (W.D.

Wash. June 8, 2007)Wash. June 8, 2007)Wash. June 8, 2007)Wash. June 8, 2007)

From and Subject LinesFrom and Subject LinesFrom and Subject LinesFrom and Subject LinesFrom and Subject LinesFrom and Subject LinesFrom and Subject LinesFrom and Subject Lines

�� FTC v. FTC v. AdteractiveAdteractive, Inc, Inc., No. Case No. CV., No. Case No. CV--0707--5940 SI 5940 SI

(C.D. Cal. 2007)(C.D. Cal. 2007)

�� Gordon v. Gordon v. VirtumundoVirtumundo, Inc, Inc., Case No. 06., Case No. 06--02040204--JCC (W.D. JCC (W.D.

Wash. May 15, 2007)Wash. May 15, 2007)

�� KleffmanKleffman v. Vonage Holding Corpv. Vonage Holding Corp., Case No. CV 07., Case No. CV 07--

2406GAFJWJX (C.D. Cal. May 23, 2007)2406GAFJWJX (C.D. Cal. May 23, 2007)

�� MySpace, Inc. v. The Globe.com, Inc.MySpace, Inc. v. The Globe.com, Inc. No. CV 06No. CV 06--33913391--

RGK (RGK (JCxJCx) (C.D. Cal. Feb. 27, 2007)) (C.D. Cal. Feb. 27, 2007)

CANCANCANCANCANCANCANCAN--------SPAM Cases Pt 2SPAM Cases Pt 2SPAM Cases Pt 2SPAM Cases Pt 2SPAM Cases Pt 2SPAM Cases Pt 2SPAM Cases Pt 2SPAM Cases Pt 2

PreemptionPreemptionPreemptionPreemption

� Asis Internet Services, v. Optin Global, Inc., 2008 WL 1902217 (N.D. Cal.

March 27, 2008 )

� Asis Internet Services v. VistaPrint USA, Inc., No. C 08-5261-SBA (N.D.

Cal. May 5, 2009)

�� Free Speech Coalition, Inc. v. Shurtleff, No. 2:05CV949DAK, 2007 U.S.

Dist LEXIS 21556 (D. Utah Mar. 23, 2007)

� Gordon v. Virtumundo, Inc., Case No. 06-0204-JCC (W.D. Wash. May

15, 2007)

� Hypertouch, Inc. v. ValueClick, Inc., L.A. Super. Ct. No. C081000 (May

4, 2009).

� Kleffman v. Vonage Holding Corp., Case No. CV 07-2406GAFJWJX

(C.D. Cal. May 23, 2007)

� Omega World Travel, Inc. v. Mummagraphics, Inc., 469 F.3d 348 (4th

Cir. 2006)

� Virginia v. Jaynes, 666 S.E.2d 303 (Va. 2008).

Bennet Kelley founded the Internet Law Center

in 2007 after a decade of activity in many of the

hottest internet issues including behavioral

targeting, cyber squatting, internet marketing

and promotions, net neutrality, privacy, spam

and spyware. Prior to launching the Internet

Law Center, Bennet worked in-house with

Bennet Kelley

Law Center, Bennet worked in-house with

companies such as ETM Entertainment Network,

SpeedyClick.com, Hi-Speed Media and

ValueClick.

Bennet is Co-Vice Chair of the California Bar's

Cyberspace Committee and has been a regular

contributor to the Journal of Internet Law.

bkelley@internetlawcenter.net

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