E.  Legislators Aim To Restrict

Unsolicited Commercial E-Mail

 

      Unsolicited commercial electronic mail, or “spam,” remains a volatile issue.  Brightmail, an   anti-spam technology corporation, reported that the volume of spam more than tripled during 2002.  In November alone, spam accounted for 38 percent of all e-mail traffic -- up from 8 percent in November 2001, according to Brightmail estimates.  Even the Direct Marketing Association, which had consistently favored self-regulation over legislation, has proposed its own guidelines that include prohibiting unsolicited e-mails with deceptive subject lines and return addresses.  In Europe as well, MessageLabs, a service provider based in the United Kingdom, reported that one in every 14 e-mails sent in the UK during 2002 was spam. 

      Meanwhile, 26 states have passed anti-spam legislation.  All but Delaware have opted to regulate and restrict, rather than broadly ban, unsolicited commercial e-mail.  Most state anti-spam laws permit the distribution of spam that includes an identifying label as well as certain information (i.e., valid address and opt-out procedures), and penalize only false and deceptive commercial e-mail. 

      Bills to regulate unsolicited commercial e-mail are pending before Congress, which has yet to pass legislation on this topic.  In addition, a significant amount of litigation has been moving forward in state and federal courts.  Finally, the European Union imposed  regulations on spam in 2002, which will require each of the E.U.’s 15 member states to amend its domestic laws to prohibit the sending of unsolicited e-mail for direct marketing purposes unless the recipient gives prior consent to receive it.

 

Federal Legislative Efforts

      Although a number of bills have been introduced in Congress to attempt to limit or eliminate spam, no specific federal legislation has yet been passed.  Currently eight anti-spam bills are pending in the 107th Congress.  However, the Senate Commerce Committee recently approved one proposal, S. 630, which could be the first such bill ever considered by the full Senate. 

      In March 2001, Sen. Conrad Burns (R-Mont.) introduced S. 630, the Controlling the Assault of Non-Solicited Pornography and Marketing Act (the “Can Spam Act”).  This measure would prohibit the sending of unsolicited commercial e-mails with falsified routing information, and would require inclusion of an e-mail address, physical address, and opt-out instructions in any such message.  The bill was amended in May 2002 to further prohibit the transmission of unsolicited commercial e-mail to addresses harvested from Web sites in violation of restrictions posted on those sites.  The bill would also provide the Federal Trade Commission and state attorneys general with a right of enforcement, and would allow Internet service providers (ISPs) to seek treble damages in a civil action under the statute.

      Notably, S. 630 would effectively preempt all state and local laws that impose liability for sending unsolicited commercial e-mail that are “inconsistent with or more restrictive than the treatment of such activities or actions under this Act.”  However, the bill would not limit the applicability of any civil tort, contract, or trespass laws or criminal computer fraud laws.  Currently, only one state -- Delaware -- prohibits the sending of unsolicited e-mail under any circumstances, including e-mail that satisfies the standards listed above.  Thus, Delaware would likely be the sole state to have its anti-spam legislation struck down entirely should S. 630 be enacted by Congress.  The bill is presently on the Senate legislative calendar and appears likely to pass.

      In the House of Representatives, seven bills introduced in 2001 laid dormant throughout 2002.  (For full descriptions, see The First Amendment and the Media – 2002.)  These include:

 

·        H.R. 95, Unsolicited Commercial Electronic Mail Act, by Rep. Gene Green (D-Texas), January 2001.

·        H.R. 113, Wireless Telephone Spam Protection Act, by Rep. Rush Holt (D-N.J.), January 2001.

·        H.R. 718, Unsolicited Electronic Mail Act, by Rep. Heather Wilson (R-N.M.), February 2001.

·        H.R. 1017, Anti-Spamming Act, by Rep. Bob Goodlatte (R-Va.), March 2001.

·        H.R. 1846, Who is E-Mailing Our Kids Act, by Rep. Felix Grucci (R-N.Y.), May 2001.

·        H.R. 2472, Protect Children from E-Mail Smut Act, by Rep. Zoe Lofgren (D-Calif.), July 2001.

·        H.R. 3146, Netizens Protection Act, by Rep. Christopher Smith (R-N.J.), October 2001. 

 

State Legislation

      Most of the specific legislation enacted against unsolicited e-mail has been on the state front.  In 2002, Kansas enacted a law making it illegal to send unsolicited commercial e-mail that contains falsified routing information or a false or misleading subject line, or that uses a third party’s domain name without permission.  Such e-mail messages must include an opt-out notice and instructions as well as an advertising label (“ADV” or “ADV-ADULT”).  In addition, the law prohibits the distribution of software designed to falsify e-mail routing information. 

      Minnesota, Maryland, Ohio, and South Dakota also adopted various laws regulating aspects of unsolicited commercial e-mail in 2002.  In addition, Utah approved a law in March 2002 that requires unsolicited commercial and sexually explicit e-mail messages to include the sender’s name and physical address, opt-out instructions, and an identifying label at the beginning of the subject line.  Furthermore, any person who violates the law with respect to an unsolicited sexually explicit e-mail is guilty of a Class B misdemeanor.  In a similar vein, California in October 2002 passed a bill banning the sending of unsolicited commercial text messages to cellular telephones or pagers of California residents.

 

Federal and State Court Litigation

      Perhaps the two most significant state cases to date have involved the constitutionality of the state anti-spam laws themselves.  In 2002, Washington State’s attorney general successfully sued a spammer under the state’s anti-spam law, becoming the first state to succeed in a suit brought pursuant to an anti-spam statute.  The suit was initiated in superior court more than two years ago under the state’s 1998 law.  The spammer challenged the claim on the grounds that the law itself unconstitutionally violated the Interstate Commerce Clause. 

      The Washington Supreme Court upheld the law in June 2001, overturning an earlier superior court ruling that the act was “restrictive and burdensome” and unconstitutionally violated the Interstate Commerce Clause.  The U.S. Supreme Court declined to hear a constitutional challenge to the Washington anti-spam law in October 2001.  State v. Heckel, 24 P.3d 404 (Wash.), cert. denied, 122 S. Ct. 467 (2001).  The case then headed back to superior court, where the judge granted summary judgment against the spammer and ordered him in October 2002 to pay nearly $100,000 in fines and related court costs. 

      Similarly, in January 2002 a California court of appeal upheld California’s anti-spam law, overruling a 2001 San Francisco county superior court decision that held the law was unconstitutional because it placed an “inconsistent restriction” on interstate use of the Internet.  Ferguson v. Friendfinder, 115 Cal. Rptr. 2d 258 (Cal. Ct. App. 2002).  The court of appeal found the anti-spam law neither discriminates against nor directly regulates interstate commerce, in that it merely governs California residents (or individuals who use equipment within the state) who send spam to other California residents.  Since the court’s decision, additional lawsuits have been brought for violations of the anti-spam statute, including one claim for a $2-million civil penalty by the state attorney general.  State of California v. PW Marketing LLC, No. CV811428 (Cal. Super. Ct. Sept. 26, 2002).

      Spam recipients have also initiated lawsuits against alleged spammers based on legal theories other than violation of an anti-spam statute, including common law trespass and forgery claims.  In February 2002, the California Supreme Court granted a petition to review an appellate court decision enjoining a former Intel employee from sending unsolicited bulk grievance e-mails to current Intel employees on Intel’s internal proprietary e-mail system based on a trespass to chattels theory.  Intel Corp. v. Hamidi, 114 Cal. Rptr. 2d 244 (Cal. Ct. App. 2001), petition for review granted, 118 Cal. Rptr. 2d 546 (Cal. 2002).  (See Chapter N in this section.)  Also, in People v. Garon (N.Y. Sup. Ct. 2002) a New York supreme court convicted a spammer who had forged “aol.com” in the header of unsolicited bulk e-mail of second-degree forgery, ordering him to pay $1.5 million in damages. 

      In the absence of a state anti-spam statute, a New York appellate court granted ISP PaeTec Communications the right to remove MonsterHut, Inc., an Internet marketing company, from its network, on a breach of contract claim.  MonsterHut, Inc. v. PaeTec Communications, Inc., 741 N.Y.S.2d 820 (N.Y. App. Div. 2002).  The ISP’s contract with MonsterHut permitted termination upon a showing that more than 2 percent of PaeTec’s subscriber-recipients of the unsolicited e-mail complained to the ISP.  Overruling a lower court injunction in favor of MonsterHut, the appellate court held PaeTec had in fact demonstrated receipt of a sufficient number of complaints to trigger the contractual prohibition against sending spam. 

      In August 2002, the state attorney general filed a lawsuit against MonsterHut under state consumer protection laws alleging illegal and fraudulent business practices, including misrepresentations to consumers and ISPs that its e-mail lists were “permission-based.”  The state sought a permanent injunction against MonsterHut from continuing such practices and payment of up to $400,000 in civil penalties.  Oral arguments were held in September 2002.

      Internet service providers have also been involved in spam lawsuits on both sides of the fence.  In 2002, both AOL and Verizon settled suits with companies over the alleged distribution of unsolicited commercial e-mails to their respective subscribers.  Under each settlement, the parties agreed to a permanent injunction against sending future unsolicited e-mails and payment of substantial monetary damages.  America Online, Inc. v. Netvision Audiotext, Inc., No. 99-CV-1186 (E.D. Va. April 2002) (unreported); Verizon Online Services, Inc. v. Ralsky, 203 F. Supp. 2d 601 (E.D. Va. 2002).  In a separate lawsuit, the same federal district court in Virginia awarded AOL nearly $7 million in damages for a spammer’s repeated violation of a permanent injunction granted by the court in 1998, barring the spammer from sending AOL members fraudulent unsolicited commercial e-mail.  America Online, Inc. v. CN Productions, Inc., No. 98-552-A, 2002 U.S. Dist. LEXIS 1607 (E.D. Va. Jan. 31, 2002).

      On the flip side, Sprint Communications was itself charged in a Utah district court in August 2002 for violating a state anti-spam statute by permitting the delivery of unsolicited commercial e-mail that lacked an “ADV” identifier in the subject line.  The class action lawsuit, intended to encourage Sprint to better monitor its Internet network, is seeking damages of $10 per e-mail received, up to $25,000 per day. 

      In the current absence of federal legislation regulating spam, in a June 2002 case of first impression, a Pennsylvania court addressed whether the federal Telephone Consumer Protection Act of 1991 (47 U.S.C. Sec. 227) also applied to unsolicited commercial e-mail.  Aronson v. Bright-Teeth Now, LLC, 2002 WL 1466477 (Pa. Com. Pl. June 19, 2002).  The law provides that use of any “telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine” is unlawful.  In rejecting the claim, the court emphasized the TCPA’s legislative history, which specifically addressed the burdens imposed by occupying a fax machine so that it is “unavailable for legitimate business messages” and the shift of advertising costs to the recipient because the ad is printed by the recipient’s machine.  (See Chapter I, Section IV.)

      The Federal Trade Commission has also policed spammers who use unsolicited commercial e-mail to advertise various deceptive business opportunities in violation of federal regulations against false and unfair advertising.  Several defendants have settled the FTC charges.  See, e.g., FTC v. Internet Specialist (D. Conn. 2002) (permanent injunction barring defendants from making any false or deceptive claims about potential earnings from any bulk e-mail list or similar program); FTC v. Stuffingforcash.com (N.D. Ill. 2002) (pending trial, district court prohibited defendants from engaging in advertising a fraudulent envelope stuffing work-at-home opportunity and froze their assets); FTC v. Universal Direct (S.D. Ohio 2002) (FTC filed a claim against defendant who used spam to promote a chain-letter marketing scheme).

      Significantly, the FTC is not the only federal agency to enter the spam arena.  In August 2002, the Federal Election Commission issued an advisory opinion granting an exemption from sponsorship/disclaimer disclosure requirements to political advertisements delivered via text messaging on wireless devices (i.e., mobile phone, Blackberry).  Federal Election Commission Advisory Opinion 2002-9 (Aug. 23, 2002).  The FEC likened wireless telephone screens to other “small” items such as bumper stickers, pins, and pens, which fall under an existing exemption because there are limits on the amount of information these items can convey.  This FEC opinion may provide an opportunity for broad use of wireless text messaging by candidates distributing unsolicited bulk messages to the voting public.

 

International Efforts To Limit Spam

      Efforts to limit spam are not, by any means, limited to the United States.  In July 2002, the European Council formally adopted the Electronic Communications Data Protection Directive.  This measure is part of an overall telecommunications regulatory framework for the European Union that includes common rules for interconnection, licensing, data privacy, and unsolicited communications.  The framework creates an opt-in approach for e-mail (including text messaging), prohibiting unsolicited commercial e-mail for the purposes of direct marketing unless a subscriber had specifically indicated a desire to receive such e-mail.  Directive of the European Parliament and of the Council Concerning the Processing of Personal Data and the Protection of Privacy in the Electronic Communications Sector, 2002/58/EC (2002).  This was a departure from the original European Commission proposal approved by the European Parliament in December 2001, which would have left the decision of whether to ban unsolicited commercial e-mails to member states.  E.U. members are required to implement the directive by July 2003. 

       Meanwhile, a bill adopted by the Japanese Diet in July 2002 requires senders to attach a notice to any unsolicited commercial e-mail message identifying it as spam and including opt-out procedures.  Advertisements sent via text messaging services to mobile phones similarly must use a specific identifying character in the subject line.  The legislation further bars spammers from sending ads to any recipients who previously have opted-out.  Violators face cease-and-desist orders and steep fines -- companies may be liable for up to 300 million yen.

 

--Kurt  Wimmer

 

The author wishes to thank Marianna Horton, an associate at Covington & Burling in Washington, D.C., for her assistance in the preparation of this chapter.