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 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

Controlling the

Assault of

Non-

Solicited

Pornography

And

Marketing Act

Public Law 108-187

CAN-SPAM Act of 2003CAN-SPAM IS . . .

• An anti-fraud and disclosure statute

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

• No volume requirement

CAN-SPAM DOES NOT . . .

• “Can Spam” – except for wireless spam

• Include a “Do Not Email Registry”

• Impose an “ADV” labeling requirement

• Create a general private right of action

CAN-SPAM Principal Requirements

From line must identify initiator

Subject line must not be deceptive. Adult Messages must provide notice.

Postal Address for AdvertiserRequires Working Opt-OutMechanism for Advertiser

UCE must be identified

as “advertisement”

1.FTC Discretionary Regs

2.CAN-SPAM Plaintiffs

3.State Law & Preemption

4.Advertiser Liability

5.California Amendments

Topics

Regulatory Timeline2004: FTC Final Rule on Adult Labeling

FCC CAN-SPAM Rules

2005: FTC (1) Final Rule on Primary Purpose of Email; and (2) Proposed Discretionary Rules

2006:

2007:

2008: FTC Final Discretionary Rules

Discretionary Regs

Definition of Valid Physical Address• Accurately registered P.O. Box allowed

Opt-Out Requests Conditions or Expiration• Cannot impose any conditions on opt-out requests

– (e.g, fee or provide information)• Abandons proposal to reduce processing time to 3 days• Rejects call for expiration period for opt-out requests

Must Be a Sender Under CAN-SPAM

Cannot designate Non-Sender

• Name must be in the “From” Line

• Must be Responsible for CAN-SPAM compliance

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

Designated Sender Rule

CAN-SPAM Plaintiffs• FTC

• State AGs

• Internet Access Service Provider (IASP)– Adversely Effected by

Violation

• No Consumer Private Right of Action

Is the IASP Remedy a Trojan Horse?

Hypertouch v. Kennedy-Western University

• Small, free service can qualify.

• Concern that Hypertouch is a professional plaintiff can only be addressed by Congress

• Opens door to litigation by anti-spam activists as faux-IASPs

Hypertouch and its principal have filed approx. 40 cases under CAN-SPAM and/or California law

Is Gordon a Proper Plaintiff?

• Gordon v. Virtumundo – Continued to use other people's e-mail addresses to collect spam .

. . for generating lawsuit-fueled revenue – No harm related to

• Bandwidth• Hardware• Internet connectivity, network integrity• Overhead, staffing or equipment costs

No!

• Not Plaintiff Congress had in mind – must demonstrate substantial harm

• Awards Defendant Attorneys’ Fees – suit “ill-motivated, unreasonable, and frivolous”

Followed in Cal Federal Court

ASIS Internet Services v. OPTIN Global (N.D. Cal. 2008)

Golf is boring.

Let’s talk about spam.

Subliminal Message #2

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 material

• States cannot dictate form of from line – Cannot prohibit use of multiple

domains.

– Not misleading to use non-corporate address where domain may be checked using “Who Is”

• State regulation must be based on traditional notions of fraud

• First Amendment requires that it not impinge non-commercial email

Preemption’s Back Door?

• Utah/Michigan Child Registry Laws– Makes sending prohibited email a

“computer crime”– Free Speech Coalition, Inc. v. Shurtleff,

Utah Federal Court refused to enjoin law finding it fell within exception for computer crime

• DOJ filed brief supporting this position

• New Colorado Spam Law – Makes violation of CAN-SPAM a

violation of state deceptive practices and computer fraud laws

– Is this a backdoor to creating private right of action under CAN-SPAM?

Lessons from the Beehive State

Registry Income/Expense ($000)

$187

$150 $133 $100

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

Income

Liability

Registry Fees Unspam Fees Law Enforcement Litigation Defense

Liabilities Exceed Income 2-1

“Sender” Liability• FTC unsuccessful in

seeking strict liability

• Advertiser liable if “actual knowledge, or by consciously avoiding knowing” about affiliate violations– Hypertouch v. Kennedy-

Western UniversityStrict anti-spam policies and policing of affiliates defeated allegation of intent.

– ASIS Internet Services v. Opt-In Global, Inc. No duty to investigate

AB 2950

• Pushed by anti-spam activists who have filed over 100 suits

• Wish list– Advertiser liability– Prohibiting use of multiple domains – Tactics to evade email filters– Expand Plaintiffs to include District &

City Attorneys– Venue – Restore Statute of Limitations to 3 Years

AB 2950

• Pushed by anti-spam activists who have filed over 100 suits

• Wish list

– Expand Plaintiffs to include District & City Attorneys

– Venue – Restore Statute of Limitations to 3

Years

AB 2950

• Pushed by anti-spam activists who have filed over 100 suits

• Wish list–

– Expand Plaintiffs to include District & City Attorneys

– Venue – Restore Statute of Limitations to 3

Years

CasesPreemption• Omega World Travel, Inc. v.

Mummagraphics, Inc., 469 F.3d 348 (4th Cir. 2006)

• Free Speech Coalition, Inc. v. Shurtleff, No. 2:05CV949DAK, 2007 U.S. Dist LEXIS 21556 (D. Utah Mar. 23, 2007)

• Kleffman v. Vonage Holding Corp., Case No. CV 07-2406GAFJWJX (C.D. Cal. May 23, 2007)

• Gordon v. Virtumundo, Inc., Case No. 06-0204-JCC (W.D. Wash. May 15, 2007)

• Virginia v. Jaynes, No. 062388 (Va. September 12, 2008)

IASP Standing• ASIS Internet Services, v. Optin Global,

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

• Gordon v. Virtumundo, Inc., supra.

• Hypertouch v. Kennedy-Western University, 2006 WL 648688 (N.D. Cal. 2006)

No Strict Liability• ASIS Internet Services, v. Optin Global,

Inc., supra.

• US v. Implulse Marketing, No. CV05-1285RSL (W.D. Wash. June 8, 2007)

• US v. Cyberheat, 2007 U.S. Dist. LEXIS 15448 (N.D. Ariz. 2007)

Bennet KelleyBennet Kelley is founder of the Internet Law Center in Santa Monica where he helps clients navigate the challenges of the digital economy. He has been active in many of the hottest Internet issues over the past decade including cyber squatting, internet marketing and promotions, online gambling, net neutrality, privacy and spam.

Bennet will be Vice-Chair of the California State Bar's Cyberspace Committee and is a regular contributor to the Journal of Internet Law. Bennet worked in-house with companies such as ETM Entertainment Network, SpeedyClick.com and ValueClick prior to launching the Internet Law Center.

The Internet Law Center’s newsletter, Monday Memo, recently was named one of the top 100 Internet Law resources..

Contact: Internet Law Center 100 Wilshire Blvd, Suite 950 Santa Monica, CA 90401 310-452-0401 bkelley@internetlawcenter.net

www.InternetLawCenter.net

Future PresentationsOctober 14• Online Advertising’s Year of Living

Dangerously, California State Bar Cyberspace Committee (webinar)

November 3• Email Compliance: Foundation of

Reputation & Deliverability, Direct Marketing Association (New York)

November 21• Affiliate & Direct Marketing, PMA

Promotion Marketing Law Conference (Chicago)