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In the Beginning . . .
There was California . . .



   'We are saying that unsolicited e-mail
   cannot be sent and there are no loopholes
   . ...
84 Days Later

Controlling the   Solicited
                  Pornography
Assault of        And
Non-              Marketing...
CAN-SPAM Act of 2003
CAN-SPAM IS . . .          CAN-SPAM DOES NOT . . .

• An anti-fraud and        • “Can Spam” – except ...
CAN-SPAM Principal Requirements
                           From line must
                           identify initiator

 ...
Topics
1. FTC Discretionary
   Regs
2. CAN-SPAM
   Plaintiffs
3. State Law &
   Preemption
4. Advertiser Liability
5. Cali...
Regulatory Timeline
2004:   FTC Final Rule on Adult Labeling
        FCC CAN-SPAM Rules

2005:   FTC (1) Final Rule on Pri...
Discretionary Regs
Definition of Valid Physical Address
• Accurately registered P.O. Box allowed


Opt-Out Requests Condit...
Designated Sender Rule
                                  Must Be a
• Name must be in the “From”      Sender Under
  Line  ...
CAN-SPAM Plaintiffs
          • FTC

          • State AGs

          • Internet Access Service
            Provider (IASP...
Is the IASP Remedy a Trojan Horse?
                      Hypertouch v. Kennedy-
                      Western University
 ...
Is Gordon a Proper Plaintiff?
     • Gordon v. Virtumundo
       – Continued to use other people's e-
         mail addres...
No!
• Not Plaintiff Congress
  had in mind – must       Followed in Cal
  demonstrate              Federal Court
  substan...
Subliminal Message #2
 Golf is
 boring.
Let’s talk
  about
 spam.
CAN-SPAM PREEMPTS ALL STATE
  REGULATION OF EMAIL EXCEPT STATE
  LAWS
• Regulating falsity or deception in email

• Not sp...
• Misrepresentation must be
  material

• States cannot dictate form
  of from line
  – Cannot prohibit use of multiple
  ...
Preemption’s Back Door?
• Utah/Michigan
  Child Registry Laws
  – Makes sending prohibited email a
    “computer crime”
  ...
Lessons from the Beehive State
                                     Registry Income/Expense ($000)




                   ...
“Sender” Liability
• FTC unsuccessful in
  seeking strict liability

• Advertiser liable if
  “actual knowledge, or by
  c...
AB 2950
• Pushed by anti-spam activists who
  have filed over 100 suits
• Wish list
  – Advertiser liability
  – Prohibiti...
AB 2950
• Pushed by anti-spam activists who
  have filed over 100 suits
• Wish list


  – Expand Plaintiffs to include Dis...
AB 2950
• Pushed by anti-spam activists who
  have filed over 100 suits
• Wish list
  –

  – Expand Plaintiffs to include ...
Cases
Preemption                                 IASP Standing
• Omega World Travel, Inc. v.              • ASIS Internet ...
Bennet Kelley
                            Bennet Kelley is founder of the Internet Law Center in Santa
                   ...
Future Presentations
October 14
• Online Advertising’s Year of Living
  Dangerously, California State Bar
  Cyberspace Com...
Can Spam At 5
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Can Spam At 5

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Review of CAN-SPAM Act and case law 5 years after passage.

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Can Spam At 5

  1. 1. In the Beginning . . .
  2. 2. 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 Murray Author of SB 186
  3. 3. 84 Days Later Controlling the Solicited Pornography Assault of And Non- Marketing Act Public Law 108-187
  4. 4. CAN-SPAM Act of 2003 CAN-SPAM IS . . . CAN-SPAM DOES NOT . . . • An anti-fraud and • “Can Spam” – except for disclosure statute wireless spam • Applies to an email • Include a “Do Not Email where the “primary Registry” purpose” is commercial advertisement or • Impose an “ADV” promotion of a product labeling requirement or service • Create a general private • No volume requirement right of action
  5. 5. CAN-SPAM Principal Requirements From line must identify initiator Subject line must not be deceptive. Adult Messages must provide notice. UCE must be identified as “advertisement” Requires Working Opt-Out Postal Address for Advertiser Mechanism for Advertiser
  6. 6. Topics 1. FTC Discretionary Regs 2. CAN-SPAM Plaintiffs 3. State Law & Preemption 4. Advertiser Liability 5. California Amendments
  7. 7. Regulatory Timeline 2004: 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
  8. 8. 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
  9. 9. Designated Sender Rule Must Be a • Name must be in the “From” Sender Under Line CAN-SPAM • Must be Responsible for Cannot designate CAN-SPAM compliance Non-Sender • Dropped requirement that Designated Sender be in control of the content or the mailing list used
  10. 10. CAN-SPAM Plaintiffs • FTC • State AGs • Internet Access Service Provider (IASP) – Adversely Effected by Violation • No Consumer Private Right of Action
  11. 11. 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
  12. 12. 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
  13. 13. No! • Not Plaintiff Congress had in mind – must Followed in Cal demonstrate Federal Court substantial harm ASIS Internet Services v. OPTIN • Awards Defendant Global Attorneys’ Fees – suit (N.D. Cal. 2008) “ill-motivated, unreasonable, and frivolous”
  14. 14. Subliminal Message #2 Golf is boring. Let’s talk about spam.
  15. 15. 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
  16. 16. • 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
  17. 17. 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?
  18. 18. Lessons from the Beehive State Registry Income/Expense ($000) $100 Liability $150 $133 Liabilities Exceed Income 2-1 Income $187 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Registry Fees Unspam Fees Law Enforcement Litigation Defense
  19. 19. “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 University Strict anti-spam policies and policing of affiliates defeated allegation of intent. – ASIS Internet Services v. Opt-In Global, Inc. No duty to investigate
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. Cases Preemption IASP Standing • Omega World Travel, Inc. v. • ASIS Internet Services, v. Optin Mummagraphics, Inc., 469 F.3d 348 Global, Inc., 2008 WL 1902217 (N.D. (4th Cir. 2006) Cal. March 27, 2008 ) • Free Speech Coalition, Inc. v. • Gordon v. Virtumundo, Inc., supra. Shurtleff, No. 2:05CV949DAK, 2007 U.S. Dist LEXIS 21556 (D. Utah Mar. • Hypertouch v. Kennedy-Western 23, 2007) University, 2006 WL 648688 (N.D. Cal. 2006) • Kleffman v. Vonage Holding Corp., Case No. CV 07-2406GAFJWJX (C.D. No Strict Liability Cal. May 23, 2007) • ASIS Internet Services, v. Optin Global, Inc., supra. • Gordon v. Virtumundo, Inc., Case No. 06-0204-JCC (W.D. Wash. May 15, 2007) • US v. Implulse Marketing, No. CV05- 1285RSL (W.D. Wash. June 8, 2007) • Virginia v. Jaynes, No. 062388 (Va. September 12, 2008) • US v. Cyberheat, 2007 U.S. Dist. LEXIS 15448 (N.D. Ariz. 2007)
  24. 24. Bennet Kelley Bennet 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. www.InternetLawCenter.net 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
  25. 25. Future Presentations October 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)

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