Privacy Concerns in
Marketing and Commercial
Communications – Part 1
                Bennet Kelley
           Internet Law...
In the Beginning . . .
There was California . . .



   “We are saying that unsolicited e-mail cannot be sent
   and there are no loopholes . . ....
84 days later . . .




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



               Controlling t...
CAN-SPAM Act of 2003
CAN-SPAM IS . . .                     CAN-SPAM DOES NOT . . .

•       anti-
    An anti-fraud and di...
Regulatory Timeline
2004: FTC Final Rule on Adult Labeling
        FCC CAN-SPAM Rules

2005: FTC (1) Final Rule on Primary...
Determining When
CAN-SPAM Applies
CAN-
CAN-SPAMENCLATURE
    SENDER    -- means a person who initiates a
    commercial e-mail and whose product, service,
 ...
CAN-SPAM Principal Requirements
From Line
 FTC: must give the recipient enough
 information to know who is sending the
 message

 Not deceptive to use mul...
Designated Sender Rule
                                               Must Be a Sender
• Name must be in the “From” Line  ...
12
Subject Lines
   • Senate Report
      – test is whether the person initiating the message knows
        that the subject ...
Opt-Out Mechanism

• Opt-Out Basics
  – May offer options, but total opt-out must be
                                 opt-...
CAN-SPAM Plaintiffs
              No Consumer Private Right of Action

              FTC & State AGs

              Intern...
CAN-SPAMIGATORS

Faux ISPs Established to Prosecute
CAN-SPAM Actions
 Small, free service can qualify
 Hypertouch v. Kenne...
Sender Liability
FTC unsuccessful in seeking strict
liability

Advertiser liable if “actual knowledge,
or by consciously a...
CAN-SPAM PREEMPTS ALL
   STATE REGULATION OF
   EMAIL EXCEPT STATE LAWS

• Regulating falsity or deception in
  email

• N...
Rulings On State Spam
       Regulation
• Misrepresentation must be
  material
  Omega World Travel, Inc. v. Mummagraphics...
TOP 5 TIPS
#1 – Always
          assume CAN-SPAM applies
#2 – The Grandmother Rule
#3 – The Hand Grenade Rule
#4 -The Acad...
Selected Cases: CAN-SPAM Act
                CAN-
               Advertiser Liability

                    ASIS Internet S...
CAN-
CAN-SPAM Cases Pt 2
           Preemption

                Asis Internet Services, v. Optin Global, Inc., 2008 WL 190...
Bennet Kelley
                                Bennet Kelley founded the Internet Law Center
                              ...
Internet Law Center
                               The Internet Law Center is dedicated to helping businesses
            ...
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PLI Can Spam

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Overview of CAN-SPAM Act.

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PLI Can Spam

  1. 1. Privacy Concerns in Marketing and Commercial Communications – Part 1 Bennet Kelley Internet Law Center bkelley@InternetLaw bkelley@InternetLawCenter.net LawCenter.net We Know the Internet
  2. 2. In the Beginning . . .
  3. 3. 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
  4. 4. 84 days later . . . President George W. Bush signing the CAN-SPAM Act (Dec. 16, 2003). Controlling the Assault of Non-Solicited Pornography And Marketing Act on-
  5. 5. CAN-SPAM Act of 2003 CAN-SPAM IS . . . CAN-SPAM DOES NOT . . . • anti- An anti-fraud and disclosure • “Can Spam” – except for wireless spam statute • Include a “Do Not Email Registry” • Applies to an email where the “primary purpose” is commercial advertisement or promotion of a • Impose an “ADV” labeling requirement product or service • Create a general private right of action • Applicable to bulk and single emails • Generate stimulating cocktail party conversations
  6. 6. 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: 2006 2007: 2008: FTC Final Discretionary Rules
  7. 7. Determining When CAN-SPAM Applies
  8. 8. CAN- CAN-SPAMENCLATURE SENDER -- 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 -- means to originate or transmit, or procure the origination or transmission of, such an e-mail message. PROCURE -- 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.
  9. 9. CAN-SPAM Principal Requirements
  10. 10. From Line FTC: must give the recipient enough information to know who is sending the message Not deceptive to use multiple domains Kleffman 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.
  11. 11. Designated Sender Rule Must Be a Sender • Name must be in the “From” Line CAN- Under CAN-SPAM • Must be Responsible for CAN-SPAM Cannot designate compliance Non- Non-Sender • Dropped requirement that Designated Sender be in control of the content or the mailing list used
  12. 12. 12
  13. 13. Subject Lines • Senate Report – test is whether the person initiating the message knows that the subject heading would be likely to mislead a reasonable recipient about a material fact regarding the content 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) • “Free Gift” subject lines violate CAN-SPAM – FTC v. Adteractive, Inc. (C.D. Cal. 2007)
  14. 14. Opt-Out Mechanism • Opt-Out Basics – May offer options, but total opt-out must be opt- one of them – 10 days to remove – No further use of email address after opt-out opt- – Separate Business Units: Opt- opt- Opt-out for Saab not opt-out for all of GM • Discretionary Regs – Cannot impose any conditions on opt-out opt- requests (e.g, fee or provide information)
  15. 15. 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 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” 15
  16. 16. CAN-SPAMIGATORS Faux ISPs Established to Prosecute CAN-SPAM Actions Small, free service can qualify Hypertouch v. Kennedy-Western University, 2006 WL 648688 (N.D. Cal. 2006) 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 )
  17. 17. Sender Liability FTC unsuccessful in seeking strict liability Advertiser liable if “actual knowledge, or by consciously avoiding knowing” about 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 investigate Asis Internet Services, v. Optin Global, Inc., 2008 WL 1902217 (N.D. Cal. March 27, 2008 )
  18. 18. 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
  19. 19. Rulings On State Spam Regulation • Misrepresentation must be material Omega World Travel, Inc. v. Mummagraphics, Inc. (4th Cir. 2006). • States cannot dictate form of from line Kleffman v. Vonage Holding Corp. (C.D. Cal. 2007); Gordon v. Virtumundo, Inc.(W.D. Wash. 2007). • 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 email Virginia v. Jaynes (Va. 2008).
  20. 20. TOP 5 TIPS #1 – Always assume CAN-SPAM applies #2 – The Grandmother Rule #3 – The Hand Grenade Rule #4 -The Academy Rule #5 – The Einstein-Dilbert Conundrum
  21. 21. Selected Cases: CAN-SPAM Act CAN- Advertiser Liability ASIS Internet Services, v. Optin Global, Inc., 2008 WL Inc., 1902217 (N.D. Cal. March 27, 2008 ) Hypertouch v. Kennedy-Western University, 2006 WL Kennedy- University, 648688 (N.D. Cal. 2006) US v. Cyberheat, 2007 U.S. Dist. LEXIS 15448 (N.D. Ariz. Cyberheat, 2007) US v. Implulse Marketing, No. CV05-1285RSL (W.D. Marketing, CV05- Wash. June 8, 2007) From and Subject Lines FTC v. Adteractive, Inc., No. Case No. CV-07-5940 SI Adteractive, Inc., CV-07- (C.D. Cal. 2007) Gordon v. Virtumundo, Inc., Case No. 06-0204-JCC (W.D. Virtumundo, Inc., 06-0204- Wash. May 15, 2007) Kleffman v. Vonage Holding Corp., Case No. CV 07- Corp., 07- 2406GAFJWJX (C.D. Cal. May 23, 2007) MySpace, Inc. v. The Globe.com, Inc. No. CV 06-3391- 06-3391- RGK (JCx) (C.D. Cal. Feb. 27, 2007) (JCx)
  22. 22. CAN- CAN-SPAM Cases Pt 2 Preemption 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).
  23. 23. Bennet Kelley 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 companies such as ETM Entertainment Network, SpeedyClick.com, Hi-Speed Media and ValueClick. bkelley@internetlawcenter.net Bennet is Co-Vice Chair of the California Bar's Cyberspace Committee and has been a regular contributor to the Journal of Internet Law.
  24. 24. Internet Law Center The Internet Law Center is dedicated to helping businesses navigate the evolving legal standards for today's digital economy, while also contributing to the development of the policies of tomorrow. The firm serves a diverse client base that includes startups and public companies both online and offline across North America. The professionals of the Internet Law Center possess years of practical experience as both lawyers and entrepreneurs with internet companies and have played a leading role in shaping Internet law and policy. This unprecedented combination of Santa Monica business, legal and policy experience not only makes the (310) 452-0401 Internet Law Center uniquely qualified to provide the professional advice needed to address emerging issues of Washington, D.C. internet law in an uncertain economy, but also enables us to (202)689-5660 provide practical solutions to brick and mortar and online businesses alike. Columbia, SC The Internet Law Center is based in Santa Monica but also has (803) 727-0154 a presence in Washington, D.C. and Columbia, S.C. The firm’s e-newsletter, Monday Memo, was named one of the top 100 Internet Law resources and has been nominated for the www.InternetLawCenter.net Los Angeles Press Club’s Southern California Journalism Award for best In-house or corporate publication.

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