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Spamming and Spoofing

CompuServe, Inc. v. Cyber Promotions and Sanford Wallace, United States District Court for the Southern District of Ohio, Civil Action No. C2-96-1070.

Summary

In this case, Cyber Promotions argued that Compuserve’s “intimate” involvement with the Internet left it open to possible future regulation which might well determine that Compuserve’s system was, in fact, “open.” This assertion was rejected with the court again affirming a private actor’s right to control and limit access to its personal property, i.e., its computer equipment.

Analysis

Following the lead of AOL, in 1996, CompuServe, the large online computer network and access provider, brought suit against Cyber Promotions and Sanford Wallace, its president. CompuServe had apparently been fighting a pitched battle against Cyber Promotions and its spam for months prior to filing suit. After receiving thousands of customer complaints and subscription cancellations over the amount of spam being received by CompuServe subscribers and the effect of that spam on system operations, CompuServe requested that Cyber Promotions cease and desist from sending spam to its subscribers. Instead of complying with this request, Cyber Promotions actually increased the volume of spam it was sending to CompuServe’s subscribers. CompuServe then attempted to block Cyber Promotions’ spam by installing spam filtering software. Cyber Promotions began to sidestep this technological block by spoofing and reconfiguring its servers to conceal its domain name.


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After obtaining a temporary restraining order prohibiting Cyber Promotions from using CompuServe accounts, equipment or services to send or receive e-mail and prohibiting Cyber Promotions from spoofing its spam with CompuServe return addresses, CompuServe moved a for a permanent injunction continuing the terms of the temporary restraining order and to bar Cyber Promotions from sending spam to any e-mail address maintained by CompuServe.

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At bottom, CompuServe’s legal theory was a simple claim that Cyber Promotions’ spamming and spoofing practices were a trespass to personal property - CompuServe’s proprietary computer equipment. As part of its defense, Cyber Promotions insisted that it had a right to continue to send its spam to CompuServe subscribers.

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In order to makes its case, CompuServe had to demonstrate not only that a trespass occurred but also, because personal property and not real property were at issue, that it had sustained actual damages.


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In a lengthy opinion granting CompuServe a permanent injunction, Judge Graham, citing the Restatement of Torts, found that Cyber Promotions committed a trespass because, although Cyber Promotions did not take possession of CompuServe’s equipment, the spam nonetheless “intentionally intermeddled” with CompuServe’s computer systems and that intermeddling resulted in a loss of value to that equipment because the drain on the CompuServe network caused by Cyber Promotions spam reduced the system resources available to CompuServe’s subscribers. Moreover, the resultant complaints and cancellation of subscriptions suggested that CompuServe’s goodwill and business reputation had also been harmed.


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Cyber Promotions’ defense relied primarily on two arguments both of which were ultimately rejected by Judge Graham. Cyber Promotions argued in the first instance that CompuServe had effectively given Cyber Promotions consent to use its system by the fact that CompuServe’s e-mail service allows subscribers to receive messages from persons outside the CompuServe network via the Internet. While Judge Graham agreed that this fact created at least an implied privilege to utilize CompuServe’s system to send e-mail, that privilege did not apply here because CompuServe expressly limited that consent through its policy statement which prohibits spamming and because Mr. Wallace was aware that CompuServe did not want to receive spam from Cyber Promotions and that CompuServe was installing filtering software to block the spam.


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Cyber Promotions also claimed a right to send spam under the free speech clause of the First Amendment. Having effectively lost the question of whether CompuServe was the Internet equivalent of a postmaster and thus a state actor to which the First Amendment applies with full force in the America Online case, Cyber Promotions argued that CompuServe’s “intimate” involvement with the new medium known as the Internet, might subject it to some special form of regulation which might allow public access to its private property - its computer system. This prospective argument was soundly rejected by Judge Graham who noted that First Amendment rights have not historically been allowed to trump private property rights, so long as an alternative avenues of communication exist and, in this case, Cyber Promotions clearly had other means by which to reach CompuServe’s subscribers.


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The case settled a few weeks after entry of the Injunction. The terms of the settlement eliminated Cyber Promotions’ ability to spam CompuServe’s system by providing that Cyber Promotions would not spoof and would not send any e-mail to any CompuServe subscriber unless that subscriber specifically requested such e-mail. In addition, Cyber Promotions paid CompuServe $65,000 in attorneys fees. In return, CompuServe agreed to allow Cyber Promotions to send verifiably requested e-mails and advertise on CompuServe’s network.


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