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One only has to look at the avalanche of get-rich-quick schemes, adult Web sites, and weight-loss pitches that appear every day in one’s e-mail to begin to understand the pressing need to control the proliferation of nonsolicited commercial electronic messages on the Internet. America Online Inc., the nation’s largest Internet service provider, reports that receipt of unsolicited commercial e-mail messages — commonly referred to as spam — is the single largest complaint of its customers. Moreover, the problem has been getting worse in recent years. Spam already accounts for nearly 40 percent of all e-mail traffic and is estimated to cost U.S. businesses between $8 billion and $10 billion a year. The problem is not just the overall burden placed on the Internet’s existing infrastructure from such bulk e-mail, or even the daily annoyance and expense associated with reading such unwanted messages, but that a lot of spam is fraudulent or contains sexually explicit materials that is potentially offensive. For several years, there has been a growing recognition that something should be done to curtail the rising proliferation of spam. Attempts to employ filters to reduce the receipt of bulk e-mail were largely ineffective because spammers were adept at finding ways of getting around such technology. Lawsuits, while generally effective where an unsolicited e-mail message contained fraudulent or deceptive business practices, did not have the legislative tools necessary to prevent the widespread distribution of unwanted, but legitimate, commercial messages. Finally, efforts to pass comprehensive federal legislation were unsuccessful because of the opposition by a strong direct marketing lobby and the inability of spam opponents to reach a consensus on an appropriate form of regulation. No fewer than 19 separate bills addressing spam have failed to pass Congress over the last several years. Renewed efforts to curtail spam, however, are suddenly gaining momentum and may find unprecedented success in the near future. Spearheaded by AOL, Internet service providers have made increased efforts to battle the proliferation of spam in the courts. For example, on April 15, 2003, AOL filed five lawsuits against well-known spammers, alleging violations of computer fraud laws and Virginia’s anti-spam law. These suits seek immediate injunctive relief and damages in excess of $10 million. Other providers such as Yahoo!, Earthlink, and MSN have also ramped up their litigation efforts to stop the proliferation of spam. Earthlink reports that it now has more than 100 lawsuits pending against alleged spammers, and MSN says that it plans increased litigation targeted at preventing spammers from using software to “harvest” e-mail addresses. Most important, renewed efforts have been made to pass the first federal anti-spam legislation. Pending before this session of Congress are several bills seeking to regulate spam. These legislative efforts include a bill from Sen. Charles Schumer (D-N.Y.), the Computer Owner’s Bill of Rights, S. 563, which calls for the creation of a national do-not-spam registry akin to the do-not-call registry that the Federal Trade Commission recently set up to combat unsolicited telephone sales. The most promising bill currently before Congress is the CAN-SPAM Act of 2003, S. 877. Specifically, Sens. Conrad Burns (R-Mont.) and Ron Weyden (D-Ore.) have reintroduced anti-spam legislation that failed to pass last term amid opposition from the direct marketing industry. Recognizing the growing public outcry for a legislative response to spam and that more than 30 states have already passed some form of anti-spam legislation, traditional opposition to federal regulation from the direct marketing industry is withering quickly. In fact, several direct marketing advocacy groups have indicated a preference for some form of comprehensive federal legislation to avoid having to comply with parochial state regulations. Accordingly, the CAN-SPAM Act of 2003 has a stronger chance of becoming the first federal anti-spam law than any of its predecessors. THE CAN-SPAM ACT The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or CAN-SPAM Act of 2003, presently pending before Congress has two key regulatory features. First, it seeks to prevent the transmission of misleading and fraudulent commercial e-mail messages. Second, it creates an effective opt-out procedure for recipients who do not wish to receive commercial e-mail messages from a particular source in the future. The act regulates only unsolicited commercial e-mail, which it defines as any message “the primary purpose of which is commercial advertisement or promotion of a commercial product or service.” In addition, in limiting itself to unsolicited messages, the act defines an unsolicited message as one that: (A) is not a transactional or relationship message; and (B) is sent to a recipient without the recipient’s prior affirmative or implied consent. Accordingly, expressly exempt from the act are e-mails that are necessary to an ongoing commercial transaction or relationship, messages that a recipient has affirmatively consented to receive, and messages in which implied consent under the act may be attributed to the recipient. Implied consent with respect to a commercial message is defined as: (A) within the three-year period ending upon receipt of the message, there has been a business transaction between the sender and the recipient (including a transaction involving the provision, free of charge, of information, goods or services requested by the recipient); and (B) the recipient was, at the time of such transaction or thereafter in the first electronic message received from the sender after the effective date of this act, provided a clear and conspicuous notice of the opportunity not to receive unsolicited commercial electronic messages from the sender and has not exercised that opportunity. Therefore, it is clear that the act provides marketers with at least one opportunity to e-mail their former customers before a recipient will have the ability to prevent the receipt of any such future messages from that sender. Section 4 of the act amends Chapter 63 of Title 18 of the U.S. Code — mail fraud — so that the transmission of a nonsolicited commercial e-mail that contains false or materially misleading routing information or header data is a crime punishable with up to a one-year prison term and/or a fine. Moreover, the transmission of such a false and misleading message is also directly prohibited under Section 5 of the act, which sets forth the general protections against unsolicited e-mail available under the act. The act also prescribes detailed requirements for the transmission of any nonsolicited commercial message. Specifically, such messages must contain a valid and functioning return e-mail address that permits a recipient the option of notifying the sender that he or she does not wish to receive further e-mails from that sender in the future. This return address must function as an opt-out mechanism for a minimum of 30 days. Furthermore, the sending of any further message to the same address after receipt of such an opt-out message is strictly prohibited. The act also specifically mandates that an unsolicited commercial e-mail message must include a valid identifier that the message is an advertisement or solicitation; clear and conspicuous notice of opportunity to opt out; and valid physical postal address for the sender. The act also prohibits the use of harvested e-mail addresses and the knowing use of e-mail addresses from an operator who employs a notice stating that it will not transfer any addresses it maintains. Finally, the act provides a good faith defense for persons who have established and implemented practices and procedures designed to comply with these provisions. PENALTIES AND ENFORCEMENT Injunctive relief is available under the act, and the statutory penalties associated with violating the act are potentially steep. They include a $10 fine per message — not to exceed $500,000 — except that this amount may be increased to $1.5 million for a willful and knowing violation of the act. In addition, a reasonable attorney fee is recoverable. One of the act’s more interesting features is its broad grant of enforcement authority to the states and to Internet service providers. While the act grants primary enforcement authority to the FTC, it also grants state attorneys general the right to bring suit on behalf of the residents of their state. In addition, an Internet service provider adversely affected by a violation of the noncriminal provisions of the act may bring suit seeking injunctive relief and the greater of either actual damages or the statutory penalty. Obviously, recognizing the broad array of resources available to potential spammers seeking to avoid compliance with the act, Congress sought to empower those best suited to enforce its provisions. The act also pre-empts state and local regulations that treat “the mere sending of unsolicited electronic mail in a manner that complies with this act as sufficient to constitute a violation of such statute, regulation, or rule or to create a cause of action thereunder.” Accordingly, while more stringent state and local regulations not directly contradicting the provisions of the act would still be permissible, the clear intent of the act is to create a uniform and nationwide policy regarding the transmission of commercial e-mail. In addition, in an obvious concession to Internet service providers, the act specifically states that it does not have any effect on the lawfulness or unlawfulness of any Internet service providers’ policies regarding the transmission or handling of electronic messages. Accordingly, a service provider’s more stringent policies regarding the use of its services would remain permissible. Finally, recognizing the dynamic and evolving nature of cybercommunication and the possibly formidable ill effects of a bad bill, the act commissions a report from the FTC on the act’s effectiveness and the need to modify its provisions. POSSIBLE CHALLENGES Despite the fact that it is targeted only at commercial electronic messages, there is a strong possibility that the act will be challenged for running afoul of the First Amendment guarantees of free speech. Specifically, while commercial speech is not entitled to the full protection of the First Amendment, the Supreme Court has previously recognized that commercial speech is indispensable to our society. See Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002). The Court generally requires that any regulation on commercial speech serve a substantial governmental interest and it be narrowly tailored to serve that interest. See Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557 (1980). One obvious First Amendment challenge will be that the act is overly broad and may regulate religious or political mass mailings. This challenge will be difficult to maintain, however, given that the act’s definition of unsolicited commercial message requires a commercial purpose. In addition, the act’s requirement that messages contain an identifier may be deemed to be forced speech. In Tulley v. California, 362 U.S. 60 (1960), the Court recognized that anonymous free speech has played an important role in the progress of mankind and extended First Amendment protection to prevent the unwarranted disclosure of the identity of authors of anonymous speech. Any such challenges, however, are unlikely to succeed because the increased cost to recipients from receiving such unsolicited messages is likely to be deemed a significant governmental interest sufficient to justify the type of regulation at issue. In Destination Ventures Ltd. v. FCC, 46 F.3d 54 (9th Cir. 1995), the court found that the cost associated with the receipt of unsolicited commercial faxes was a sufficient governmental interest to justify regulation. The marketing industry’s criticism of the bill focuses on the fact that state regulations are not sufficiently pre-empted and that definitions of consent and liability under the bill need additional clarification. In contrast, spam abolitionists advocate either a complete ban on all spam or an opt-in bill as opposed to the current opt-out procedures of the act. Anti-spam advocacy groups argue that marketers will find ingenious ways to abuse the initial opportunity to contact potential recipients under the act and that an opt-out procedure will do little to reduce mass mailings. As a result, both sides are presently seeking concessions in the final version of the bill. Finally, the relative anonymity with which senders can post messages on the Internet presents unique problems regarding enforcement under the act. Specifically, by using relays, many spammers can effectively remain anonymous even when posting large quantities of bulk e-mail. In addition, in today’s global economy, it is possible that spammers will simply relocate outside of the United States to avoid the strictures of the new legislation. It is not clear, therefore, how effective the present legislation can be, given the difficulty in tracking or identifying the source spam. Despite these problems, it is clear that attempts to legislate against the current spam problem are reaching a crossroads. As a result, it is likely that some form of anti-spam legislation will be forthcoming in this session of Congress. Moreover, given the current debate surrounding how to best curb spam and the influential parties involved in that debate, it is likely that the final version of the bill that becomes law will be the result of a political compromise. M. Trevor Lyons is an associate at Roseland, N.J.’s Connell Foley. He wishes to thank partner Peter J. Pizzi for his invaluable assistance with this article, which first appeared in the American Lawyer Media newspaper New Jersey Law Journal.

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