Battle Over Spam May Veer to Criminal Court

Legal actions to contain e-mail "spam" have been grinding along on the civil side for years, but stalled on the criminal front -- until now.

The recent felony conviction and sentencing of a Virginia man for spam-related offenses -- the first on a felony level -- could be a sign that more criminal prosecutions are coming to a legal battleground more accustomed to civil actions and large fines.

In January 2004, Congress passed the federal Can-Spam Act in an effort to streamline spam regulations and give the Federal Trade Commission more room to go after spammers. But many prosecutors and civil lawyers say the federal law has no teeth. The sentencing of the Virginia defendant, Jeremy Jaynes, to nine years in prison is an indication that states are taking spam prosecution into their own hands.

"Our spam laws were being enforced civilly," noted Virginia Assistant Attorney General Lisa Hicks-Thomas of the state's computer crimes division. "But what we found was that spammers were making so much money that even if the ISPs [Internet service providers] won a big judgment, spammers would just write the check. It didn't put a dent in it."

A number of states like Virginia have begun seizing on an exemption in the federal law that allows states to go after spammers for fraud-related offenses.

About 20 states have passed laws that can be used to step up federal charges for fraud-related offenses in spam, according to Kelly Wallace of Atlanta's Wellborn & Wallace, whose firm recently advised the Georgia governor on a "Slam Spam" law. Many of those state laws have gone in the direction of stiffer penalties to protect children, noted Wallace, who holds the record for the largest civil verdict -- $1 billion -- ever won against spammers on behalf of an ISP. Kramer v. Cash Link, No. 3-03-CV-80109-CRW-TJS (S.D. Iowa).

In defense of Can-Spam, the FTC said it works closely with states to prosecute spammers effectively. The FTC has filed 69 lawsuits against 202 individuals since spam started in the 1990s, according to Katie Harrington-McBride, a staff attorney with the FTC. Eight of those include spam counts filed since the federal law was approved.

Virginia was the first state-and one of the few-to make "pure spam" a felony, according to its computer crimes division. Other states have prosecuted spam-related felonies, but on some other basis, such as identity theft, Hicks-Thomas said.

As the home state of America Online, MCI Inc. and other big ISPs, Virginia sees 50 percent to 80 percent of the nation's e-mail. It is not illegal to send spam, Hicks-Thomas said, but it is a felony in Virginia, and a misdemeanor in other jurisdiction, if the sender disguises where it is coming from.

Prosecutors say that is exactly what Jaynes did. Jaynes, 30, allegedly used aliases to purchase domain address and IP blocks (which computers use to communicate) in order to send untraceable spam. Prosecutors say he grossed up to $750,000 per month from the products he was selling, until he was eventually tracked by his credit card numbers.

Virginia prosecutors assert that more states need to step up spam laws and start putting offenders like Jaynes before a jury. "People hate spam and will sentence [spammers] to time," Hicks-Thomas said.

APPEAL TO BE LAUNCHED

Jaynes' lawyer, David Oblon of Albo & Oblon in Arlington, Va., expects Virginia's law to be thrown out on appeal -- and Jayne's conviction along with it.

"The government created this specific [state law] and now they are trying to say it becomes a global anti-spamming law," Oblon said. He will argue on appeal that the Virginia law is unconstitutional because it violates the commerce clause, an individual's right to anonymity and due process.

Loudin County Circuit Court Judge Thomas Horne delayed Jaynes' prison term while the case is appealed.

While spam litigation is just heating up in the criminal arena, civil lawyers have been busy for years. They've had a lukewarm reaction to the federal law, noting that it makes it a little easier for ISPs to sue spammers and to calculate damages.

Wallace's firm has represented ISPs in about two dozen cases against spammers.

In addition to ISPs, the Washington law firm Arent Fox said it is seeing more clients who are legitimate businesses that want to send bulk e-mail without crossing the line into spam, according to Michael Grow, who leads the firm's technology group. The firm has also defended companies that produce the filtering technology that ISPs use to deflect spam.