Junk e-mail company to pay $2 million to settle lawsuit

Monday, March 30, 1998

Cyber Promotions, Inc., a company known for blanketing the Internet with unsolicited junk e-mail, agreed to pay $2 million to an Internet service provider and to desist from the practice known as spamming.

The agreement provides that the head of Cyber Promotions, Sanford Wallace, will be personally liable for $1 million if he or any of his companies sends any more unsolicited e-mail to customers of Earthlink Network, one of the country's biggest Internet service providers.

Pete Wellborn, an attorney who represented Earthlink, told The New York Times: “This is the nail in the coffin that put Cyber Promotions out of business. But Sanford Wallace is very much an entrepreneurial figure. I would not be surprised to see him back on the Internet in one form or another.”

One spam foe applauded the settlement. Ray Everett-Church, co-founder and lobbyist for the Coalition Against Unsolicited Commercial Email, said: “This settlement reinforces something Cyber Promotions should have learned in another lawsuit it lost: that owners of private networks can control access to those networks.

“What Cyber Promotions did is a form of trespass,” Everett-Church said. “This principle was first delineated in the Compuserve v. Cyber Promotions case decided almost two years ago in a federal district court in Ohio. That case said that when you invade someone's network without authorization it is a trespass and there is no First Amendment right to do that.”

But at least one technology watcher fears that the rush to slam spam may violate commercial free-speech rights. Solveig Singleton of the Cato Institute, a think-tank that examines Internet and technology issues, said: “Spam should be protected by the First Amendment for several reasons. First of all, it is protected commercial speech. And the doctrine that says commercial speech is entitled to less protection than other types of speech is wrong.

“Furthermore, it is increasingly difficult to define commercial speech from noncommercial speech. The lines have become too blurred. A lot of spam has been used for noncommercial purposes,” she said.

The issue of spam extends far beyond the lawsuits of Cyber Promotions. Several state legislatures and the Congress are currently considering bills that would limit spamming.

David Sorkin, associate director of the Center for Information, Technology and Privacy Law at John Marshall Law School, said that “the more pressing First Amendment questions involving spam do not involve Cyber Promotions and their lawsuits, but rather various state statutes that are being proposed.”

Sorkin said that Washington and Nevada have passed such statutes and California is considering anti-spam bills.

“It is somewhat difficult to tell if these bills will survive some sort of constitutional attack,” he said.