TechLaw

MySpace.com and two of its litigation counsel, Ian C. Ballon and Wendy M. Mantell, at Greenberg Traurig, appear to have found a winning recipe for keeping spammers off MySpace.com's social network: Start with a creative interpretation of federal and state anti-spam provisions, top off with an aggressive terms of service agreement that demands liquidated damages for violations.

MySpace.com yesterday announced it had reached a settlement with The Globe.com, an outfit Myspace.com said was using MySpace accounts to send unsolicited commercial "MySpace e-messages" to other users. Over 400,000 such messages were sent from 95 dummy MySpace.com accounts. The seeds of the settlement were sown on Feb. 27, 2007, when Judge R. Gary Klausner ruled, in an unpublished opinion:

• MySpace e-messages meet the CAN-SPAM Act's definition of electronic mail, despite the fact that MySpace e-message addresses do not have a traditional domain name component and the messages never leave the MySpace.com network during transmission.
• MySpace.com qualifies as an "Internet access service" eligible to invoke CAN-SPAM's civil remedies. The court rejected the defendant's contention that the CAN-SPAM Act protects only "traditional ISPs," an argument that succeeded recently in Gordon v. Virtumundo Inc., No. 06-204 (W.D. Wash. May 15, 2007).
• Header information accompanying the e-messages was "false and misleading" in violation of CAN-SPAM even though literally accurate, because the MySpace accounts were opened using fictitious information that did not identify The Globe.com as the message sender.
• The Globe.com was liable under the California anti-spam statute, Cal. Bus. Code 17529.5, which provides a cause of action against senders of e-mail messages containing false or misleading headers or subject lines, provided the message is transmitted to or from a California e-mail address.
• The Globe.com was liable for breaching MySpace.com's terms of service agreement. The court ruled that the TOS was enforceable and that its liquidated damages provision calling for a penalty of $50 per forbidden message was reasonable. (CAN-SPAM sets statutory damages in a range between $25-$300 per message.)

The damage calculations derived from the court's order placed The Globe.com's liability at $5.5 million, a strong impetus toward settlement one would think. The terms of the May 31 settlement were not disclosed.

The case is MySpace Inc. v. The Globe.com Inc., No. 06-3391 (C.D. Cal. Feb. 27, 2007).