Intellectual and Technology Law Practice

This advisory was prepared by Jenner & Block’s Intellectual Property and Technology Law Practice for the Information Technology Law & Ecommerce Committee of the September 2004 Association of Corporate Counsel.

“ to Chattels” Finds New Life In Battle Against Spam by Daniel J. Schwartz and Joseph F. Marinelli

We have all had the experience—you return this theory to stop spammers in several to your office after a long weekend away states. and spend the first hour of your day In Virginia, American Online, Inc. has been deleting junk e-mails soliciting anything from successful in asserting trespass to chattels a new dental plan to prescription drugs. against a number of spammers. In These junk e-mails, commonly referred to as American Online v. National Health Care spam, clog Internet service provider (“ISP”) Discount, Inc., 174 F.Supp. 2d 890 (N.D. and corporate networks everyday. Internet Iowa 2001), an Iowa district court applying service providers and most corporations Daniel J. Schwartz Virginia tort law granted summary judgment is a partner at utilize special filtering software to block on AOL’s behalf holding that National Jenner & Block and a spam from entering users’ inboxes. Still, Health Care Discount, Inc. trespassed on member of the Firm’s spammers manage to penetrate these filter, Intellectual Property AOL’s computer systems by sending 276 and Technology Law, and users are left sifting through the spam million e-mail messages to AOL members. and Litigation Practices. to locate important e-mails. The court granted AOL $337,500 in actual His practice includes patent, trade secret and Internet service providers and and $100,000 in punitive trademark litigation. corporations have taken this high-tech damages, and permanently enjoined Mr. Schwartz also problem to the courts, and the most low- National Health Care Discount, Inc. from counsels clients sending e-mail to AOL members. AOL’s concerning patent, tech of players, the century-old tort of trademark and trade trespass to chattels, has emerged as a trespass to chattels claims against other secret strategy. He viable weapon against spam. Trespass to spammers in Virginia have been equally received a bachelor’s chattels occurs when “one party successful. See American Online, Inc. v. degree in Mechanical LCGM, Inc. et al., 46 F.Supp 2d 444 (E.D. Engineering from intentionally uses or intermeddles with Northwestern in rightful possession of Va. 1998), American Online, Inc. v. Prime University and his J.D. another without authorization.” Data systems, Inc. et al., 1998 U.S. Dist. from Northwestern LEXIS 20226 (E.D. Va. 1998), American University Law School. Restatement (Second) of § 217(b). Online, Inc. v. IMS et al., 24 F. Supp. 2d He co-teaches a course One who commits trespass to chattels is in intellectual property liable to the possessor of the chattel if the 548 (E.D. Va. 1998). litigation at Loyola University Law School chattel is impaired as to its “condition, In EarthLink, Inc. v. Carmack, 2003 U.S. in Chicago. quality, or value.” Id. Despite its arcane Dist. LEXIS 9963 (N.D. Ga. May 7, 2003), a tone, ISPs and corporations have used Georgia district court awarded EarthLink over $16 million in actual and specifically warned against using CompuServe’s punitive damages against equipment to send their spam messages. Howard Carmack for trespass While trespass to chattels has been successfully to chattels and violations of asserted in several spam cases, at least one court other state and federal laws. has denied the claim. In Intel Corp. v. Hamidi, 30 Carmack engaged in a Cal.4th 1342 (Cal. 2003), the California Supreme massive spamming campaign, Court held that under California law, the tort of sending an estimated 857.5 trespass to chattels did not encompass an Joseph F. Marinelli million e-mails, which the court electronic communication that neither damaged is an associate at deemed as trespass to the recipient computer system nor impaired its Jenner & Block and a EarthLink’s service provider Hamidi member of the Firm’s system. The court stated that functioning. The court in did not rule out Intellectual Property the substantial award was “to trespass to chattels altogether as a cause of and Technology Law serve a clear message and action. It simply illustrated its boundaries and Practice. His practice found that Intel was outside those boundaries. focuses on patent and warning to Carmack and all trademark litigation other similarly-situated In that case, Hamidi, a former employee of Intel, and prosecution, wrongdoers that such crime sent six different e-mail messages, each to as licensing, and and misconduct will not be many as 35,000 Intel employees over a period of intellectual property tolerated.” counseling. He is a two years. The e-mails criticized Intel’s registered U.S. patent Spam as trespass to chattels employment practices, warned recipient attorney. He received has been recognized by courts employees of the dangers those practices posed his bachelor’s degree in New York and Ohio as well. to their careers and suggested employees in Mechanical consider moving to other companies. Hamidi Engineering from In Tyco International (US) Inc. Purdue University in v. Doe, 2003 U.S. Dist. LEXIS breached no computer security barriers in order to 1996 and his J.D. 25136 (S.D.N.Y. Aug. 29, send the e-mails, and he offered to, and did, from the University of 2003), Tyco was awarded only remove from his mailing list any recipient who so Wisconsin. $1 in compensatory damages, requested. Intel’s efforts at blocking the but also awarded $10,000 in transmission of the messages were only partly punitive damages by a New York district court successful. Intel demanded that Hamidi stop against an individual who had attempted to sending the e-mails, but Hamidi persisted. overload Tyco’s e-mail server with 30,000 e-mail The California Supreme Court ruled that without any messages. The compensatory damage award was that Hamidi’s actions caused or threatened nominal because Tyco failed to adequately set forth to cause damage to Intel’s computer system, Intel its actual losses. In CompuServe Inc. v. Cyber was not entitled to an injunction as a matter of law. Promotions, Inc., et al., 962 F. Supp. 1015 (S.D. Looking to earlier California law and the Ohio 1997) an Ohio district court granted Restatement (Second) of Torts § 218, the court CompuServe a preliminary injunction against stated that trespass to chattels required some injury spammers who sent e-mails to CompuServe or damage occur to the property. An e-mail that subscribers. The court found that even though neither damages the recipient computer system nor CompuServe’s servers were not physically impairs its functioning is not a trespass because damaged, their value was diminished by the spam such an e-mail does not interfere with the which consumed disk space and processing possessor’s use or possession of the personal capacity that would have otherwise been available property itself. Analyzing the facts under this to CompuServe’s subscribers. The court found framework, the court found that there was no that even though CompuServe’s e-mail service evidence indicating that Intel’s computer allows subscribers to receive messages from infrastructure or software was actually damaged or anyone on the Internet, the spammers were even threatened to be damaged. Intel was not

2 dispossessed of its computers. Hamidi’s messages resources unavailable for subscribers. did not prevent Intel from using its computers for any The burden on Intel’s computer system caused by appreciable length of time. Intel also failed to prove Hamidi’s e-mails did not in the court’s mind measure that its system was slowed by the influx of Hamidi’s up to the burden or threat of burden proven in cases messages or that the messages imposed any like CompuServe. The court recognized that although marginal operation cost on Intel. Hamidi sent thousands of e-mails, the burden on The court distinguished Intel’s situation from those Intel’s computer system was incomparable to the cases discussed above like CompuServe, Inc. v. burden caused by spam to an ISP like CompuServe. Cyber Promotions, Inc. in which spamming was While trespass to chattels is a formidable weapon found to be actionable trespass. In each of those for ISP’s and corporations against spam, Hamidi spamming cases, the plaintiff showed some reminds us that it has its boundaries. The one thing interference, or threat of interference, with the Hamidi makes clear — before deciding to bring a efficient functioning of its computer system. trespass to chattels claim, a party must consider the Compuserve, for example, presented evidence that evidence of damage or impairment inflicted by a the defendant’s mass e-mails placed a “tremendous mass e-mail campaign and how to present that burden” on CompuServe’s equipment by using disk evidence to the court. space and draining processing power, leaving those

For more information, please contact any of the following Jenner & Block attorneys:

Raymond N. Nimrod [email protected] Adam Petravicius [email protected] Daniel J. Schwartz [email protected]

All attorneys may be contacted by phone at 312 222-9350

©Copyright 2004 Jenner & Block LLP. Jenner & Block is an Illinois Limited Liability Partnership including professional corporations. This publication is not intended to provide legal advice but to provide information on legal matters and Firm news of interest to our clients and colleagues. Readers should seek specific legal advice before taking any action with respect to matters mentioned in this publication. Under professional rules, this publication may be considered advertising material; the attorney responsible for this publication is Daniel J. Schwartz. Cover image from the Collection of the Supreme Court of the United States. 3