The decision in the lawsuit brought by the Federal Trade Commission (FTC) against Impulse Media Group was handed down this week, and for many it was a shocker. There were many claims of spam from Impulse Media Group’s affiliates, and so many thought that the lawsuit was a slamdunk.
They were wrong.
You see, here’s the thing – as many know – lawsuits often turn on a legal technicality. And that’s because the facts of the case have to match the law under which the case was brought. Exactly.
Now, I’m very familiar with the affiliate spam section of CAN-SPAM. That’d be because I wrote it. Senator McCain’s office contacted me while I was still the CEO over at Habeas, and asked for my help drafting “some language to go after affiliates who spam” (that would be why this section is called the “McCain Amendment). That is the clause under which Impulse Media Group was sued.
And, the bottom line is, the FTC coudn’t prove their case.
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That’s because that section of CAN-SPAM requires either actual or constructive knowledge of the affiliate’s spamming. The actual language of that section requires that the vendor (in this case Impulse Media Group) “knew or should have known” that the affiliates were spamming. And they had to stand to profit from it. And they had to do nothing to stop it.
This language had to be in the affiliate spamming language of CAN-SPAM, because otherwise you could send me email, advertising Joe’s widgets, with Joe never even knowing, and suddenly Joe would be sued for affiliate spamming.
The bottom line is that in order to sue (and prevail) under the affiliate section of CAN-SPAM the vendor has to stand to profit from the spam, and has to have been on notice of the spamming, and done nothing to stop it.
Put another way, the vendor (the merchant, again, in this case Impulse Media Group), had to stand to profit from the spamming, and had to reasonably know or should reasonably have known about it, and had to have done nothing to change that situation.
In this case, Impulse Media Group argued that they were quick to terminate any affiliate who spammed – indeed, they asserted that their affiliate model involved creating links, not sending email at all.
In short, Impulse Media Group (successfully) argued that they did not fit the mold for which the affiliate spam section of CAN-SPAM was written – they were a square peg which the FTC was trying to force into a round hole. (Ok, that might be an unfortunate choice of metaphors, given the nature of the affiliate spam.)
And by arguing successfully, I mean that they convinced a jury. And not just the jury – all of the jury – it was a unanimous decision.
Now, I wasn’t there in the court room, but here’s what I can comfortably assert based on my experience, the news reports, and my intimate understanding of this part of CAN-SPAM:
Impulse Media Group’s material is adult by nature. Nobody likes to receive adult-oriented spam. Nobody. It is one of the few types of spam on which everybody agrees that it is spam.
That means that there was a jury of people who almost certainly would all agree that adult-oriented spam is bad, and who would want to – indeed go out of their way to – find someone whom they thought was guilty of profiting from such spam guilty, and who, instead, all agreed that Impulse Media Group was not guilty of knowingly, intentionally, profiting from this kind of spam.
The government had to prove the opposite – they had to prove that Impulse Media Group did knowingly – intentionally – profit from their affiliates spamming, and that they looked the other way.
All external evidence points to that the government was unable to prove it.
In otherwords, they blew the case.
Either Impulse Media Group was actually guilty of knowingly letting affiliates spam, profiting from it, and doing nothing about it, and somehow convinced the entire jury that they were innocent, or the government was operating on bad information or simply didn’t themselves fully analyze the law as it applied to the facts of the case.
I’m betting on the latter.
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Anne, you are correct about it being the latter. Although, what isn’t clear in the press reportings I’ve seen is that the gov’t overreached and tried to convince the court that CAN-SPAM is a strict-liability statute. Both Judge Lasnik in IMG, and Judge Bury in the Cyberheat case summarily rejected that contention. Note to “gunner” – the gov’t DID their homework. It’s just that IMG could not be held liable as a matter of law.
standard disclaimer: “i am not a lawyer, and don’t even play one on television”, but as you say, the principle of “innocent until proven guilty before a court of law” still applies, even for low life pond scum like spammers. i’ve served on a jury, and if the prosecution/government cannot prove its case the verdict must be “innocent” no matter how little we might like it. hopefully next time the government’s lawyers will do their homework and get an honest conviction on the evidence.
“gunner”
The FTC blew their case? (What, another pun?) Is it really blowing the case if you don’t have a case to begin with? I thought you believed they lost unjustly until the end where you seem to agree that they had no case begin with. Thanks to Anne, of course. :-)
Hey, very interesting post. Just wanted to help out and let you know that there is a small typo here: “the FTC coudn’t prove their case”. Are you sure you wrote the CAN-SPAM act? aha jk.
I felt the exact same way as you about the fact that the jury would have WANTED to find Impulse Media responsible because of the nature of their business. I like your analysis. I’m hopeful that the case was so fact specific that it doesn’t set a strong precedent.