By Ian B. Brooks – Edited by Alissa Del Riego
United States v. Kilbride, No. 07-10528 (9th Cir. Oct. 28, 2009)
Opinion

The Ninth Circuit has affirmed the District Court for the District of Arizona, which had convicted and sentenced defendants Jeffery Kilbride and James Schaffer of transporting obscene materials for sale.

The Ninth Circuit held that a national community standard “must be applied in regulating obscene speech on the Internet, including obscenity disseminated via email.” United States v. Kilbride, No. 07-10528 at 14492 (9th Cir. Oct. 28, 2009).  Defendant Internet spammers Kilbride and Schaffer had appealed their convictions for interstate transportation for sale of obscene material in violation of 18 U.S.C. §§ 1462 and 1465. Judge Fletcher of the 9th Circuit examined the opinions of the fragmented Justices in the Supreme Court’s opinion in Ashcroft v. ACLU for guidance in reaching his conclusion that a national community standard would not pose the constitutional concerns that a local community standard would. Ashcroft v. ACLU, 535 U.S. 564 (2002)

Eric Goldman provides an overview of the case. Orin Kerr, of The Volokh Conspiracy, criticizes the Ninth Circuit’s reasoning in the case. Kerr argues that the Ninth Circuit should have followed the precedent set in Miller v. California, 413 U.S. 15 (1973), wherein local “contemporary community standards” were applied.

Although the Ninth Circuit agreed with the defendants’ assertion that the district court erred in its jury instruction on the obscenity community standard, the court found that it was not a plain error and did not require reversal. The court reached its holding based on  Ashcroft, which found the Child Online Protection Act (COPA) unconstitutional because it was based partly on community standards to identify material that was harmful to children.

Defendants Kilbride and Schaffer operated a spamming business through Ganymede Marketing, a Mauritian company with servers operating in the Netherlands. Two images from the defendants’ sexually explicit emails lead to the obscenity charges. Kilbride and Schaffer were sentenced to 78 and 63 months respectively. On appeal, defendants challenged the District Court’s application of a contemporary community standard to email communications under Hamling v. United States, 418 U.S. 87 (1974), because it would subject the defendants to the least tolerant community standard in the country. The government challenged defendants’ argument by citing a prior case in the district, United States v. Dhingra, 371 F.3d 557 (9th Cir. 2004), in which the Ninth Circuit did not foreclose a local community standard where a crime occurred over the Internet. The Ninth Circuit distinguished Dhingra noting that it does not apply to a federal law that regulates speech.

Rather than applying Hamling, the Ninth Circuit followed Ashcroft. The Ashcroft case addressed the constitutionality of the COPA, which regulated material harmful to minors. The opinion of the Court in Ashcroft did not find it significant that Internet communications were not focused to a particular area and rejected the national community standard approach. The Ninth Circuit reasoned that the view of the Court was contrary to defendants’ argument but noted that the opinion was not joined by a majority of the court.The Ninth Circuit found support for its conclusion that a national obscenity standard should be applied by examining the multiple concurrences and dissent of the other Justices in Ashcroft. Judge Fletcher noted that six Justices raised constitutional concerns over the application of a local community standard for defining obscenity in Internet cases.

This case represents a departure from the local community standard that had been applied following Miller and goes against the reasoning of the opinion of the Court in Ashcroft, but applies what some believe to be the practical reasoning necessary for balancing Internet communications, free speech, and obscenity concerns. Looking forward, OneNewsNow provides a brief opinion on how the Ninth Circuit’s decision may impact defenses raised by attorneys.

By Brian Kozlowski – Edited by Jad Mills
RootZoo, Inc. v. Facebook, Inc., 5:09-cv-03043-HRL (N.D Cal. July 7, 2009)

In a federal court complaint filed in the Northern District of California on July 7th, sports discussion board and social networking site RootZoo alleged that Facebook charged them for advertising referrals that never occurred and that Facebook failed to “properly guard” against click fraud, the practice of third-party individuals or computer programs repeatedly clicking on the advertisement to inflate the number of referrals.

RootZoo’s complaint accuses Facebook of both breach of the “implied covenant of good faith and fair dealing” in their advertising contract and unfair business practices. RootZoo was one of many advertisers who paid Facebook for each click referring a Facebook user to their site. RootZoo claims that Facebook consistently charged them for more outgoing referrals than the RootZoo servers logged as incoming during the period they advertised on Facebook. According to the complaint, when RootZoo submitted server log documentation to Facebook and asked to be refunded for the discrepancy, Facebook refused to provide any refund and would not release any documentation to back up their refusal. The complaint contrasted Facebook’s unwillingness to release data with the more transparent practices of Yahoo! and Google. RootZoo’s filing came only weeks after TechCrunch wrote a series of well-publicized articles on Facebook click fraud prompted by outraged advertiser posts on the marketing discussion board WickedFire. Following the TechCrunch articles, Facebook representatives claimed to have “developed a series of sophisticated systems” to detect click fraud and to have refunded any advertisers that were affected. However, RootZoo is seeking class action status and an unspecified amount of damages..

MediaPost and The Register offer overviews of the filing and a response from Facebook, while TechCrunch summarizes some of the preceding controversy and WickedFire discussion board postings.

RootZoo’s complaint offers June 2, 2008 as an example of the overcharging and third-party click fraud. On June 2^nd, Facebook charged RootZoo for 804 clicks, but RootZoo’s server logs showed only 300 incoming visitors transferred from the Facebook site. In addition to this overcharging, RootZoo claims that all of the documented visitors came from small towns at a rate that “would be almost statistically impossible” given the site’s past visitor history. This statistical impossibility is offered as evidence that most of the referrals actually received were not potential customers, but individuals or programs repeatedly clicking on the RootZoo advertisements to artificially increase the number of Facebook referrals.

The suit is the first that Facebook has faced in the click fraud forum because, as eConsultancy explains, Facebook’s advertising does not allow third parties to profit directly from click fraud. Unlike Yahoo! or Google’s advertising services, where bot-driven click fraud from anywhere on the internet profits the fraudster directly, Facebook does not pay ad revenue to third parties who generate clicks. Furthermore, Facebook’s advertisements are both extremely targeted and require a logged in user. As a result, Facebook click fraud requires the creation of thousands of “dummy” accounts to click on ads, which produce revenue for Facebook, but not for the fraudster. Unlike “conventional” click fraud, RootZoo’s complaint suggests that Facebook click fraud instead results from competing advertisers who hope to increase RootZoo’s advertising costs–an indirect type of click fraud. This “non-conventional” click fraud only incidentally profits Facebook, but even incidental profits may keep the Facebook team from thoroughly investigating or preventing such profitable, third-party behavior.

The future success of this lawsuit remains unclear. RootZoo has the benefit of representation from the experienced firm of Kabatek Brown Kellner, which recently handled click fraud lawsuits against Google and IAC. However, Eric Goldman suggests that RootZoo’s lawsuit also faces many difficulties—from establishing class action status to overcoming the system issues inherent in tracking site visits. Furthermore, Goldman suggests that the terms of the advertising contract with Facebook may protect Facebook from liability for third-party click fraud. However, eConsultancy points out that even if RootZoo faces great challenges collecting from Facebook, the lawsuit may represent larger problems for Facebook if they lose future advertisers who are concerned about click fraud.

]]> http://jolt.law.harvard.edu/digest/district-courts/rootzoo-inc-v-facebook-inc/feed 0 http://jolt.law.harvard.edu/digest/legislation/jaynes-v-virgina http://jolt.law.harvard.edu/digest/legislation/jaynes-v-virgina#comments Thu, 18 Sep 2008 18:57:45 +0000 Christina Hayes http://jolt.law.harvard.edu/digest/?p=64 Virginia State Supreme Court Holds Anti-Spam Statute Unconstitutionally Overbroad
By Jay Gill — Edited by Nicola Carah

Jaynes v. Commonwealth of Virginia
Supreme Court of Virginia, September 12, 2008, No. 062388
Slip Opinion

The Supreme Court of Virginia overturned the conviction of prolific spammer Jeremy Jaynes, unanimously reversing not only the Virginia state court of appeals, but its own earlier holding in the case. In doing so, the court held that the Virginia anti-spam statute under which Jaynes was convicted was unconstitutionally overbroad, as it did not distinguish between commercial and non-commercial instances of anonymous, unsolicited bulk e-mail. The court ruled that non-commercial anonymous bulk e-mail falls squarely within First Amendment protection and that no reasonable construction of the Virginia statute could remedy the constitutional defect.

In a press release praising the decision, the ACLU, which filed an amicus brief in support of Jaynes, wrote, “[s]peech on the Internet deserves no less First Amendment protection than in any other medium.” Jon Praed of the Internet Law Group took issue with the court’s characterization of the situation, telling the Washington Post: “I guess a burglar can break into your home as long as they are reciting the Gettysburg Address.” John Levine, president of the Coalition Against Unsolicited Commercial E-mail, and an expert for the prosecution in Jayne’s jury trial, argues that IP forgery is a red herring and points out that there are a variety of alternatives to send anonymous emails. Nonetheless, he commented, “I don’t see it as a fatal setback for anti-spam law.” According to Levine, Virginia’s statute was unique in prohibiting noncommercial spam, and other statutes, including the federal CAN-SPAM act (which took effect after Jaynes’s arrest), do not contain the flaw that led to the result in this case.

Facts
Jaynes used several computers in his North Carolina apartment to send unsolicited bulk e-mail to @aol.com addresses, which had been stolen and given to him by a former AOL employee. The e-mails advertised penny stocks, FedEx refund claims, and a “history eraser” product, and all carried falsified routing information to disguise Jaynes’s identity. On at least three occasions, he sent over 10,000 email in one day, a threshold that elevated the crime to a felony under Virginia Code § 18.2-152.3:1. A jury convicted him and he was sentenced to nine years in prison.

Virginia’s Anti-Spam Statute
Virgina’s anti-spam statute prohibited, in relevant part, “falsify[ing] or forg[ing] electronic mail transmission information or other routing information in any manner in connection with the transmission of unsolicited bulk electronic mail.” The court found this language to be substantially overbroad, as it did not exclude non-commercial language, such as political and religious speech, that may be distributed in anonymous, bulk form over the Internet. Since including false header information is the only way to send e-mail anonymously, and anonymous speech is protected under the First Amendment, the court reasoned that by prohibiting the falsification of header information in the non-commercial context, the statute impinged on protected First Amendment speech. Dismissing the Commonwealth’s argument that such overbreadth was too insubstantial to warrant striking down the statute, the court noted that, “were the Federalist Papers just being published today via e-mail, that transmission by Publius would violate the statute.” The court refused to apply a limiting construction to the statute that would cure the constitutional defect, stating that to adopt such a construction “would be rewriting Code § 18.2-152.3:1 in a material and substantive way.”

Jurisdiction
Before the state supreme court, Jaynes also argued lack of personal jurisdiction, as he only used the computers in North Carolina. The court found that, because he was aware he was sending to AOL subscribers (due to @aol.com domain on the addresses), and that it was public knowledge that AOL’s headquarters and servers are in Virginia, his acts were sufficiently directed at the state of Virginia to allow the exercise of jurisdiction. The court then entered into a complex analysis of standing, eventually concluding that Jaynes had standing to raise a constitutional overbreadth argument (as opposed to a pure facial or an as-applied constitutional challenge).

Related Reading
Katherine Wong authored a Note on the CAN-SPAM act and federal preemption on state anti-spam statutes in 20 Harv. J. L. & Tech. 459 (2007).