AOL v. IMS

Citation
America Online, Inc. v. IMS,  24 F.Supp.2d 548 (E.D. Va. 1998) (full-text).

Factual Background
Plaintiff America Online (“AOL”) is an Internet service provider and Defendant Joseph J. Melle, Jr., (“Melle”) is the creator and operator of defendants TSF Marketing and TSF Industries (collectively “TSF”). AOL alleges that Melle and TSF improperly sent unauthorized bulk e-mail advertisements (“spam”) to AOL subscribers. Specifically, AOL alleges that Melle sent over 60 million e-mail messages over the course of 10 months; that he continued to send unauthorized bulk e-mail after he was notified in writing by AOL to cease and desist these activities; that his activities caused AOL to spend technical resources and staff time to “defend” its computer system and its membership against this spam; and that Melle's messages damaged AOL's goodwill among its members and generated more than 50,000 member complaints.

AOL sued six defendants under five causes of action: false designation of origin under the Lanham Act (Count I); dilution of interest in trademarks and service marks under the Lanham Act (Count II); violation of the Computer Fraud and Abuse Act (Count III); violation of the Virginia Computer Crimes Act (Count IV); and trespass to chattels under Virginia Common Law (Count V). Of the six defendants, only Melle filed an answer to the complaint, and the Court found the remaining defendants to be in default. After entry of those defaults, Melle stipulated to a permanent injunction against him. AOL filed its summary judgment motion and agreed to dismiss the remaining counts of the complaint against Melle, if summary judgment were granted in its favor.

Trial Court Proceedings
The trial court awarded plaintiff summary judgment. Following Compuserve Inc. v. Cyber Promotions, 962 F. Supp. 1015 (S.D. Ohio 1997), the trial court found that defendant, by continuing to send spam to plaintiff's subscribers after being told by AOL to cease and desist, had trespassed on plaintiff's computer network in violation of Virginia common law. "[Defendant] Melle admits that he received a cease and desist letter from AOL ... and that, as a result of that letter, he knew his contact with AOL's computer network was unauthorized, yet he continued spamming."

The trial court further held that defendant's act of forging "aol.com" in the headers of his e-mail constituted both a false designation of origin and dilution in violation of federal trademark law. This conduct constituted false designation of origin because "[a]ny e-mail recipient could logically conclude that a message containing the initials "aol.com" in the header would originate from AOL's registered Internet domain ... [and thereby be] deceived into thinking that AOL sponsored or approved of [defendant] Melle's bulk mailing activities." This injured AOL's reputation with its subscribers. This conduct also diluted AOL's famous mark by associating it with the transmission of junk e-mail. Such association tarnished the mark. The trial court accordingly awarded plaintiff summary judgment on liability. Left for another day was the question of damages.

Thus, the trial court held that the bulk e-mailer committed a trespass to chattels against AOL’s computer network, the bulk e-mailer falsely designated origin of his products in violation of the Lanham Act and the bulk e-mailer diluted AOL’s distinctive trademark and service mark by tarnishment in violation of the Lanham Act.