UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA,

Alexandria Division

AMERICA ONLINE, INC.,
Plaintiff,

v.

IMS, BRIAN ROBBINS, GULF COAST MARKETING, TSF MARKETING, TSF INDUSTRIES, and JOSEPH J. MELLE, JR.,
Defendants.

CASE NO. 98-0011-A

AMERICA ONLINE’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR PRELIMINARY INJUNCTION AGAINST DEFENDANT JOSEPH J. MELLE, JR.

INTRODUCTION AND SUMMARY OF ARGUMENT

Defendant Joseph J. Melle, Jr., and parties acting in concert with him (collectively "Melle"), have for months willfully and defiantly bombarded America Online, Inc. ("AOL") and its members with millions of unwanted Internet electronic mail messages ("e-mail"). In these e-mail messages, Melle offers to sell the very tools that allow virtually anyone to send junk e-mail on their own. When Melle first began his assault, AOL repeatedly demanded that he stop. Melle ignored those demands. In January, 1998, AOL filed suit against Melle. Despite AOL’s attempts to stop his bulk mailings, Melle has continued his barrage of unwanted and unsolicited e-mail. On February 24, 1998, for example, Melle sent more than 439,000 messages in a single day to AOL members. Four days earlier, on February 20, 1998, Melle sent more than 390,000 messages. And just last week, Melle opened an AOL account with the screen name "JMelle3" from which he sent unsolicited e-mail advertising products that facilitate bulk e-mailing and offering to "hide" the source of the sender’s bulk e-mail messages. Melle did this only days after Melle assured AOL: "I am currently not in the bulk e-mail business." See Exhibit A attached hereto and Exhibit 24 to the Levitt Declaration.

Melle has made it apparent that he will go to any length and employ any means necessary, including trickery and deceit, to evade AOL’s filtering mechanisms and dupe AOL members into opening his unwanted messages. Many of Melle’s e-mail messages counterfeit AOL’s registered trademark and service mark, falsely implying that they originate from AOL or an AOL member. Melle forges other information in the headers of his messages that makes it difficult for AOL to detect the source and quantity of his messages. Melle also relays his messages through the computers of unwitting third parties in the United States and at least twelve foreign countries to camouflage his mailings. Melle then attaches a deceptive phrase in the subject line of his message, such as "URGENT" or "Hope you had a good Thanksgiving," to trick AOL members into opening his messages.

AOL members overwhelmingly detest unsolicited bulk e-mail. AOL has received more than 25,000 complaints specifically in response to Melle’s e-mail messages, more than 10,000 of which were sent following the filing of the complaint in this case. One member wrote: "Stop the junk mail! 16 junk mails received today alone on my AOL account! Why can’t AOL control this invasion?" Another complained: "[I] resent taking up my allotted time on line for this type of stuff. Received 10 unsolicited messages just today, and I’m getting fed up with them." See Exhibit 19 to the Declaration of Jay Levitt.

In response to the complaints of its members, AOL has demanded that Melle stop sending e-mail to its members and employed technical means to filter Melle’s messages from its computer system. However, Melle has ignored AOL’s demands and engaged in practices designed to evade AOL’s filtering mechanisms. Melle has also made affirmative efforts to coerce AOL into receiving, processing, and storing his junk e-mail. Near the end of last year, through a front called the "National Organization of Internet Commerce," Melle threatened to post the e-mail addresses of one million AOL members if AOL did not agree to accept bulk e-mail. When AOL refused, Melle increased the threat to five million addresses. Although Melle has not yet posted the addresses, his threat remains viable and Melle continues to harm AOL by sending bulk e-mail to AOL members.

Melle’s mass mailings are a trespass upon and misappropriation of AOL’s valuable computer systems. Melle’s unauthorized and deceptive conduct has damaged AOL’s goodwill among its members, resulted in tens of thousands of member complaints, and imposed significant monetary costs on AOL. AOL’s efforts at self-help have failed. AOL now seeks a preliminary injunction to halt the flood of unsolicited e-mail, and to prevent Melle’s further unauthorized use of AOL’s trademark and service mark.

Conduct like Melle’s has been enjoined before. Facing nearly identical factual scenarios, both this Court and the United States District Court for the Southern District of Ohio granted preliminary injunctions prohibiting the very conduct in which Melle engages. On October 31, 1997, this Court entered a preliminary injunction against Over the Air Equipment, Inc. ("OAE"), which -- like Melle -- had deluged the computer systems of AOL and the electronic mailboxes of its members with massive quantities of junk e-mail. A copy of this Court’s Order ("Ct.’s Order") and Amended Preliminary Injunction are attached at Exhibit B hereto. This Court found that AOL was irreparably harmed by OAE’s transmission of bulk e-mail and enjoined OAE from sending or transmitting any unsolicited electronic mail messages to AOL or its members. Ct.’s Order at 2-3; Transcript of the Hearing Before The Honorable Leonie Brinkema ("Hr’g Tr."), attached at Exhibit C hereto, at 27. In reaching its decision, this Court largely adopted the analysis of the United States District Court for the Southern District of Ohio, which had previously enjoined further unauthorized mailing by another bulk e-mailer, Cyber Promotions, Inc., in CompuServe, Inc. v. Cyber Promotions, Inc., 962 F. Supp. 1015 (S.D. Ohio 1997).

There is no reason for the Court to treat Melle differently. Like OAE and Cyber Promotions, Melle has, without any claim of right, willfully trespassed upon AOL’s computer systems by sending huge quantities of junk e-mail messages to AOL members. These mailings have injured AOL and its members and threaten to further injure AOL and its members by proliferating the tools that permits others to send junk e-mail of their own. In addition, Melle has purposely infringed AOL’s registered trademark and service mark. As explained in more detail in this brief, a preliminary injunction prohibiting Melle from sending any e-mail to AOL or its members is necessary to prevent Melle’s parasitic advertising techniques and prevent further irreparable damage to AOL.

BACKGROUND ON AOL’S E-MAIL SYSTEM AND THE INTERNET

AOL provides a proprietary, content-based online service, that affords its members access to the Internet and the capability to send and receive e-mail. AOL’s e-mail system is operated through dedicated computers (called "servers") that receive, store, and route e-mail messages to AOL members. AOL’s e-mail system has a finite capacity designed to accommodate the needs of AOL members. The system is subject to disruption by unsolicited bulk e-mail. Declaration of Matt Korn ("Korn Decl."), ¶¶ 12, 24-25.

AOL’s e-mail system allows AOL members to send and receive e-mail messages. Using e-mail, AOL members are able to communicate electronically with any one of more than eleven million AOL members, and with tens of millions of other Internet users throughout the United States and the world. Declaration of Jay Levitt ("Levitt Decl."), ¶ 3. The Internet is a complex "network of networks" connecting millions of computers throughout the world. Korn Decl., ¶ 5. To facilitate orderly and effective interaction, computers that communicate through the Internet are assigned a unique twelve-digit numeric address. Levitt Decl., ¶ 4. This numeric address is called an "Internet Protocol" ("IP") address. Id. Computers that communicate through the Internet may obtain a "domain name" from the InterNIC, a consortium run by the National Science Foundation. A "domain name" corresponds to a particular IP address and can be used to locate a particular computer on the Internet. A domain name in the United States is usually followed by one of the suffixes ".com," ".edu," or ".gov," with ".com." being used primarily for commercial purposes (e.g., "tsf-industries.com" and "tsf-marketing.com" used by Melle). Id., ¶ 5. Many Internet users prefer to use a domain name, rather than a lengthy and cumbersome IP address, to identify themselves and their communications to other Internet users. Id.

An Internet e-mail address consists of a name corresponding to the individual user’s account (the "user name") followed by the name of the domain within which the user’s account is located, separated by the "@" symbol (e.g., "sales@tsf-industries.com"). An AOL member’s e-mail address consists of the AOL member’s "screen name," which the member designates for herself, the "@" symbol, and "aol.com," AOL’s registered domain name (e.g., "member@aol.com"). Levitt Decl., ¶ 6.

AOL’s policies clearly bar both members and nonmembers from sending bulk e-mail through AOL. AOL’s Unsolicited Bulk E-mail Policy prohibits both AOL members and nonmembers from engaging in bulk e-mailing activities and AOL reserves the right to block such transmissions. AOL’s Terms of Service, which apply to AOL members, also prohibit a member from using her AOL account to "harvest" the e-mail addresses of other AOL members for the purpose of sending unsolicited bulk e-mail, or to send unsolicited bulk e-mail to other AOL members or across the Internet. The relevant portions of AOL’s Unsolicited Bulk E-mail Policy and AOL’s Terms of Service are attached at Exhibit 1 to the Levitt Declaration.

Notwithstanding AOL’s policies on junk e-mail, junk e-mailers like Melle have increasingly used specialized software to "strip" or "harvest" AOL member screen names from AOL’s member directory and chat rooms in order to create mailing lists containing millions of e-mail addresses. Bulk e-mailers like Melle then flood AOL’s system with massive batches of unsolicited messages targeted to AOL members. Levitt Decl., ¶ 9.

Junk e-mail has proliferated enormously because it permits the author of a message to foist the costs of his marketing onto others. The development of the Internet and readily-available software permit a user to transmit a single e-mail message simultaneously to hundreds of thousands of recipients at a de minimis expense. Levitt Decl., ¶ 9. The true costs of mass e-mailing -- expenses incurred storing, sorting, and delivering the messages -- are borne by the recipients’ Internet service providers ("ISPs"), and ultimately, by their members. Id., ¶¶ 10, 16-17. AOL has been forced to spend millions of dollars to upgrade its system to be able to process the mass mailings of bulk e-mailers like Melle and still effectively service its members’ e-mail needs. Korn Decl., ¶ 12. Because junk e-mailers pay only a fraction of the costs associated with their activities, Melle -- and others like him -- routinely send massive batches of unsolicited messages through ISPs such as AOL. Indeed, it is not uncommon for one bulk e-mailer to distribute hundreds of thousands of messages in a single session. Levitt Decl., ¶ 9.

AOL has undertaken various technical efforts to filter messages from Internet domains that have been the subject of member complaints regarding unsolicited bulk e-mail. Levitt Decl., ¶ 18. These methods, however, rely on truthful e-mailing practices to be successful. When senders, such as Melle, use deceptive e-mailing practices, AOL’s ability to filter junk e-mail is significantly impaired. Id., ¶ 19; Korn Decl., ¶ 17.

FACTUAL SUMMARY

Melle is a junk e-mailer who sends massive quantities of unwanted solicitations to AOL and its members. These messages primarily advertise bulk e-mailing software and CD-ROMS containing millions of e-mail addresses (which allow numerous others to engage in the same unlawful activities engaged in by Melle himself), and various products that comprise Melle’s "online classifieds." Levitt Decl., ¶ 20.

Purchasers of Melle’s products are usually asked to send money to a mail drop registered under the name TSF Marketing or TSF Industries. Levitt Decl., ¶ 5. Melle is the sole incorporator and owner of TSF Industries, a Nevada corporation. Id. TSF Marketing is a registered California d/b/a designation for Joseph Melle. Id. A true and correct copy of the registration information for TSF Industries and unofficial copies of the registration information for TSF Marketing and TSF Industries are attached at Exhibit 5 to the Levitt Declaration.

Melle Encourages and Facilitates the Transmission of Bulk E-mail by Others

Melle’s bulk e-mailing practices are particularly damaging to AOL because he markets the tools that allow virtually anyone to engage in the very same unlawful conduct in which he engages. Melle regularly advertises a CD-ROM that contains "43 Million email addresses." A purchaser of this massive e-mail list also receives a "free full working demo of Stealth, the bulk email program capable of sending up to 400,000 emails per hour, and able to cloak your true identity." For those customers of his who would rather not send their own junk mail, Melle offers to send their junk e-mail, for a fee, to 1 million people. Recently, Melle began advertising a "bulk server" that will purportedly give a purchaser "20 Megs of bulletproof web space, an auto responder, and e-mail addresses with 10 ports for unlimited mass mailing." On his Web page, Melle offers to send commercial solicitations to 25 million people on behalf of others. Examples of e-mails advertising these bulk e-mailing products and services and Melle’s Web page are attached at Exhibit 4 to the Levitt Declaration. Unless stopped, Melle’s actions threaten to exponentially increase the amount of junk e-mail sent across the Internet and thereby greatly exacerbate the harm already inflicted upon AOL and its members. Levitt Decl., ¶ 20.

Melle Uses Deception to Evade AOL’s Filtering Mechanisms

Melle employs numerous false and deceptive practices to mask the source and quantity of his transmissions, in order to evade AOL’s electronic filtering mechanisms and avoid receiving the thousands of returned messages and recipient complaints provoked by his mass e-mailings. Levitt Decl., ¶¶ 24-28. For example, instead of transmitting from one consistent ISP account, Melle transmits from numerous, constantly varying ISP accounts. Id., ¶ 24. Attached at Exhibit 10 to the Levitt Declaration are examples of three e-mails sent within a sixteen-day period from three different ISP accounts. By using a large number of ISP accounts, Melle makes it more difficult for AOL to determine the source of Melle’s e-mails and prevent him from sending unwanted e-mail to AOL members. Id.

In addition to using dozens of different ISP accounts, Melle intentionally forges the "from line" in the electronic return address of his messages to conceal the domains from which he transmits e-mail. Levitt Decl., ¶ 25. Often, Melle forges the domain name "aol.com" in the header of his messages to make it appear as though his messages are sent from a member of AOL. Id., ¶ 26. Because AOL cannot block mail that its computers believe is coming from its own domain, Melle’s forgery helps his messages evade AOL’s filtering mechanisms. A number of Melle’s messages containing "aol.com" forgery are attached at Exhibit 12 of the Levitt Declaration. The domain "aol.com" is registered with the InterNIC and contains AOL’s registered trademark and service mark "AOL." When Melle counterfeits AOL’s registered mark and domain name in the return addresses of his messages, he creates the false and damaging misperception among the AOL members who receive these messages that AOL endorses or condones Melle’s unsolicited bulk e-mail practices and/or the products and services that he markets. Attached at Exhibit 13 to the Levitt Declaration are examples of complaints by AOL members, which demonstrate member confusion caused by Melle’s unauthorized use of AOL’s domain name.

In other messages, Melle manipulates the headers on his messages to entirely omit the domain name in the "from line." Levitt Decl., ¶ 25. When no domain name exists, AOL’s mail computers interpret this to mean that Melle’s messages are internal mail sent by another AOL user and do not filter Melle’s unauthorized messages. Id. Examples of this practice are attached at Exhibit 11 to the Levitt Declaration.

To further mask the quantity of messages he sends, Melle appends different sets of names and numerals -- which appear to have been randomly generated -- to the forged domain names in the headers of his e-mail messages, making it appear that the messages were sent from a number of different people with accounts within the forged domain. For example, instead of sending 100,000 messages from "member1@aol.com," Melle would send 10 messages each from "member1@aol.com" through "member10,000@aol.com." Melle’s tactics make detection of his mass mailing more difficult. The functional result is the same -- AOL is forced to process and deliver 100,000 unwanted advertisements on behalf of Melle. Attached to the Levitt Declaration at Exhibit 14 are examples reflecting more than 20 user names employed by Melle to send mail from the Mexican domain "kin.cieamer.conacyt.mx."

Melle also obscures his identity, and the point of origin of his e-mails by relaying his messages through the servers of innocent third parties. Levitt Decl., ¶ 28-29. The examples attached at Exhibit 15 to the Levitt Declaration were relayed through servers in twelve different foreign countries. Id., ¶ 28. When a message is relayed through another ISP, it appears that the message is actually coming from that ISP. Like forging the domain name in an e-mail header, this practice makes it more difficult for AOL to detect the true source of the e-mail and to filter unwanted e-mail. Several examples of e-mails sent by Melle employing this practice are attached at Exhibits 15 and 16 to the Levitt Declaration.

Melle’s Actions Continue to Injure AOL

Melle’s actions cause serious and irreparable injury to AOL by impairing the functioning of AOL’s e-mail system and harming AOL’s business reputation and goodwill among its members. Korn Decl., ¶ 22, 24; Price Decl., ¶ 7. AOL’s business competitors have used the issue of junk e-mail to attempt to persuade AOL members to abandon their AOL membership. Korn Decl., ¶ 22. Unsolicited bulk e-mail of the sort that Melle sends to AOL members through the Internet is the number one complaint voiced by AOL members about AOL’s e-mail system. Price Decl., ¶ 6. Over the past few months, AOL has received an average of over 100,000 member complaints each day concerning junk e-mail. Korn Decl., ¶ 16; Levitt Decl., ¶ 13. Melle’s actions have deprived AOL of the intended use of its system -- to provide a rapid e-mail service free of unwanted junk mail. Unsolicited bulk e-mail has impaired the day to day functioning of AOL’s e-mail service and has at times resulted in significant delays in members’ receipt of their e-mail from the Internet. Korn Decl., ¶ 24.

The huge mailing lists used by bulk e-mailers like Melle are often outdated, and contain a high percentage of invalid e-mail addresses. Levitt Decl., ¶ 10; Korn Decl., ¶ 25. Each message sent to an invalid e-mail address makes multiple trips through AOL’s system, and increases the processing load imposed on AOL’s computers. AOL’s computers first attempt to transmit a message to the invalid addresses listed. When delivery proves impossible, AOL’s computers must attempt to transmit the message back to the originating site of the e-mail message to inform it of the delivery failure. If the sender has forged his return address, as bulk e-mailers like Melle often do to avoid having to process returned mail or having to receive recipients’ complaints, AOL’s computers are unable to return the message to its sender and it is bounced back to AOL again. Id. Processing these "bounce" messages consumes considerable processing resources within AOL’s computer networks. Id.

AOL has been forced to spend millions of dollars to upgrade its computer networks so that AOL can process authorized e-mail in a timely manner notwithstanding the millions of unsolicited junk e-mail messages sent by Melle and others. Korn Decl., ¶ 12. In the past year alone, AOL has invested more than $50 million to expand the capacity of its system. Id., ¶ 23. In addition, AOL has spent millions more on staff to address customer complaints regarding e-mail delays and the receipt of unwanted bulk e-mail. Id., ¶ 23. AOL estimates that between $2.5 and $15 million dollars in added equipment costs alone may be attributed to the costs of processing junk e-mail. Id.

Melle’s activities also impose costs directly on AOL’s members. All AOL members must endure the annoyance, increased costs, and delays in AOL’s operations occasioned by the mass quantities of e-mail. However, the more than one million members who pay in increments of time also pay increased monthly billings for their connection time to AOL. Levitt Decl., ¶ 17; Korn Decl., ¶ 4. Time spent by such a member accessing, reviewing, and discarding junk e-mail messages is paid for by the member according to the member’s hourly billing rates.

Only an Injunction Will Stop Melle

AOL has tried all available means of self-help to stop Melle from bulk e-mailing its members. Despite these efforts, Melle has continued to bombard AOL with bulk e-mail. During the Summer of 1997, in response to numerous member complaints, AOL used technical means to block the primary domain from which Melle was sending his messages. Thereafter, in oral conversations with AOL personnel, Melle was informed that AOL prohibits sending unsolicited bulk e-mail to AOL and its members. Levitt Decl., ¶ 29. Melle refused to stop. Samples of messages sent by Melle in August and September are attached at Exhibit 17 to the Levitt Declaration. By letter dated October 15, 1997, sent via Federal Express and e-mail, AOL notified Melle’s d/b/a designation, TSF Marketing, that it and its agents were prohibited from further transmission of any e-mail through AOL’s proprietary computers and computer system. A copy of this letter is attached at Exhibit 18 to the Levitt Declaration. Melle ignored AOL’s formal request that he stop. Since October 15, 1997, AOL has received more than 25,000 complaints about Melle’s junk mail from AOL members who have taken the affirmative step of forwarding Melle’s unsolicited, unwanted messages to AOL. Id., ¶ 13. These 25,000 complaints represent only a small fraction of the total number of unwanted messages Melle has sent to AOL members since October 15, 1997.

Melle continues with impunity to send unsolicited messages to AOL members even in the face of this lawsuit. Since the complaint in this case was filed on January 6, 1998, AOL has received more than 10,000 member complaints about Melle’s e-mail transmissions. Id. Attached to the Levitt Declaration at Exhibit 20 are a number of these complaints. One of these complaints was received by AOL as recently as March 12, 1998. On March 17, 1998, Melle opened an AOL account with the screen name "JMelle3." Melle used that account to harvest the e-mail addresses of AOL members and then sent a message advertising products that facilitate deceptive bulk e-mailing to another AOL member. A copy of the message is attached at Exhibit 24 to the Levitt Declaration. In the e-mail message Melle tells potential bulk e-mailers "we will hide your dial-up." The clear purpose of Melle’s products is to conceal the source and identity of bulk e-mail and facilitate deceptive e-mailing practices.

Melle has unequivocally stated that he will never stop sending unsolicited bulk e-mail, even if Congress passes a law that specifically prohibits it. Attached at Exhibit 21 to the Levitt Declaration is an e-mail from Melle to AOL in which he makes the brazen statement:

[B]ulk email is here to stay, regardless of what steps online services take, and regardless of any decree the U.S. Congress may make in this arena. Should Congress approve a bill that makes bulk email illegal, it will not stop. Instead companies will incorporate in offshore Countries and do there [sic] bulking from there.

An injunction is necessary to stop Melle’s unlawful activities.

Melle has not only refused to stop his unlawful trespass upon AOL’s system, he has tried to blackmail AOL to force it to accept his transmissions. Various e-mail correspondence and postings by Melle on various Internet Web pages containing his threats to post one million and five million e-mail addresses of AOL members are attached at Exhibit 23 to the Levitt Declaration. These threats have not been successful.

AOL’s attempts at obtaining voluntary compliance and its efforts at self-help have failed. Absent a Court order, there is no reason to expect that Melle will cease his unlawful conduct. Accordingly, AOL asks that this Court immediately enjoin Melle from utilizing AOL’s equipment and services in connection with his transmission of e-mail.

I...AOL IS ENTITLED TO A PRELIMINARY INJUNCTION THAT PREVENTS MELLE FROM MAKING UNAUTHORIZED USE OF AOL’S COMPUTERS, AND FROM INFRINGING AOL’S TRADEMARK AND SERVICE MARK

The Fourth Circuit considers four factors in determining whether preliminary injunctive relief should be granted: 1) the likelihood of irreparable harm to the plaintiff if the preliminary injunction is not granted; 2) the likelihood of harm to the defendant if the preliminary injunction is granted; 3) the likelihood that plaintiff will succeed on the merits; and 4) the public interest. Hughes Network Sys., Inc. v. Interdigital Comm. Corp., 17 F.3d 691, 693 (4th Cir. 1994) (citing and reaffirming Blackwelder Furniture Co. v. Seilig Mfg. Co., 550 F.2d 189, 195-96 (4th Cir. 1977)); Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d 353, 359 (4th Cir. 1991). These factors are not weighted equally. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048, 1054-55 (4th Cir. 1985); Hughes, 17 F.3d at 693. "[I]rreparable harm to the plaintiff and the harm to the defendant are the two most important factors." Rum Creek, 926 F.2d at 359. "If, after balancing those two factors, the balance ‘tips decidedly’ in favor of the plaintiff, a preliminary injunction will be granted if ‘the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation. . . ." Id. The "questions" are serious enough to warrant an injunction if their "resolution is not immediately apparent. That is . . . to say that [the plaintiff] has not embarked on frivolous litigation. . . ." Blackwelder, 550 F.2d at 195-96.

In this case -- as in AOL’s suit against OAE and CompuServe’s suit against Cyber Promotions -- the four factors weigh heavily in favor of the preliminary injunction AOL seeks. As an initial matter, the balance of hardships overwhelmingly favors AOL. Absent the requested order, AOL will continue to suffer irreparable injury from Melle’s assault on its computer systems and misappropriation of its registered trademark and service mark. Melle, in contrast, will sustain no legally cognizable harm from an order preventing him from making further use of AOL’s proprietary equipment and intellectual property; Melle will be free to advertise his products using other means. With regard to the likelihood of success on the merits, AOL’s Complaint not only presents "serious" issues -- sufficient to support an injunction where the balance of the hardships favors the plaintiff as it does here -- but indeed states multiple causes of action on which AOL has an enormous likelihood of success. Finally, the public interest favors the requested preliminary relief, because an injunction will prevent the further impairment of mail service to AOL members and continuing customer confusion and customer complaints. AOL is, accordingly, entitled to the relief it has requested.

A…AOL And Its Members Have Suffered And Will Continue To Suffer Irreparable Harm Unless Melle’s Conduct Is Enjoined

The transmission of unsolicited bulk e-mail to AOL and its members injures AOL and its members in a number of ways. First, the massive quantities of UBE have impaired the day-to-day functioning of AOL’s e-mail service. Korn Decl., ¶ 23. Second, the vast majority of AOL members do not want to receive junk e-mail and complain vociferously to AOL about unwanted e-mail. Korn Decl., ¶ 16. Junk e-mail is the number one complaint voiced by AOL members about the e-mail system. Price Decl., ¶ 6. The resulting loss of customer goodwill is impossible to restore or to value with specificity. CompuServe, 962 F. Supp. At 1027-28 ("Plaintiff has demonstrated that defendants’ intrusions into their computer systems harm plaintiff’s business reputation and goodwill. This is the sort of injury that warrants the issuance of a preliminary injunction because the actual loss is impossible to compute." (citations omitted)). See Hr’g Tr. At 26-28 ("I’m definitely convinced on this record, even though it’s not a complete record, that there’s definitely irreparable injury that the plaintiff will incur if [the defendant’s transmission of unsolicited bulk e-mail] continues.").

The harm to AOL’s goodwill is exacerbated because Melle’s deliberate evasion of AOL’s technical filtering mechanisms leaves AOL members with the mistaken impression that AOL actually condones or sponsors the services advertised in Melle’s messages. For example, after receiving an unsolicited message from the Melle, an AOL member forwarded the message to AOL, stating

PLEASE!!!!!!!!!! SEE IF YOU CAN MAKE SURE MY ADDRESS IS NOT INCLUDED WITH THESE PEOPLE. I HATE MY MAILBOX CLUTTERED UP WITH UNSOLICITED ADVERTISEMENTS AND THEREFORE NEVER ORDER ANYTHING THIS WAY! PLEASE HELP SPREAD THE WORD - THIS IS SLIMEY!

This message is attached to the Levitt Declaration at Exhibit 2. Another recipient of Melle’s misleading messages forwarded it to AOL, adding: "Why is it that 95% of my AOL mail is crap like this or sex ads?" Another bluntly stated: "keep my mailbox clean of junk or cancel my account." Copies of these messages are attached to the Levitt Declaration at Exhibit 3.

Because injury to reputation or goodwill cannot easily be restored and is difficult to quantify in monetary terms, it is viewed as irreparable. See, e.g., Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Operating Co., 22 F.3d 546, 552 (4^th Cir. 1994) (threat of permanent loss of customers and potential loss of goodwill support finding of irreparable harm); Cutler-Hammer, Inc. v. Universal Relay Corp., 285 F. Supp. 636, 639 (S.D.N.Y. 1968) ("Since injuries to reputation are not readily recompensed by money damages the harm caused may well be irreparable.").

AOL’s competitors use the presence of junk e-mail on AOL’s system as a marketing tool to lure away AOL members. Korn Decl., ¶ 22. When AOL loses members, it is irreparably harmed.

AOL has also suffered irreparable injury from Melle’s infringement and misappropriation of its trademark and service mark. Melle’s forgery of the aol.com domain name falsely suggests to the recipients of his messages that AOL is affiliated with Melle’s unsolicited mail practices. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 939 (4^th Cir. 1995) ("[Infringement] gives rise to irreparable injury, in that plaintiff has lost control of its business reputation . . . there is substantial likelihood of confusion of the purchasing public, there may be no monetary recovery available, and there is an inherent injury to the good will and reputation of the plaintiff." (citations omitted, alteration in original)). The complaints attached at Exhibit 13 to the Levitt Declaration demonstrate this confusion. One states: "I am forwarding this to you because this unsolicited bulk e-mail appears to originate from an AOL address." Another states: "This part is from your AOL member." Another reads: "heres another spam artist! Please delete their account." No amount of money can restore to AOL the goodwill and business reputation it has lost from Melle’s wrongful use of AOL’s registered trademark and service mark in connection with his junk mail.

B…Melle Will Suffer No Legally Cognizable Harm If The Requested Injunction Is Issued

AOL seeks only to prevent Melle from utilizing AOL’s own proprietary computers and computer networks in connection with Melle’s transmission of electronic information across the Internet. Melle has no entitlement, absent AOL’s expressed or implied authorization, to use AOL’s computers and computer networks. See Hr’g Tr. At 28 ("[T]here are other ways of doing advertising, and it is extremely, in my opinion, inequitable to, in effect, almost be a parasite on the system that AOL has and on their computers . . ."); CompuServe Inc. v. Cyber Promotions, Inc., 962 F. Supp. At 1024 (stating that defendants’ continued use of CompuServe’s proprietary computer equipment, after CompuServe notified them that it no longer consented, was a trespass). Just as a private company is entitled to prevent outsiders from using its office equipment, and a private citizen is entitled to prevent strangers from using his home, AOL is entitled to prevent Melle from trespassing upon its computers and computer networks without authorization.

Although Melle has sought to insulate his practices by vague references to a "right to advertise" and a right to "free speech," there is no First Amendment or other right to use another person’s computer system to transmit unsolicited mail. See Cyber Promotions, Inc. v. America Online, Inc., 1996 U.S. Dist. LEXIS 19073, at *33 (E.D. Pa. 1996) ("[T]he First Amendment does not prevent AOL from using its [filtering mechanisms] to protect its private property rights by blocking Cyber’s mass e-mail advertisements from clogging AOL’s system and damaging AOL’s reputation while at the same time not receiving any compensation whatsoever from Cyber."). AOL is not a state actor, and it is entitled to restrict access to its private property. Id. Melle, moreover, has other ways -- including using the U.S. mail, hundreds of other areas on the Internet, and print media -- to advertise his products and services. Allowing AOL to prevent Melle from making unauthorized use of AOL’s computers and computer networks will result in no legally recognized harm to Melle.

Finally, despite AOL’s demand that Melle cease and desist from sending unauthorized junk e-mail to AOL, Melle has continued to access AOL’s computers, by fraudulent means. Levitt Decl., ¶¶ 24-31. Melle has no lawful entitlement to employ deception to avoid AOL’s technical filtering tools. Melle’s fraudulent conduct violates Virginia common law, the Lanham Act, and the Virginia Computer Crimes Act. He will suffer no cognizable harm if ordered to comply with the law. See 11A Charles Alan Wright, et al., Federal Practice and Procedure, § 2948.4 (1977) ("A federal statute prohibiting the threatened acts that are the subject matter of the litigation has been considered a strong factor in favor of granting a preliminary injunction.").

C…AOL Has A Substantial Likelihood Of Success On The Merits Of Its Claims For Trespass To Chattels, Violation Of The Computer Fraud And Abuse Act, Violation Of The Virginia Computer Crimes Act And Violation Of The Lanham Act

AOL has alleged that Melle trespassed upon its computers and computer networks, violated the Virginia Computer Crimes Act, and violated the Lanham Act through his bulk mailings. AOL has a substantial likelihood of succeeding on the merits of all of its claims. However, AOL need only show a likelihood of succeeding on the merits of one of its claims to warrant an injunction against Melle.

1…Melle Has Trespassed Upon AOL’s Computers And Computer Networks

Under Virginia law, conversion occurs when (1) the plaintiff has a right to immediate possession of personal property, and (2) the defendant wrongfully exercises or assumes authority over the property, depriving the plaintiff of possession. McCormick v. AT&T Technologies, Inc., 934 F.2d 531, 535 (4^th Cir. 1991) (applying Virginia law). The use of a chattel will amount to conversion when it so seriously interferes with the right of another to control the chattel that it amounts to a deprivation of possession and justifies requiring the actor to pay its full value. See Restatement (Second) of Torts § 227 (1965); Unlimited Screw Products, Inc. v. Malm, 781 F. Supp. 1121, 1131 (E.D. Va. 1991) (citing Restatement (Second) of Torts § 222A (1965)).

Trespass has been characterized as a "little brother of conversion." W. Page Prosser, et al., Prosser and Keeton on The Law of Torts, § 14 at 85-86 (5^th Ed. 1984). The difference between the two torts is essentially one of degree: Where an interference with personal property is not sufficiently grave to compel the defendant to pay the full value of the property, it constitutes a trespass to chattels. Id. Under Virginia common law, "[o]ne who commits a trespass to a chattel is liable to its rightful possessor for actual damages suffered by reason of loss of its use." Vines v. Branch, 244 Va. 185, 190 (1992) (citation omitted).

A trespass to chattel is committed by intentionally using or intermeddling with personal property in rightful possession of another without authorization. Restatement (Second) of Torts § 217(b). Physical "intermeddling" is defined in Restatement § 217, comment e, as: "intentionally bringing about a physical contact with the chattel." This physical contact is actionable when it is "harmful to the possessor’s materially valuable interest" in the chattel. Restatement (Second) of Torts § 218(b). A showing of diminution of quality, condition, or value of the property as a result of defendant’s use is sufficient. Id.

The United States District Court for the Southern District of Ohio granted a preliminary injunction under almost identical circumstances. See CompuServe, 962 F. Supp. At 1015. In CompuServe, the defendants had sent unsolicited e-mail advertising their products and those of their clients to hundreds of thousands of Internet users, many of whom were CompuServe subscribers. Like Melle, the defendants concealed the origin of their messages by falsifying header information and by concealing their true domain names. Id. At 1019. As AOL has here, CompuServe alleged that the volume of messages generated by the mass e-mailings placed a significant burden on its equipment and cost CompuServe’s subscribers money for time spent accessing, reviewing, and discarding the unsolicited e-mails. Id. As a result, CompuServe had received complaints from its subscribers. Id. And as in this case, CompuServe had notified the defendants that they were no longer authorized to use CompuServe’s proprietary computer equipment, but the defendants nonetheless continued to send their messages through CompuServe’s computers. Id. At 1024. The court concluded that CompuServe stated a valid cause of action for trespass. It explained:

Defendants’ intrusions into CompuServe’s computer systems, insofar as they harm plaintiff’s business reputation and goodwill with its customers, are actionable under Restatement § 218(d).

Id. At 1023.

CompuServe was relied upon heavily by Judge Brinkema in granting a preliminary injunction against OAE. Judge Brinkema stated:

I think the reasoning in the CompuServe case is extremely clear, extremely careful, extremely pertinent to this case, and the judge in that case went through a very careful analysis of the concept of trespass to chattel. . . . I do think this case can be resolved at this point, I mean, this issue resolved at this point on the trespass concept . . .

Hr’g Tr. At 26, 27. There is no reason that Melle’s conduct in this case should be viewed any differently.

a…Melle Has Intentionally Made Use Of AOL’s Computer Network

Melle has intentionally co-opted AOL’s computers and computer networks to process and deliver Melle’s unsolicited commercial advertisements to AOL members. AOL’s computer and networking equipment is tangible personal property, and Melle’s transmission of electronic signals to and through this equipment is a sufficiently "physical" contact to constitute a trespass on the property. See Hr’g Tr. At 26 ("There is no question the same technology applies in this case as it applied in CompuServe, and that is that the computers, the physical computers of America Online are, in fact, invaded . . . ."); CompuServe, 962 F. Supp. At 1021; cf. Thrifty-Tel, 54 Cal. Rptr. 2d at 473 (Ct. App. 1996) (generation by computer of thousands of phone calls to long distance telephone service constituted trespass to chattels); Martin v. Reynolds Metals Co., 342 P.2d 790, 792-94 (Or. 1959) (en banc) (invisible fluoride particles); McNeill v. Redington, 154 P.2d 428 (Cal. Ct. App. 1944) (vibration of the soil or concussion of the air); Virginian Ry. Co. v. London, 139 S.E. 328 (Va. 1927) (sparks from railroad company’s engine).

b…Melle’s Use Of AOL’s Computer Network Is Unauthorized

AOL has made clear through its policies on junk e-mail that it considers bulk, unsolicited e-mail to be an unauthorized trespass on its computer systems. AOL has also told Melle repeatedly to stop transmitting unsolicited e-mail over AOL’s computer network. Melle has acknowledged in correspondence his awareness that AOL opposes his use of the AOL e-mail system. In fact, Melle stated in e-mails to AOL that his purpose in threatening to post the e-mail addresses of five million AOL members was to force AOL to change its policy regarding unsolicited bulk e-mail. Knowing that AOL prohibits unsolicited bulk e-mail, Melle cannot claim that his use of AOL’s computers is under any claim of right.

To the extent that Melle believes that, simply by connecting itself to the Internet AOL gave up its right to deny access to particular third-party bulk e-mailers, Melle is wrong. As the court recognized in CompuServe, 962 F. Supp. At 1024, this argument is "analogous to the argument that because an establishment invites the public to enter its property for business purposes, it cannot later restrict or revoke access to that property," a proposition that is plainly contradicted by Virginia law. See Randolph v. Virginia, 119 S.E.2d 817, 820 (Va. 1961), vacated on other grounds 374 U.S. 97 (1963) ("It is ‘well settled that, although the general public have an implied license to enter a retail store, the proprietor is at liberty to revoke this license at any time as to any individual, and to eject such individual from the store if he refuses to leave when requested to do so.’") (citation omitted).

c…AOL’s Possessory Interest In Its Computer Equipment Is Injured By Melle’s Unauthorized Use

AOL has a present possessory interest in its computers and computer network. The value that AOL realizes from this computer equipment is wholly derived from the extent to which the equipment can serve AOL’s member base. See CompuServe, 962 F. Supp. At 1022. Accordingly, AOL has a strong interest in preventing uses of its property that are not "compatible with the intended purpose of the property." Riesbeck Food Markets, Inc. v. NLRB, 1996 U.S. App. LEXIS 17693, at *13-14 (4^th Cir. 1996) (citing Perry Educ. Ass’n v. Perry Local Educators’ Ass’n, 460 U.S. 37, 49 (1983)). Using AOL’s computer systems to force unwanted junk e-mail upon AOL’s own members is not compatible with the intended use of AOL’s computer systems and decreases the utility of AOL’s e-mail service. See CompuServe, 962 F. Supp. At 1023 ("[T]he receipt of a bundle of unsolicited messages at once can require the subscriber to sift through, at his expense, all of the messages in order to find the ones he wanted or expected to receive. These inconveniences decrease the utility of CompuServe’s e-mail service . . . .").

AOL members are upset by their receipt of Melle’s messages. See, e.g., Exhibits 17, 19, 20 to the Levitt Declaration. AOL receives approximately 100,000 member complaints about unsolicited bulk e-mail each day and has received in excess of 25,000 complaints specifically in response to Melle’s e-mail messages since AOL formally asked Melle to stop. Member dissatisfaction hurts AOL through lost business and harm to its reputation and goodwill. This harm diminishes the value AOL realizes from its computer equipment. CompuServe, 962 F. Supp. At 1023 ("Defendants’ intrusions into CompuServe’s computer systems, insofar as they harm plaintiff’s business reputation and goodwill with its customers, are actionable under Restatement § 218(d)."). The intentional and unauthorized use of AOL’s commercially valuable e-mail system constitutes a trespass on AOL’s property in violation of Virginia common law.

2…Melle Has Violated The Virginia Computer Crimes Act

Melle’s conduct also is prohibited by the plain terms of the Virginia Computer Crimes Act, which affords a private right of action to any person injured by another, who has "us[ed] a computer or computer network without authority and with the intent to . . . obtain property or services by false pretenses." Va. Code Ann. § 18.2-152.3(1). Each of these elements is present here. Melle has, without authorization, used AOL’s computers and computer networks by repeatedly transmitting hundreds of thousands of unsolicited e-mail messages to and through AOL’s system; Melle knows that he is acting without authorization from AOL in doing so (he has been specifically warned on more than one occasion that his unsolicited bulk e-mail is unwelcome and unauthorized); and Melle has intentionally engaged in a variety of deceptive practices to obscure the source of his mail, to evade AOL’s blocking and screening devices and thereby to obtain access to and use of AOL’s commercially valuable computer systems, for his own commercial advantage.

3…Melle Has Unlawfully Used AOL’s Registered Trademark And Service Mark

Since October 1989, AOL has used the initials "AOL" as a trademark and as a service mark in various forms and styles, continuously in commerce to identify its products and services. The "AOL" mark is registered as a trademark upon the Principal Register of the United States Patent and Trademark Office as United States Registration No. 1,984,337, registered July 2, 1996. It has also been registered as a service mark upon the Principal Register of the United States Patent and Trademark Office as United States Registration No. 1,977,731, registered June 4, 1996. Copies of these registrations are attached at Exhibit D hereto.

a…Melle Has Falsely Indicated that His Messages Originate from the AOL System in Violation of Section 43(a)(1) of the Lanham Act

Section 43(a)(1) of the Lanham Act (15 U.S.C. § 1125(a)) prohibits the use in commerce of "any false designation of origin . . . which . . . (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person."

Melle has violated Section 43(a)(1) by counterfeiting the aol.com domain in the headers on his messages to make it appear as though the messages originate from AOL member accounts. This form of deceit creates a likelihood of confusion as to AOL’s sponsorship or approval of Melle’s services and/or e-mail messages.

The Fourth Circuit has articulated several factors that may be relevant to a determination that a likelihood of confusion exists, including the distinctiveness of the senior mark; similarity of the mark; similarity of the goods or services that the mark identifies; similarity of the facilities employed by the parties to transact their business; similarity of advertising; defendant’s intent in selecting the mark; evidence of actual confusion; quality of defendant’s product; and sophistication of consuming public. See, e.g., Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 463 (4^th Cir. 1996). "Certain factors may not be germane to every situation . . . though several factors are simultaneously present, some factors may, depending on the case, be more important than others." Id. (citation omitted)

The facts of this case strongly support the conclusion that Melle has used the aol.com domain name (which includes the "AOL" mark) in a manner likely to confuse the relevant public into believing that his e-mail originates from with the AOL system, and that by tolerating his bulk e-mailing practices, AOL sponsors or is in some way affiliated with Melle’s bulk e-mailing activities. Melle’s uses AOL’s domain name purposefully to conceal the true point of origin of his messages by falsely implying that AOL is the point of origin. There is a substantial likelihood that -- as Melle plainly intends -- his use of aol.com will cause confusion as to AOL’s sponsorship or approval of Melle’s services and e-mail practices. Many AOL members subscribe to AOL precisely because it is a user-friendly online service that affords easy access the Internet. These AOL members log on to AOL and receive Melle’s messages in their electronic mail boxes. When the messages indicate in their headers that they originated from someone with an account at "aol.com," the member recipient is likely to take the header at face value. The Court does not need to engage in any conjecture on this point. The complaints attached at Exhibit 13 to the Levitt Declaration demonstrate that AOL members who receive these messages are confused regarding the source of the messages and mistakenly believe that AOL can stop these e-mails by canceling the member’s account.

Defendants in other cases have been enjoined from engaging in precisely this type of false designation. See "Web Firm Takes on CyberPromotions" <http://www.news.com/News/Item/0,4,11309,00.html> (temporary restraining order preventing defendant from sending unsolicited bulk e-mail using plaintiff’s domain name as a return address) (Mar. 19, 1998). There is no reason that Melle’s conduct should be treated differently.

b…Melle Has Diluted The Value Of AOL’s Registered Trademark And Service Marks

Section 43(a) of the Lanham Act (15 U.S.C. § 1125(c)(1)) prohibits the use in commerce of a mark or trade name "if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark." AOL could prevail on its dilution claim because the registered "AOL" mark clearly qualifies as "famous" within the meaning of Section 43(c)(1), and the association of the mark with Melle’s widely condemned e-mailing practices unquestionably dilutes its value. Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 506 (2d Cir. 1996) ("[T]o establish a dilution claim, two elements must be shown: (1) ownership of a distinctive mark, and (2) a likelihood of dilution.").

The "AOL" mark easily qualifies as "famous." The mark has been used continuously in commerce since 1989, and it is registered on the principal register. AOL spends hundreds of millions of dollars annually on advertising, direct marketing, and consumer relations that incorporate and promote brand identification with the "AOL" mark. Price Decl., ¶ 3. By virtue of AOL’s use and promotion of the "AOL" mark, it has become a valuable business asset. Id. The mark is used and recognized throughout the United States and worldwide in association with AOL’s online products and services. Id. Indeed, approximately 89% of adults in this country are familiar with one of more of AOL’s registered marks. Id.

The "AOL" mark is tarnished, and thus diluted, by association with Melle’s junk e-mail practices. "The sine qua non of tarnishment is a finding that plaintiff’s mark will suffer negative associations through defendant’s use." Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d at 507. See also Original Appalachian Artworks v. Topps Chewing Gum, 642 F. Supp. 1031 (N.D. Ga. 1986) (preliminary injunction against sale of children’s GARBAGE PAIL KIDS cards where defendants’ cards used plaintiff’s marks in a setting which created an undesirable, unwholesome, or unsavory mental association with plaintiff’s mark).

If AOL’s trademark and service mark are associated with bulk e-mailing its mark will be tarnished. Sending junk e-mail is widely condemned in the Internet community. A survey conducted by World Research Inc. on Internet users’ attitudes toward unsolicited junk e-mail found that nearly 70 percent of recipients hate junk e-mail or consider it "bothersome." Levitt Decl., ¶ 11. As mentioned, AOL receives more than 700,000 complaints from its members each week regarding unsolicited bulk e-mail.

Melle has used AOL’s famous mark as part of the "header" information on his e-mail messages, falsely indicating that his messages originated from AOL’s domain. Levitt Decl., ¶ 26. Melle’s unlawful reproduction of AOL’s well known mark in connection with his practice of transmitting bulk unsolicited, commercial e-mail -- a widely condemned form of Internet communication -- diminishes the value of the mark by association.

D...Public Policy Supports An Injunction

An injunction against Melle’s fraudulent and illegal e-mail practices would serve the public interest. As Judge Brinkema specifically determined in granting a preliminary injunction against OAE,

[T]he parties who are really represented by the plaintiff here are the ultimate subscribers to the service who clearly don’t want the stuff, and at least on the record before me, in many cases where [AOL] attempted to keep their subscribers from having to see it, they were unsuccessful because of activities on [OAE’s] behalf. So clearly the public interest, it seems to me, at this level anyway is in favor of [AOL].

Hr’g. Tr. at 26.

Likewise, in this case Melle’s high volume of junk mail slows down the receipt and transmission of other messages through the AOL system and over the Internet, and costs the ultimate recipients of Melle’s messages time and money spent wading through messages they do not want and did not request. See CompuServe, 962 F. Supp. at 1028 ("It is ironic that if defendants were to prevail . . . the viability of electronic mail as an effective means of communication for the rest of society would be put at risk."). Further, Melle’s conduct already has engendered confusion among AOL members regarding AOL’s association with Melle’s services and e-mail practices, and if not enjoined is likely to result in further consumer confusion. See Exhibit 13 to Levitt Decl.; AMP, Inc. v. Foy, 540 F.2d 1181, 1184-85 (4th Cir. 1976); Communications Satellite Corp. v. Comcet, Inc., 429 F.2d 1245, 1251 (4th Cir.), cert. denied, 400 U.S. 942 (1970). Finally, the public interest is advanced by the Court’s protection of the common law rights of individuals and entities to their personal property. See CompuServe, 962 F. Supp. at 1028. Immediate injunctive relief is warranted.

CONCLUSION

For the foregoing reasons, plaintiff AOL respectfully requests that the Court enter the Preliminary Injunction in the proposed form submitted herewith.

Respectfully submitted,

Jon L. Praed (VSB# 40678)
LATHAM & WATKINS
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
(202) 637-2200

Attorneys for Plaintiff
America Online, Inc.
Of Counsel:

Everett C. Johnson, Jr.
Richard P. Bress
Elizabeth T. Carlson
Matthew R. Lewis
LATHAM & WATKINS
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
(202) 637-2200

Randall Boe
Charles Curran
AMERICA ONLINE, INC.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 265-1428

FOOTNOTES

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