AOL v. USA Home Employment Complaint

NATURE OF PLAINTIFF'S CLAIMS

1. Defendant USA Home Employment has repeatedly bombarded AOL and its members with millions of deceptive, unsolicited, and unwanted Internet electronic mail ("e-mail") messages advertising dubious opportunities to earn "Big Money in a short time" by working at home. Despite demands by AOL that USA Home Employment cease sending unwanted and unsolicited junk e-mail, defendant refused to stop these mass junk e-mailings and persisted in using deceptive techniques designed to frustrate AOL's ability to detect and filter its junk e-mail messages. Defendant's junk e-mail has resulted in thousands of member complaints and has clogged AOL's computers and computer systems, co-opting valuable computer and staff resources needed to deliver authorized Internet e-mails for AOL members.

2. Defendant's indiscriminate mass mailings and deceptive practices 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. Defendant has violated the Computer Fraud and Abuse Act (18 U.S.C. §1030 et seq.), the Trademark Act of 1946 (15 U.S.C. § 1125(c)), the Washington State Unsolicited Commercial Electronic Mail Act, the Virginia Computer Crimes Act (Va. Code Ann. § 18.2-153.2 et seq.), engaged in unfair competition, and trespassed upon and converted for its own use AOL's personal property in violation of California common law. Defendant has also been unjustly enriched at AOL's expense.

3. AOL has demanded that defendant stop its mass junk mailings and has tried to stop its misappropriation of AOL's computers and computer system through technical means, but its attempts at self-help have proven unsuccessful. By this action, AOL seeks an injunction to prevent further unlawful conduct, and compensatory and punitive damages. AOL also asks that a constructive trust be imposed in favor of AOL on all monies received by defendant as a result of its bulk e-mail activities.

JURISDICTION AND VENUE

4. This is an action for violations of the Computer Fraud and Abuse Act (18 U.S.C. § 1030), the Trademark Act of 1946 (15 U.S.C. § 1125(c)), the Washington State Unsolicited Commercial Electronic Mail Act, the Virginia Computer Crimes Act (Va. Code Ann. § 18.2-153.2 et seq.), unfair competition, trespass to chattels, conversion, and unjust enrichment.

5. This Court has jurisdiction over the subject matter pursuant to 28 U.S.C. § 1331, and supplemental jurisdiction over plaintiff's state and common law claims pursuant to 28 U.S.C. § 1367. This Court also has diversity jurisdiction over this action pursuant to 28 U.S.C. § 1332, as this action is between citizens of different states, and the amount in controversy exceeds the sum or value of $75,000, exclusive of interest or costs.

6. Venue is proper in this judicial district pursuant to 28 U.S.C. 1391(b) in that defendant resides in this judicial district and a substantial part of the events giving rise to the claims occurred in this judicial district.

THE PARTIES

7. Plaintiff AOL is a corporation organized and existing under the laws of the State of Delaware with its principal place of business at 22000 AOL Way, Dulles, Virginia 20166. AOL is an Internet service provider ("ISP") that provides a proprietary, content-based online service. AOL maintains computers and other devices that enable its members to obtain various services, including access to the Internet. Its central computer system, which includes specialized computers (called "servers") that process e-mail messages, is located in Reston, Virginia. E-mail sent to and from AOL members is processed through and stored on these computers. AOL's computers likewise provide the functionality for, and maintain the content of, the AOL service provided throughout the United States and abroad.

8. AOL has used as a trademark and as a service mark the initials "AOL," in various forms and styles, continuously in commerce to identify its products and services since October 1989. This mark has been 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. The mark has 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. These registrations are attached as Exhibit A.

9. AOL has invested substantial resources to promote and protect the AOL trademark and service mark in connection with the interstate and worldwide sale of its products and services.

10. AOL has registered the domain name "aol.com" with the InterNIC, the organization that assigns and maintains directories of Internet addresses. This domain name is used extensively in interstate commerce and is recognized worldwide as a source identifier of AOL's online services.

11. Upon information and belief, defendant USA Home Employment ("defendant") is a business entity of unknown form operating in Los Angeles County, California at 3940 Laurel Canyon Boulevard, Suite 447, Studio City, California 91604.

The Internet

12. Defendant committed the acts complained of herein through the use of the electronic messaging capabilities of the Internet. The Internet is a complex "network of networks" that interconnects innumerable smaller groups of linked computers. All of the networks comprising the Internet are connected in a manner that permits any computer on the Internet to communicate with any other computer on the Internet. Some of the components of the Internet are owned by governmental organizations; however, AOL is a proprietary, content-based Internet service provider ("ISP") that owns and operates a domain site consisting of computers and other devices that enable its members to gain access to the Internet and to send and receive e-mail over the Internet.

13. The Internet makes it possible for a user to exchange e-mail messages rapidly with other Internet users in the United States and abroad. E-mail can normally be sent virtually instantaneously from one individual to another, or from an individual user to a large group of addresses. The Internet's e-mail functionality makes it possible for a sender easily to transmit tens and even hundreds of thousands of copies of a single message.

14. The InterNIC, a consortium funded by the National Science Foundation, is responsible for assigning the unique addresses used by computers to communicate through the Internet. These unique addresses are referred to as Internet Protocol ("IP") addresses. Like the unique street addresses and telephone numbers used by individuals and businesses for their mail and telephone communications, IP addresses ensure orderly communications between computer networks on the Internet. An IP address consists of 4 sets of up to 3 numbers in the following format: 123.123.123.123.

15. The InterNIC also assigns "domain" names to individuals, businesses, and organizations using the Internet. Domain names function as convenient shorthand IP addresses, giving Internet users the option of using readily understandable proper names to identify themselves and their communications, rather than cumbersome twelve-digit IP addresses. Businesses are typically assigned domain names with the ".com" designation (e.g., "aol.com"), while educational and governmental organizations usually are assigned ".edu" and ".gov" domain names (e.g., "topuniversity.edu" and "federalagency.gov"). Because each domain name corresponds to a unique IP address, the InterNIC performs the important task of maintaining the directories that allow computers connected to the Internet to find the appropriate IP address for a particular domain requested by a user.

16. An e-mail address consists of a name corresponding to the individual user's account (the "user name") and the name of the domain within which the user's account is located, separated by the "@" symbol (e.g., "jdoe@company.com").

17. E-mail messages contain "headers," generated by the sender's ISP, which identify the sender's return e-mail address, the message's "subject," and other information related to the transmission of the e-mail message (such as the date, time, and routing information). AOL's system is configured such that these "headers" are excerpted at the beginning of each message and appear in full text at the conclusion of the message.

18. A sender who wishes to conceal his true identity and e-mail address can falsify the header information in his e-mail transmissions or manipulate the information used in the electronic header. Various "stealth" software programs, designed for and marketed to the senders of junk e-mail, facilitate the falsification of e-mail header information in mass mailings.

Unsolicited Junk E-Mail

19. It costs virtually nothing for an individual sender to transmit an e-mail message, regardless of the number of recipients. Considerable resources are expended by the ISP at the receiving end, however, storing, sorting, and delivering the e-mail.

20. Although the sender of junk mail sent through the postal system must pay the costs of delivery through the purchase of stamps, there are no stamps on the Internet. Instead, the costs of storing, sorting, and delivering junk e-mail are borne -- involuntarily -- by the recipient's ISP, and the recipients themselves. When computer and staff resources are consumed by massive batches of junk e-mail, known colloquially as "spam," the delivery of legitimate, authorized e-mail is often impaired.

21. Bulk e-mailers, or "spammers," engage in the practice precisely because the medium permits them to shift their marketing costs onto the recipients' ISPs, such as AOL. The ability to send junk e-mail from "throw away" Internet accounts or with falsified headers, and thereby avoid accountability to the consumer, has made bulk junk e-mailing an irresistibly tempting marketing method for disreputable would-be entrepreneurs peddling get-rich schemes and dubious products and services.

22. The practice of unsolicited bulk e-mailing is widely condemned in the Internet community. AOL's Terms of Service specifically prohibit AOL members from using their AOL accounts to send unsolicited bulk e-mail, and expressly reserve AOL's right to block unsolicited bulk e-mail sent to its members from the Internet. AOL's Unsolicited Bulk E-Mail Policy expressly precludes the use of AOL's computer facilities for the transmission of unsolicited e-mail through the Internet to AOL members. In addition, AOL's Terms of Service and E-Mail Policy prohibit members from "harvesting" or collecting the e-mail addresses of other AOL members. These policies apply to both members and non-members.

Unsolicited Junk E-Mail Causes Substantial Harm to AOL's Computer Systems and Business Reputation

23. AOL's e-mail system was created solely for the benefit of AOL members, who pay prescribed fees and who agree to adhere to AOL's Terms of Service. The e-mail system is operated through dedicated servers that store and route e-mail messages between AOL's members. AOL permits its members to use the "aol.com" domain name, which when combined with a unique user name gives each member a distinctive e-mail address from which to exchange e-mail with Internet users (e.g., "member98@aol.com").

24. Any e-mail that is sent through the Internet to an AOL address is first received and sorted by AOL's mail servers. The AOL mail system has a finite capacity designed to accommodate the demands imposed by AOL's members. AOL's computers and computer system are not designed to accommodate, and are vulnerable to disruption by, defendant's and others' indiscriminate mass mailings of unsolicited e-mail. AOL has been forced to devote thousands of hours of staff time to address member complaints about this unsolicited e-mail and expend millions of dollars for new equipment to process the mass mailings.

25. The repeated transmission of massive batches of unsolicited e-mail messages by defendant and other junk e-mailers also degrades the performance of AOL's computers and computer system, forcing AOL to divert computer processing resources away from the handling of authorized e-mail for AOL members. The aggregation of time required to process these bulk e-mail transmissions slows the "delivery" of all e-mail to AOL members, and has at times resulted in significant delays in members' receipt of their e-mail from the Internet.

26. The transmission of unsolicited bulk e-mail by defendant and other junk e-mailers also results in a substantial quantity of mail sent to invalid e-mail addresses, which causes additional harm to the performance of AOL's computers and computer system. For each message that contains undeliverable recipients, AOL's computers must attempt to transmit a message back to the originating site of the e-mail message to inform it of the delivery failure. Attempts to send such "bounce" messages back to the sender's computers consume considerable processing resources within AOL's computers and computer system.

27. AOL has undertaken various technical efforts to permit its members to opt out of receiving messages from domains and IP addresses that are or have been the subject of member complaints regarding unsolicited bulk e-mail. These methods, however, rely on truthful e-mailing practices to be successful. When senders, such as defendant, mail from multiple and varying domains, employ random and varying user names, relay their messages through the servers of innocent third parties, or falsify the headers on their e-mails to indicate that their messages are from domains that AOL does not filter (e.g., "msn.com" or "aol.com"), AOL's computers and computer system cannot detect and filter the e-mail.

28. The practice of sending unsolicited commercial e-mail through AOL's computers and computer system has the effect of unfairly shifting to AOL the costs of transmitting these promotional messages. It is AOL, rather than the junk e-mailer, that pays the costs of the additional computer and staff resources that must be devoted to the processing of the massive batches of e-mail that junk e-mailers transmit through AOL's computers and computer system. AOL members also pay for these unwanted bulk messages in time and effort wasted in opening, reading, and discarding the messages.

29. Junk e-mailers' activities have particularly adverse consequences for those AOL members who pay for their access to AOL's online services and e-mail capability in increments of time. 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. These AOL members thus end up paying twice for the activities of junk e-mailers, through the increased costs and delays in AOL's operations occasioned by the processing of mass quantities of e-mail, and through increased monthly billings for their connection time with AOL. The costs of member dissatisfaction ultimately are borne by AOL, in lost business and harm to its reputation and goodwill.

30. The receipt of unsolicited, unwanted e-mail is the number one complaint voiced by AOL members about the Internet e-mail system. AOL receives approximately up to two hundred thousand such complaints per day.

USA Home Employment's Spamming Practices

31. In or before May 1998, AOL members began receiving large volumes of unsolicited junk e-mail from USA Home Employment advertising, among other things, means to earn "Big Money in a short time" by working at home. These e-mail messages direct recipients to send a "one-time registration fee of $35" to an address in Studio City, California and promise that registrants will receive a first package containing envelopes and sales letters "ready to stuff and mail" and a "free gift" of a "highly informative manual." The messages also guarantee that the registration fee will be refunded "as soon as you stuff and mail your first 300 envelopes." See Exhibit B.

32. USA Home Employment has sent millions of unsolicited junk e-mail messages to AOL members and has used the techniques described above -- randomized sender addresses and altered header information -- to elude AOL's filtering and blocking systems and to disguise the origin of the messages.

33. Unsolicited junk e-mail messages from USA Home Employment use the "aol.com" domain name in their headers in forged recipient addresses. These forged addresses have caused confusion among AOL members and others, and led them to believe that AOL sponsors or approves of defendant's spamming practices.

34. AOL has received tens of thousands of complaints from its members about messages from USA Home Employment.

35. On May 20, 1998, AOL sent a letter to USA Home Employment at the address listed in the above-mentioned e-mail messages. AOL's letter notified USA Home Employment that its unsolicited e-mail transmissions were causing injury to AOL and had resulted in numerous complaints by AOL members. AOL demanded that USA Home Employment cease and desist from transmitting unsolicited bulk e-mail to AOL and its members and prohibited USA Home Employment and any other person(s) working in concert with the company or on the company's behalf from transmitting any e-mail through AOL's proprietary computers and computer networks. AOL did not receive any response.

36. Following the mailing of AOL's cease and desist letter, USA Home Employment continued to transmit large volumes of unsolicited e-mail messages advertising dubious home employment opportunities to AOL members. USA Home Employment also continued to engage in deceitful practices such as randomizing sender addresses and altering header information to evade AOL's filtering and blocking systems.

37. AOL repeats and realleges paragraphs 1 through 36 of this complaint as if fully set forth herein.

38. In connection with its provision of online and Internet computer services to its members, who are citizens of California and other states, AOL maintains computers and a computer system that are "protected computers" as the term is defined in 18 U.S.C. § 1030(e)(2)(B) because they are used in interstate commerce and communication ("AOL's protected computer facilities").

39. Since at least as early as May 1998, defendant has repeatedly transmitted to AOL's protected computer facilities millions of unsolicited commercial e-mail messages in batches of tens and hundreds of thousands without authorization.

40. On each occasion on which defendant transmitted large batches of unsolicited junk e-mail messages, defendant knew that its bulk mailings would impair the operation of AOL's protected computer facilities and AOL's ability to provide quality e-mail services to its members.

41. Defendant has engaged in deceptive practices for the purpose of attempting to conceal from AOL the actual quantity of junk mail being transmitted by defendant to AOL members, thereby frustrating AOL's efforts to protect its e-mail system from injury and shield its members from unwanted junk mail.

42. Defendant knowingly and intentionally caused the transmission of information to, and gained access to, AOL's protected computer facilities without authorization, and as a result of such conduct caused damage, or recklessly caused damage, in violation of 18 U.S.C. § 1030(a)(5).

43. As a result of defendant's conduct, AOL has suffered damages, including impairment of the integrity and/or availability of data, programs, systems, and/or information in AOL's protected computer facilities, in an amount to be determined at trial. AOL's damages aggregate to at least $5,000 in value in the year preceding the date of the filing of this complaint.

44. Defendant threatens to continue to engage in the unlawful actions alleged herein, and unless restrained and enjoined will continue to do so, causing irreparable harm to AOL and its members. It is difficult to ascertain the amount of compensation that could afford AOL adequate relief for defendant's continuing unlawful acts. AOL's remedy at law is, therefore, inadequate to compensate for the injuries threatened, and AOL is entitled to preliminary and permanent injunctive relief.

(Service Mark Dilution, 15 U.S.C. § 1125(c))

45. AOL repeats and realleges paragraphs 1 through 44 of this complaint as if fully set forth herein.

46. Defendant has made commercial use of the domain name "aol.com" with the willful intent to trade on AOL's reputation or to cause dilution of the famous marks AMERICA ONLINE, AOL, and "aol.com."

47. Defendant's use of the domain name "aol.com" began long after AOL's marks had become well known and famous.

48. Defendant's use of the domain name "aol.com" causes dilution of the distinctive quality of AOL's famous marks AMERICA ONLINE, AOL, and "aol.com."

49. Defendant's use of the domain name "aol.com" lessens the capacity of AOL's famous marks AMERICA ONLINE, AOL and "aol.com" to identify and distinguish AOL's goods and services.

50. Defendant's activities complained of herein constitute service mark dilution within the meaning of Section 43(c) of the Trademark Act of 1946, 15 U.S.C. § 1125(c).

51. Defendant's conduct has caused AOL irreparable injury, loss of reputation and pecuniary damages. Unless enjoined by this court, defendant will continue to willfully dilute AOL's famous marks to the immediate and irreparable damage of AOL.

(Violation of Washington State's Unsolicited Commercial Electronic Mail Act)

52. AOL repeats and realleges the allegations of paragraphs 1 through 51 of this complaint as if fully set forth herein.

53. AOL maintains computer facilities that provide and enable computer access by multiple users to its computer servers and the Internet and thereby qualifies as an "Interactive computer service" as that term is defined by the Washington State Unsolicited Commercial Electronic Mail Act (the "Act").

54. Defendant has initiated the transmission of numerous commercial electronic mail messages to numerous electronic mail addresses belonging to AOL members that the defendant knew, or had reason to know, were held by Washington residents.

55. The commercial electronic mail messages sent by defendant used a third party's Internet domain name without permission of the third party, misrepresented information identifying the point of origin or transmission path of the commercial electronic mail message, and/or contained false or misleading information in the subject line.

56. Defendant transmitted these commercial electronic mail messages after the effective date of the Act.

57. Defendant's actions constitute numerous violations of the Act and, as provided by the Act, are also unfair and deceptive acts in trade or commerce and an unfair method of competition in violation of 19.86 RCW (1997), the Washington Consumer Protection Act.

58. By virtue of defendant's violations of the Act and 19.86 RCW (1997), AOL is entitled to liquidated damages in the amount provided by the Act, and/or any other remedies provided by 19.86 RCW (1997), including reasonable attorney's fees.

59. Defendant threatens to engage in unlawful actions alleged herein, and unless restrained and enjoined will continue to do so, causing irreparable harm to AOL. AOL is therefore entitled to preliminary and permanent injunctive relief.

(Violation of the Virginia Computer Crimes Act, Va. Code Ann. § 18.2-152.2 et seq.)

60. AOL repeats and realleges the allegations of paragraphs 1 through 59 of this complaint as if fully set forth herein.

61. In connection with the provision of online and Internet computer services to its members who are citizens of the Commonwealth of Virginia and other States, AOL maintains in the Commonwealth of Virginia computers and a computer system that are "property" within the meaning of Va. Code Ann. § 18.2-152.2.

62. Without authority, defendant has repeatedly transmitted batches of unsolicited commercial e-mail messages to AOL's computers and computer system in the Commonwealth of Virginia.

63. In transmitting these batches of unsolicited commercial e-mail messages, defendant knowingly falsified portions of the Internet "header" information on its e-mail messages for the purpose of attempting to conceal from AOL and its members the actual domain or IP address which served as the point of origin of the transmission.

64. Without authority, defendant has obtained access to and used AOL's computers and computer system with the intent to obtain the use of AOL's property and services by false pretenses, in violation of Va. Code. Ann. § 18.2-152.3.

65. Without authority, defendant has willfully used AOL's computers and computer network, in violation of Va. Ann. Code § 18.2-152.6.

66. The foregoing acts of defendant have caused injury to AOL, AOL's computers and computer system, and to AOL's business relations, reputation, and goodwill.

67. Defendant threatens to continue to engage in the unlawful transmissions complained of herein, and unless restrained and enjoined will continue to do so, impairing the services provided to AOL members and causing AOL irreparable damage. Because of defendant's pattern and practice of using numerous and varying domain names and IP addresses from which to carry out unlawful transmissions, AOL otherwise will be obliged to maintain multiple actions concerning the activities of this defendant. It is difficult to ascertain the amount of compensation that could afford AOL adequate relief for defendant's continuing unlawful acts. AOL's remedy at law is, therefore, inadequate to compensate for the injuries threatened.

(Unfair Competition, Cal. Bus. & Prof. Code § 17200 et seq.)

68. AOL repeats and realleges paragraphs 1-67 of this complaint as if fully set forth herein.

69. Defendant has engaged in unlawful, unfair or fraudulent business practices or acts in violation of state and federal law as described above.

70. By these acts, defendant has engaged in unfair competition in violation of Cal. Bus. & Prof. Code § 17200 et seq.

71. Defendant's acts of unfair competition have caused AOL injury, including loss of goodwill and customers and damage to business reputation, among other damages, in an amount to be determined at trial.

72. Defendant threatens to engage in the unlawful actions alleged herein, and unless restrained and enjoined will continue to do so, causing irreparable harm to AOL. AOL is therefore entitled to preliminary and permanent injunctive relief.

(Trespass To Chattels)

73. AOL repeats and realleges paragraphs 1 through 72 of this complaint as if fully set forth herein.

74. The computers, computer networks, and computer services that comprise AOL's e-mail system are the personal property of AOL.

75. Without valid authorization, defendant has intentionally and repeatedly obtained access to, and made use of, AOL's proprietary computer equipment and e-mail system to facilitate defendant's spamming operation for defendant's own economic benefit.

76. Through defendant's practice and pattern of repeatedly causing the transmission of unsolicited commercial e-mail to tens of thousands of AOL users, and the resulting transmission of a substantial number of bounced back messages and complaints in response to defendant's messages, defendant has wrongfully exercised dominion over AOL's computers and e-mail system in denial of AOL's own rights to that property, and has thereby deprived AOL and its members of legitimate use of this commercially valuable system.

77. Defendant's conduct constitutes trespass to AOL's chattels.

78. As a result of defendant's trespass, AOL has been damaged, including loss of goodwill and customers and damage to business reputation, among other damages, in an amount to be determined at trial. Because these damages cannot be readily ascertained, AOL lacks an adequate remedy at law and is entitled to preliminary and permanent injunctive relief.

79. The conduct of defendant alleged above was intentional, wanton, willful, oppressive and in conscious disregard of the rights of AOL. Accordingly, AOL is entitled to exemplary and/or punitive damages in an amount sufficient to punish defendant and deter defendant and others from engaging in similar conduct.

(Conversion)

80. AOL repeats and realleges paragraphs 1 through 79 of this complaint as if fully set forth herein.

81. Defendant, without authorization, has intentionally used AOL's proprietary computer and e-mail system for defendant's own commercial benefit. This unauthorized use by defendant has deprived AOL and its customers of the legitimate use of this commercially valuable proprietary system.

82. Defendant's conversion of AOL's commercial property has caused and continues to cause AOL to suffer irreparable injury, loss of reputation, and pecuniary damages in an amount to be determined at trial.

83. Defendant committed the acts described above intentionally, maliciously, in an oppressive manner, and in conscious disregard of AOL's rights. Accordingly, AOL is entitled to punitive damages in an amount sufficient to punish defendant and deter defendant and others from engaging in similar conduct.

(Unjust Enrichment and Imposition of a Constructive Trust)

84. AOL repeats and realleges paragraphs 1 through 84 of this complaint as if fully set forth herein.

85. Defendant has unjustly derived considerable economic benefit from the unauthorized use of AOL's proprietary computer system and other resources.

86. Defendant has also unjustly derived considerable economic benefit from the conduct described above by shifting the costs associated with receiving, sorting, storing and responding to customer complaints about unsolicited junk e-mail, and with processing undeliverable messages from defendant's lists. AOL has not been compensated in any way by defendant for these costs.

87. Any and all profits made by defendant as a result of its spamming practices constitute unjust enrichment.

88. AOL has been damaged by defendant's conduct and is entitled to an award of damages in an amount to be determined at trial, and/or is entitled to a constructive trust to be imposed on all profits made by defendant as a result of the practices described above.

STEINHART & FALCONER LLP
ANDREW J. BERMAN (State Bar No. 146200)
LISA M. SITKIN (State Bar No. 194127)
333 Market Street, 32nd Floor
San Francisco, California 94105-2150
Telephone: (415) 777-3999
Attorneys for Plaintiff
AMERICA ONLINE INCORPORATED