Local spam draws fire, again
Internet giants target company
KITCHENER (Sep 30, 2004)
A Kitchener company is facing the wrath of Microsoft Corp. and Amazon.com, who have filed a joint anti-spam lawsuit that has the potential to lead to millions of dollars in penalties.
It's the second time Gold Disk Canada Inc. has faced such legal action, although it settled out of court when sued by Yahoo Inc. earlier this year.
A complaint filed Monday in U.S. District Court in Seattle alleges Gold Disk used Microsoft's Hotmail service to send millions of deceptive, commercial e-mails, some of which were forged to appear to have come from Amazon.com.
Named in the complaint as owners and operators of Gold Disk are Barry Head and his two sons, Eric and Barry. They are believed to reside in two homes on Oliver Court in Kitchener, although they could not be reached for comment yesterday.
David Zapolsky, vice-president and associate general counsel of Amazon.com, told The Record his firm filed 11 lawsuits last year against spammers.
In the course of its investigation, it found that "three of them had paper trails that led back to Gold Disk." He believes it's "one of the primary actors (in North America) in this scheme to send out fraudulent and deceptive e-mail . . . Microsoft had also identified Gold Disk as a major spam source."
This is the first time the two companies have come together to file such a joint lawsuit.
"We will be seeking damages in the order of millions (of dollars) but it's premature to identify the specific level of remedy," Zapolsky said.
In seeking damages, Zapolsky said one of Amazon.com's chief grounds is the infringement of its trademark. Microsoft, on the other hand, could technically seek penalties of $1,000 for each deceptive e-mail under Washington state law and up to $250 per e-mail under federal legislation.
The joint complaint claims that on or before Jan. 1 2003, the Heads "sent large volumes of e-mail messages advertising the sale of human growth hormone, cable descramblers, penis enlargement products, debt consolidation, merchant card processing services and other goods and services of questionable value."
The messages were alleged to have been sent using thousands of Microsoft Hotmail accounts established with fictitious names and directing recipients to websites where the products and services could be ordered.
The complaint also alleges some of the e-mails were designed to appear to have been sent from Amazon.com and incorporated the company's registered trademark name.
"As a result of the defendants' actions, Microsoft's computer equipment servers were required to process hundreds of millions of improper spam e-mails," the complaint says.
Earlier this year, the Heads were sued by Yahoo, which claimed they sent 94 million e-mails to its subscribers in violation of U.S. anti-spam legislation. They allegedly sold untargeted e-mail lists for up to $3,500 US.
Yahoo settled out of court last June for a sum that lawyers on both sides wouldn't disclose other than to say it was more than $100,000.
At the time, it was reported that the settlement was with Eric Head, 25, and Yahoo had dismissed its case against his father and brother. They were never really involved in the e-mail business, said Huey Cotton, a Los Angeles lawyer for the Heads.
However, Zapolsky said: "We believe we will be able to prove the liability of all the defendants at trial."
Cotton couldn't be reached yesterday, but he was quoted in a report by Consumer Business Review Online as saying: "Eric Head and his related companies have been out of business for some time. We will address the new allegations in the appropriate forum."
The complaint against Gold Disk seeks a permanent injunction against the Heads to cease their allegedly illegal activities and asks for damages to be determined at trial by jury.
Marc Lallaman, a public relations spokesman for Microsoft, said yesterday: "If you spam, you stand a pretty good chance of being sued. That's the message they're trying to get out."