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E-Commerce News
Spyware May Constitute Trespass; E-Mail Message Can Satisfy
October 25, 2005
SPYWARE MAY CONSTITUTE TRESPASS
An adware program that causes lost productivity and diverts computer resources on a personal computer can result in liability for trespass to chattels against the adware distributor, according to a federal trial court in Illinois. The court also ruled, that under the proper set of facts, advertisers who use adware to deliver their messages could also be subjected to trespass to chattels claims.
The case arose when Stephen Sotelo filed a class action complaint against various entities involved in distributing spyware created by DirectRevenue LLC, which was used to serve contextual pop-up ads.
Sotelo claimed that DirectRevenue and certain other named defendants had "trespassed" against his personal property (his computer) by interfering with his use of it. The court found that, because Sotelo was arguing that the defendants had interfered with his use of his computer, trespass to chattels was the proper theory to claim.
The defendants argued that any harm suffered in this case by a personal computer user was little more than an annoyance. The court disagreed with this argument. It noted, "The elements of trespass to personal property--interference and damage--do not hinge on the identity of the plaintiff, and the cause of action may be asserted by an individual computer user who alleges unauthorized electronic contact with his computer system that causes harm, such as Spyware."
The court also found that Sotelo suffered real damage to his computer system, because the pop-up ads slow the computer's performance, deplete its memory, and destroy other software. The court was unimpressed with the defendant’s contention that the damage was minimal, because Sotelo could simply close the pop-up ads as they arose. The court felt that the defendants were "ignor[ing] the reality of computer and Internet use," pointing out that closing each pop-up ad does nothing to mitigate damages, such as wasted time, lost productivity, burdened memory, hampered display capabilities, and breached security.
Having denied the motion to dismiss of DirectRevenue, the adware distributor, the court then considered whether to dismiss the case against AccuQuote and aQuantitative. AccuQuote was an advertiser that bought ad space in the pop-up ads while aQuantitative was the marketing company that served the ads.
AccuQuote and aQuantitative argued that they did not cause the ads to be sent to Sotelo's computer and that Sotelo failed to plead their knowledge of DirectRevenue's actions. But the court held that Sotelo sufficiently implicated the two defendants in the claim by contending that they cooperated with DirectRevenue in using its spyware to transmit the ads. Sotelo did not need to allege that the defendants intended to break the law. It was sufficient for Sotelo to allege that the defendants intentionally caused the ads to be placed through spyware that unlawfully interfered with his computer.
The most interesting part of this case isn't the fact that an adware distributor might be liable for the effects of its products, it's the liability of the advertiser who uses that service! Be careful.
E-MAIL MESSAGE CAN SATISFY STATUTE OF FRAUDS
An e-mail message can satisfy the requirement of a writing under the statute of frauds, as well as the signature requirement under the Uniform Commercial Code, according to a recent ruling from a federal court in New York. The court also found that an e-mail message may serve as a valid confirmation of the existence of an earlier agreement.
The case concerned an October 3, 2003 e-mail sent by Bazak International Corp. to Tarrant Apparel Group, purporting to confirm an agreement between the parties, for the purchase of certain apparel items that Tarrant had agreed to sell at $2.40 per item. An attachment contained a letter with both a typed and handwritten signature. The e-mail with the attached letter bore a subject header reading, "Total Inventory Purchased" and the attached letter, sent on letterhead stationery, read in part, "As per our agreement with Mr. Gerard Guez, we would like to inform you that Bazak International has bought the total inventory of 747,096 pcs per your Sept. 30, 2003 inventory report ... The total inventory purchased is 687,896 pcs. Please send us a proforma invoice...."
Despite the e-mail, Tarrant later informed Bazak that Tarrant had decided to sell its inventory to another buyer at a higher price. Bazak brought a lawsuit for "specific performance", essentially asking the court to force Tarrant to complete the contract described in the October 3 e-mail.
In response to Bazak's suit for specific performance, Tarrant unsuccessfully argued that the message did not satisfy the statute of frauds' requirement of a writing sufficient to indicate that a contract for sale had been made between the parties, and signed by the party against whom enforcement was sought.
The federal court disagreed. It ruled that an electronic message was indistinguishable from writings that satisfied the statute of frauds, such as faxes, telexes or telegrams--all of which are intangible at some point during their transmission. According to the court, "An e-mail suffices as much as a letter, a telegram or a fax to provide such objective indication of an existing agreement."
Tarrant was equally unsuccessful with the argument that e-mail cannot satisfy the "writing in confirmation" requirement of U.C.C. §2-201(2) because the statute does not specifically mention e-mail as a recognized form of writing.
The UCC states that "writing" includes "printing, typewriting or any other intentional reduction to tangible form." Although e-mails are "intangible messages during their transmission, this fact alone does not prove fatal to their qualifying as writings under the UCC," the court wrote. Writings that have satisfied the UCC's writing requirement include communications that are intangible during portions of their transmission and then are rendered into tangible forms, such as faxes, telexes, and telegrams. Risks attendant with e-mail, that a party could dispatch unsolicited messages and attempt to create a binding contract, were no greater with e-mail than they were with any other form of transmission, the court said. Both handwritten and typed messages were capable of fabrication.
The court found, in the case before it, that "the October 3 e-mail does, as a matter of law, satisfy" the statute of frauds, distinguishing the e-mail from those of other cases. Here, the message was not ambiguous, and inferences drawn were not tenuous. The message was directly applicable to the agreement at issue, and did not pertain to other subjects.
The court also found that the October 3 e-mail satisfied the U.C.C.'s requirement of a writing "in confirmation of an earlier agreement," because, according to the court, the e-mail was sufficient to indicate that a contract for sale had been made. It was not necessary for every term of the agreement to be specified. It was only necessary for the writing to simply provide a basis for belief that it rested on a real transaction--no more, no less.
Finally, the court said that the issue of whether e-mail was an appropriate and expected form of communication between the two particular parties in the re-sale industry was a question of fact. The existence of subsequent e-mail correspondence from Tarrant to Bazak provided evidence for a reasonable jury to find that the parties did accept e-mail as an appropriate form of communication.
As e-mail communication becomes more and more commonly used in the business world, it is inevitable that courts will recognize its legitimacy. This case is an excellent example.
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