Spamhaus has finally prevailed in a long-running US court action against it by e360 Insight, a firm it blacklisted for spamming.
e360 Insight sued Spamhaus in the US over the blacklisting way back in 2006. Spamhaus, which is based in the UK, argued (on the advice of lawyers) that it was outside the jurisdiction of US courts. Judge Charles Kocoras allowed the case against Spamhaus to proceed despite this and awarded a default judgment in favour of e360 Insight for a whopping $11.7m.
The default judgement was used by e360 Insight in a failed attempt to pressure ICANN into removing Spamhaus' domain records. Judge Kocoras ruled the sanction was too broad and rejected the bid.
The original judgment was appealed and sent back to district court for a second hearing, where much reduced damages of $27,002 were awarded last week, two years after e360 Insight filed for bankruptcy, citing the legal cots of fighting the case as one of the reasons for the failure of the business. The defunct firm was characterised by Spamhaus as a Chicago-based one-man 'bulk email marketing' firm. e360 Insight, which was owned by David Linhardt, allegedly spamvertised bargaindepot.net (prop. David Linhardt) via junk mail messages that violated the US CAN SPAM Act.
Spamhaus' lawyers appealed for a second time to argue that the damages awarded against the anti-spam organisation were still too high. The US Court of Appeals found in favour of Spamhaus on Friday, reducing damages to the token value of $3 and ordering e360 Insight to pay Spamhaus' defence costs. The ruling criticises e360 Insight's conduct throughout the case, particularly criticising it for failing to come up with any evidence for the supposedly astronomical financial losses Spamhaus's actions had caused it to suffer and for repeatedly failing to file legal papers on time (ie, to meet basic discovery obligations).
By failing to comply with its basic discovery obligations, a party can snatch defeat from the jaws of certain victory. After our earlier remand, all e360 needed to do was provide a reasonable estimate of the harm it suffered from Spamhaus's conduct. Rather than do so, however, e360 engaged in a pattern of delay that ultimately cost it the testimony of all but one witness with any personal knowledge of its damages. That lone witness lost all credibility when he painted a wildly unrealistic picture of e360's losses.
Having squandered its opportunity to present its case, e360 must content itself with nominal damages on each of its claims, and nothing more. We VACATE the judgment of the district court and REMAND this matter with instructions to enter judgment for the plaintiffs in the amount of three dollars.
Goldman concludes that the Spamhaus case illustrates that courts are ultimately likely to favour filtering services and ISPs rather than bulk-mailing firms in cases involving spam blacklisting.
"Spamhaus ended up traveling the long road and ultimately defeating e360, but it's nice to see it prevail. As the Holomaxx v. Yahoo and Microsoft cases indicate, lawsuits brought by emailers against ISPs or filtering services face a long and uphill road, which should lead to a dead end," he writes. ®