Microsoft Wins $4 Million in Spam Case

  |  July 15, 2004   |  Comments

The online giant wins a summary judgment of $4 million in a case involving unusually deceptive spam, false advertising and trademark infringement.

Microsoft has won a summary judgment of $4 million in its case accusing a California individual and his companies of unusually deceptive spam, false advertising, trademark infringement and "cybersquatting."

U.S. District Judge Manuel Real awarded the judgment to Microsoft against Daniel Khoshnood of Canoga Park, Calif. and his companies Pointcom, Inc. and Joshuathan Investments, Inc.

The award was for statutory damages based on trademark infringement and cybersquatting (attempting to profit from the use of another's trademark in a domain name). Though the award was not made specifically to punish Khoshnood for sending spam, "he used that spam to send out a variety of different things, including Microsoft trademark-infringing graphics," according to Aaron Kornblum, Internet safety enforcement attorney for Microsoft.

The suit alleged that Khoshnood sent messages with subject lines reading, "WINDOWS SECURITY WARNING!!" with messages falsely telling the recipients that a virus had been detected on their computers and in order for their computers not to crash, they should go to Windowsupdatenow.com. This Web site was registered to Khoshnood. The messages told users that if they downloaded a toolbar, it would update the recipient's Microsoft security patches, which was not true.

Khoshnood also registered "hottmail.com," "wwwwindows.com," "microsoftc.com," "wwmsn.com" and other domain names similar to those held by Microsoft.

According to the complaint, in 1997 Khoshnood agreed to cease and desist from using in any manner, "including as part of a domain name, all names, titles or trademarks associated with Microsoft's products or services." By subsequently registering those domain names, Microsoft said, Khoshnood violated the agreement. The court apparently agreed.

"No one would register domains like hottmail.com for any other reason than fooling people," said Anne Mitchell, president and CEO of the Institute for Spam and Public Policy (ISIPP). "He was registering domains like hottmail.com and sending email from there."

Mitchell said that when a judge grants summary judgment, it is "significant. A summary judgment says there is no point in going to court because the case can be decided on the facts without going to trial. All the necessary factual issues are either settled or so one-sided they don't need to be tried."

The court also issued an injunction barring Khoshnood from getting any Microsoft accounts, using Microsoft's name or spoofing.

"I think it's fantastic that Microsoft is pursuing spammers as doggedly as they are," said Mitchell. "Now they have a judgment against [Khoshnood]. He owes them $4 million and with a legal judgment you can enforce that however you can, including seizing property. They can take his house, his car, they can even have his wages garnished."

Ray Everett-Church, chief privacy officer with Privacy Group LLC, said that "many of the bad guys can be crippled or put permanently out of commission" when companies win legal judgments against spammers. However, he cautioned, "To effect a change in the spam problem, you must have massive enforcement, and while Microsoft's victory is a positive development, it barely scratches the surface."

Kornblum said Microsoft would now move to enforce the judgment. "The first step is to investigate the assets of the defendant and see what remaining assets they have and then attempt to enforce the judgment against them," Kornblum said.

"Just the fact that this happened is a deterrent. That's the broader point of these lawsuits, to send a message to spammers and would-be spammers that spamming has financial consequences. We are attempting to make the Internet a safer place," said Kornblum.

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