In a UK first, an email account provider has obtained a court injunction banning a database supplier from selling bogus ‘opt in’ email address lists. What was the basis of the Microsoft claim and why did it succeed?
Topic: Email marketing
Who: Microsoft Corporation and Paul McDonald
Where: Chancery Division of the High Court, London
When: December 06
For the first time, an application was successfully made to the court for an injunction banning activity in breach of the email marketing provisions of the Privacy and Electronic Communications (EC Directive) Regulations 2003 ("PecRegs").
The application was made by Microsoft Corporation in its capacity as proprietor of the MSN Hotmail email service. The Defendant was one Paul McDonald, trading under the name BIZADS and operating a website offering email address lists.
Microsoft took action because of complaints it had received from Hotmail account holders. The complaints were about unwanted commercial emails from traders, a high proportion of which had bought the email addresses from BIZADS.
These gave it good reason to believe that contrary to the assertions on the BIZADS site, the owners of the email addresses it sold, many of which were Hotmail email addresses, had not in fact opted in to receive unsolicited commercial email from third parties.
In the proceedings issued against McDonald, Microsoft argued that by selling the email addresses to which the non compliant messages had been sent, McDonald and BIZADS were "instigating" the sending of the messages. The PecRegs apply in this context to those who either send or instigate the sending of non compliant email.
Microsoft also argued that the PecRegs were there to protect not just individual recipients of non compliant emails but also providers of electronic communications newtworks.
They said that McDonald's activities caused Microsoft to suffer loss by damage to its goodwill. This occurred as Hotmail subscribers became less willing to continue to subscribe if they were not effectively protected against spam and the technology needed to fight spam was expensive, as were the additional servers needed to carry the volume of spam transmitted.
Microsoft further argued that although the PecRegs did not expressly entitle victims of spam to seek injunctive relief, the courts had the general power under the Supreme Court Act 1981 to grant an injunction in any case where it was "just and convenient" to do so. In this case, as Regulation 30 of the PecRegs did entitle those suffering damage as a result of non compliance with the PecRegs to sue for compensation in respect of that damage, there were clear grounds for holding that it was just and convenient in this case to grant an injunction to stop further such damage occurring.
The Court agreed with all these submissions and granted Microsoft an injunction banning further advertising and sale by BIZADS of non compliant email address lists as well as summary judgment against McDonald for costs and damages to be assessed. McDonald did not appear in court to defend himself.
Why this matters:
Given the lack of enforcement of the PecRegs to date by the Information Commissioner's Office, the principal body seized with the task of doing so, this is a welcome development for all legitimate email marketers who take the trouble to comply but usually see unscrupulous competitors get off scot free.
The verdict also underlines the potentially wide variety of those involved in the email marketing process who could be regarded as "instigating" the sending of the messages and therefore liable.