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Beyond Sys., Inc. v. Kraft Foods, Inc.

United States Court of Appeals, Fourth Circuit

February 4, 2015

BEYOND SYSTEMS, INC., Plaintiff -- Appellant,
v.
KRAFT FOODS, INCORPORATED; VICT. TH. ENGWALL & CO.; KRAFT FOODS GLOBAL, INCORPORATED; CONNEXUS CORPORATION, Defendants -- Appellees, and HYDRA LLC; JOHN DOES 1-20, Defendants, WORLD AVENUE USA, LLC, Intervenor, JAMES JOSEPH WAGNER; HYPERTOUCH, INCORPORATED, Third-Party Plaintiffs

Argued October 29, 2014.

Page 713

Appeal from the United States District Court for the District of Maryland, at Greenbelt. (8:08-cv-00409-PJM). Peter J. Messitte, Senior District Judge.

ARGUED:

Richard Kennon Willard, STEPTOE & JOHNSON LLP, Washington, D.C., for Appellant.

Darrell J. Graham, ROESER BUCHEIT & GRAHAM LLC, Chicago, Illinois; Ari Nicholas Rothman, VENABLE LLP, Washington, D.C., for Appellees.

ON BRIEF:

Stephen H. Ring, LAW OFFICES OF STEPHEN H. RING, P.C., Gaithersburg, Maryland; Michael S. Rothman, LAW OFFICE OF MICHAEL S. ROTHMAN, Rockville, Maryland; Jill C. Maguire, Benjamin B. Watson, STEPTOE & JOHNSON LLP, Washington, D.C., for Appellant.

John K. Roche, PERKINS COIE LLP, Washington, D.C.; John E. Bucheit, ROESER BUCHEIT & GRAHAM LLC, Chicago, Illinois, for Appellees Kraft Foods, Incorporated, Vict. Th. Engwall & Co., and Kraft Foods Global, Incorporated.

J. Douglas Baldridge, Lisa Jose Fales, VENABLE LLP, Washington, D.C., for Appellee Connexus Corporation.

Before NIEMEYER, WYNN, and THACKER, Circuit Judges. Judge Wynn wrote the opinion, in which Judge Niemeyer and Judge Thacker joined.

OPINION

Page 714

WYNN, Circuit Judge:

In the late 1990s and early 2000s, legislatures across the country became increasingly concerned about unwanted commercial e-mail colloquially known as " spam." By 2004, thirty-five states had enacted some form of anti-spam legislation, though as might be expected each addressed the problem somewhat differently. See Roger Ford, Preemption of State Spam Laws by the Federal CAN-SPAM Act, 72 U. Chi. L. Rev. 355, 363 (2005). Among the common provisions in these statutes were the creation of private rights of action for internet service providers and large statutory damage provisions.

In this case, ostensible internet service provider Beyond Systems, Inc. seeks statutory damages from Kraft Foods, Inc. and Connexus Corporation under California's and Maryland's anti-spam statutes based upon several hundred e-mails which it alleges were unlawful spam. The district court summarily ruled that Beyond Systems consented to the harm underpinning its anti-spam claims and is therefore barred from recovery. We affirm the district court's judgment on this ground.

I.

A.

Beyond Systems is a Maryland corporation that provides at least a modicum of e-mail and server access to a limited number of clients. Paul Wagner owns Beyond Systems, whose servers are housed in his parents' Maryland residence. Paul's brother, James Joseph (" Joe" ) Wagner, owns Hypertouch, Inc., a nominal internet service provider in California that routes spam e-mails to Beyond Systems' Maryland servers, where they are cached in accounts designed to hold spam e-mails.

Hypertouch and Beyond Systems have histories of suing alleged spammers. To further its litigation strategy, Beyond Systems developed web pages with hidden e-mail addresses--that is, e-mail addresses embedded in the code that generates the webpages that are not visible to website visitors. The hidden e-mail addresses are discovered by " spam crawlers," computer programs spammers use to look for e-mail addresses and subscribe them to e-mail lists. Because only spam crawlers can find these hidden e-mail accounts, Beyond Systems uses them as " spam traps." As a result, spam-trap-based litigation has accounted for 90% of Beyond Systems' income in recent years.

Unlike other internet service providers that routinely try to block e-mail accounts from spam, Beyond Systems does nothing to filter or block spam e-mail. Further, Beyond Systems has increased its storage capacity to archive large volumes of spam ...


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