Easy to Kill Your Competition in California

Hypertouch v. Valueclick in California Appeals.

If you want to take down your competitor, simply put together a spammy email campaign in their name and let it loose in the state of California, or at least that’s how easy the California Appeals Court thinks it should be.  In a recent ruling, the court decided that two advertising firms can be held liable for the actions done by their affiliates (and sub-affiliates).  This ruling has been highly questioned by legal writers, including Eric Goldman and Venkat Balasubramani, and may really make an impact on email affiliate marketing.

See the original complaint. You can even read the exhibits of each email in question.

Previously CAN-SPAM plaintiffs had to prove that the defendant had knowledge of those advertising with non-compliant email marketing, but this case really opens up a vulnerable spot in affiliate marketing.  Advertisers and Networks who do not send their own emails are liable for those promoting them who are non-compliant.  “the court expressly embraces a strict liability standard for affiliate liability” says Eric Goldman.  He goes on to point out the circumstance where a California company has affiliates outside the state of California and may not realize they are emailing California residents.  This is just one of many problem areas with this Appeals Court decision.

The way in which the Valueclick’s affiliates were said to be non-compliant is through deceptive subject lines.  These were subjects like “Let us know your opinion and win a free gift card” and “Do you think Hillary will win? Participate now for a Visa card.”  Now, I don’t know about you, but those sound pretty typical to me.  In fact, I’ve seen far worse “promises” to the consumer.  At least they used words like “win” and “participate.”  The court stated that subject lines were one of three ways the affiliates were in violation but neglects to even discuss the other two that were voiced in the original complaint.

If you love legal documents, you can take a deeper dive into the case here: http://www.courtinfo.ca.gov/opinions/documents/B218603.DOC

I’m sure it will be appealed, but this is just one more instance that shows the ignorance of lawmakers.  If you do business in California you might want to read up or perhaps see how you can get involved.

Supporting Articles:

• http://blog.ericgoldman.org/archives/2011/01/hypertouch_v_valueclick.htm
• http://spamnotes.com/2011/01/20/ca-court-of-appeals-state-spam-statute-imposes-strict-liability-and-not-preempted-by-can-spam.aspx
• http://www.techdirt.com/articles/20110121/02484412754/california-appeals-court-says-company-can-be-held-liable-spam-it-didnt-write-know-about.shtml