Cyber Promotions, Inc. v. American Online, Inc., Civ. A. No. 96-2486.

• Decision Date: 04 November 1996
• Docket Number: Civ. A. No. 96-5213.,Civ. A. No. 96-2486.
• Parties: CYBER PROMOTIONS, INC. v. AMERICAN ONLINE, INC. AMERICAN ONLINE, INC. v. CYBER PROMOTIONS, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

Page 436

948 F.Supp. 436

CYBER PROMOTIONS, INC. v. AMERICAN ONLINE, INC.

AMERICAN ONLINE, INC. v. CYBER PROMOTIONS, INC.

Civ. A. No. 96-2486.

Civ. A. No. 96-5213.

United States District Court, E.D. Pennsylvania.

November 4, 1996.

Opinion Denying Reconsideration December 20, 1996.

Ralph A. Jacobs, Richard M. Bernstein, Hoyle, Morris & Kerr, Philadelphia, PA, Glenn S. Gitomer, Janeen Olsen Dougherty, McCausland, Keen & Buckman, Radnor, PA, Jonathan A. David, Lerner, David, Littenberg, Krumholz and Mentlik, Westfield, NJ, for Cyber Promotions, Inc. in Civ. A. No. 96-CV-2486.

Ronald P. Schiller, David L. Weinreb, Piper and Marbury, Philadelphia, PA, for America Online Incorporated in Civ. A. No. 96-CV-2486.

Michael A. Grow, Vorys, Sater, Seymour and Pease, Washington, DC, Ronald P. Schiller, Piper and Marbury, Philadelphia, PA, for America Online, Inc. in Civ. A. No. 96-CV-5213.

Richard M. Bernstein, Hoyle, Morris & Kerr, Philadelphia, PA, Glenn S. Gitomer, McCausland, Keen & Buckman, Radnor, PA, Paul H. Kochanski, Lerner, David, Littenberg, Krumholz and Mentlik, Westfield, NJ, for Cyber Promotions, Inc. in Civ. A. No. 96-CV-5213.

MEMORANDUM OPINION AND ORDER

WEINER, District Judge.

These cases present the novel issue of whether, under the First Amendment to the United States Constitution, one private company has the unfettered right to send unsolicited e-mail advertisements to subscribers of another private online company over the Internet and whether the private online company has the right to block the e-mail advertisements from reaching its members. The question is important because while the Internet provides the opportunity to disseminate vast amounts of information, the Internet does not, at least at the present time, have any means to police the dissemination of that information. We therefore find that, in the absence of State action, the private online service has the right to prevent unsolicited e-mail solicitations from reaching its subscribers over the Internet.

The cases have their genesis in a letter dated January 26, 1996, in which American Online, Inc. ("AOL") advised Cyber Promotions, Inc. ("Cyber") that AOL was upset with Cyber's dissemination of unsolicited e-mail to AOL members over the Internet. AOL subsequently sent a number of "e-mail bombs"¹ to Cyber's Internet service providers ("ISP").

On March 26, 1996, Cyber filed Civil Action No. 96-2486 in this Court against AOL in response to AOL's "e-mail bombing" of Cyber's ISPs. The Complaint alleges that as a result of AOL's "e-mail bombing", two of Cyber's ISPs terminated their relationship with Cyber and a third ISP refused to enter into a contract with Cyber. The Complaint asserts a claim for violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, as well as state law claims for intentional interference with contractual relations, tortious interference with prospective contractual relations and unfair competition. The Complaint seeks certain injunctive relief and damages.

On April 8, 1996, AOL filed a ten-count Complaint against Cyber in the United States District Court for the Eastern District of Virginia, alleging service and trade name infringement, service mark and trade name dilution, false designation of origin, false advertising, unfair competition, violations of the Virginia Consumer Protection Act, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act and the Virginia Computer Crimes Act. AOL seeks various injunctive relief and damages.

On May 8, 1996, Cyber filed a First Amended Complaint in Civil Action No. 96-2486 in which it asserted the same four claims it asserted in its original Complaint and added a declaratory judgment claim (Count V). Cyber seeks, inter alia, a "declaration that [it] has the right to send to AOL members via the Internet unsolicited e-mail advertisements." Amended Complaint at p. 21. Cyber also asks the Court to "permanently enjoin[] AOL ... from ... directly or indirectly preventing AOL members from receiving [Cyber's] e-mail messages." Id.

On June 17, 1996, AOL filed a First Amended Complaint in the Virginia action in which it added claims for misappropriation, conversion, and unjust enrichment.

By Order dated July 24, 1996, the judge in the Eastern District of Virginia to whom AOL's action was assigned, transferred that action to this Court, finding that it arises from "the same nucleus of operative facts" as Cyber's action and that therefore "the two cases should be consolidated for trial." Upon transfer to this Court, AOL's action was assigned Civil Action No. 96-5213. The parties have agreed that the First Amended Complaint in that action will be treated as setting forth AOL's counterclaims in Civil Action No. 96-2486.

AOL has vehemently argued throughout the brief history of these suits that Cyber has no right to send literally millions of e-mail messages each day to AOL's Internet servers free of charge and resulting in the overload of the e-mail servers. Indeed, the court has received a plethora of letters from disgruntled AOL members who object to having to receive Cyber's unsolicited e-mail whenever they sign on to AOL despite repeated attempts to be removed from Cyber's lists. Cyber, on the other hand, has contended that without the right to send unsolicited e-mail to AOL members, it will go out of business.

Recognizing that Cyber's contention that it has the right to send unsolicited e-mail to AOL members over the Internet implicates the First Amendment and therefore is a threshold issue, the Court directed the parties to brief the following issue: Whether Cyber has a right under the First Amendment of the United States Constitution to send unsolicited e-mail to AOL members via the Internet and concomitantly whether AOL has the right under the First Amendment to block the e-mail sent by Cyber from reaching AOL members over the Internet. In response, AOL has filed a document entitled "Motion for Partial Summary Judgment of America Online, Inc. on First Amendment issues." Specifically, AOL seeks summary judgment on Cyber's declaratory judgment claim asserted in Count V of Cyber's First Amended Complaint. Cyber has filed a document entitled "Plaintiff's Memorandum in Support of its First Amendment Right to Send Internet E-Mail to Defendant's Members."

The Court also directed the parties to enter into a Stipulation of Facts solely for the purpose of resolving the First Amendment issue. Pursuant to the Court's directive, the parties have stipulated to the following facts:

1. Cyber is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, having a place of business at 1255 Passmore Street, 1st Floor, Philadelphia, Pennsylvania 19111.

2. AOL is a corporation organized and existing under the laws of the State of Delaware with its principal place of business at 22000 AOL Way, Dulles, Virginia 20166.

3. AOL was and is a private online company that has invested substantial sums of its own money in equipment, name, software and reputation. AOL is not owned in whole or in part by the government.

4. AOL is owned by shareholders, and its stock trades on the New York Stock Exchange.

5. AOL is not a government entity or political subdivision.

6. AOL's members or subscribers pay prescribed fees for use of AOL resources, access to AOL and access and use of AOL's e-mail system and its connection to the Internet.

7. AOL's e-mail system operates through dedicated computers known as servers, which consist of computer hardware and software purchased, maintained and owned by AOL. AOL's computer servers have a finite, though expandable, capacity to handle e-mail. All Internet e-mail from non-AOL members to AOL customers or members and from AOL customers or members to non-AOL members requires the use of AOL's computer hardware and software in combination with the hardware and software of the Internet and the hardware and software of the non-AOL members.

8. Private companies compete with AOL in the online business.

9. There has been no government involvement in AOL's business decision to institute or reinstitute a block directed to Internet e-mail sent by Cyber to AOL members or subscribers.

10. Although the Internet is accessible to all persons with just a computer, a modem and a service provider, the constituent parts of the Internet (namely the computer hardware and software, servers, service providers and related items) are owned and managed by private entities and persons, corporations, educational institutions and government entities, who cooperate to allow their constituent parts to be interconnected by a vast network of phone lines.

11. In order for non-AOL members to send Internet e-mail to AOL members, non-AOL members must utilize a combination of their own hardware and software, the Internet and AOL's network.

12. To obtain its initial access to the Internet, AOL obtained an Internet address and domain name from IANA, a clearinghouse that routinely and ministerially assigns Internet addresses and domain names.

13. Cyber, an advertising agency incorporated in 1996, provides advertising services for companies and individuals wishing to advertise their products and services via e-mail.

14. Cyber sends its e-mail via the Internet to members of AOL, members of other commercial online services and other individuals with an Internet e-mail address.

15. AOL provides its subscribing members with one or more e-mail addresses so that members can exchange e-mail with one another and exchange e-mail (both sending and receiving) over the Internet with non-AOL members.

16. AOL has attached to its Memorandum of Law in Support of its Motion for Partial Summary Judgment on First Amendment Issues three sets of examples of e-mail messages sent by Cyber to AOL members. The first set (Tab 1) consists of a multi-page set of advertisements; the second set (Tab 2) consists of an exclusive or single-advertiser e-mail; and the third set...