Habeas Lawsuits Put Business Model to Test

In the first test of its unusual anti-spam business model, Habeas Inc. has filed two lawsuits.

The suits, filed yesterday in U.S. District Court for the Northern District of California, accuse the defendants of trademark infringement by sending unsolicited bulk commercial e-mail containing Habeas' so-called warrant mark.

Habeas, which bills itself as an assured e-mail delivery company, is asking the court for permanent injunctions on the defendants' alleged use of its warrant mark. It also seeks unspecified punitive damages, attorney fees and any profits the defendants made from e-mail using Habeas' mark.

“These suits will prove our business model works,” said Anne Mitchell, CEO of Habeas. “The issues are straightforward.”

Most spam-related court cases involve educating the judge on complicated e-mail issues, not an easy task when there isn't even an industry-wide accepted definition of spam, Mitchell said.

But Habeas' lawsuits are in territory any judge will find familiar, she added.

“There is not a judge in the country who doesn't understand trademark and copyright law,” Mitchell said.

Internet service providers and e-mail administrators often use filters to block e-mail that seems likely to be spam. However, marketers who claim they are not spammers increasingly are complaining about so-called false positives, e-mail that is not spam getting blocked from its intended recipients.

To help e-mailers who abide by certain list-building and maintenance practices avoid false positives, Habeas, Palo Alto, CA, offers its users a warrant mark to prove that the e-mail they are sending is not spam.

Among those recognizing Habeas' headers are ISPs America Online and Juno, and anti-spam solutions providers SpamAssassin, SpamCop and Mailshell, which are used by many smaller ISPs and e-mail administrators.

The business model is a twist on trusted-sender and white-list anti-spam solutions — those where e-mail from known and trusted sources gets automatically accepted. Habeas copyrighted a small poem that licensees can add to their headers, the top portion of their outgoing e-mail that identifies the sender. Mail administrators can configure their systems to check all incoming e-mail for Habeas' header and automatically accept mail that contains it, lightening the load on their main servers.

One trick that spammers use to get their mail past administrators is to forge headers so their e-mail looks like it comes from someone else. Under Habeas' model, spammers who forge its header can be prosecuted under trademark and copyright law. According to Habeas, it can seek penalties of $1 million or more, shut down offenders through injunctions and refer them for criminal prosecution in severe cases.

Currently, 26 states have anti-spam laws. But industry observers note that even a federal anti-spam law would be useless against offshore mailers.

However, the United States has strong laws against misuse of copyrighted materials or of registered trademarks. Also, international treaties require countries to respect each other's trademark and copyright laws.

The marketplace is apparently about to find out whether Habeas' business model holds up.

Named in Habeas' first suit are Dale Heller of Matter Georgia, Stan M. Stuchinski, doing business as The Power Team, The Power Team 2000 and Bigdogsecrets.com, and Keynetics Inc., a Delaware corporation doing business as Clickbank.net.

The suit alleges that Heller signed an agreement with Habeas “to only use the Habeas marks in e-mails sent for personal, noncommercial use and that met the requirements of a 'Habeas Compliant Message.'” According to Habeas, Heller subsequently sent e-mail selling a book by Stuchinski titled “The Secrets of the Big Dog” from Stuchinski's Web site Bigdogsecrets.com. Book buyers were redirected to Clickbank.net, a site maintained by Keynetics, according to Habeas.

The other lawsuit names InterMark Media, Massapequa, NY, and its subsidiary Avalend Inc. Avalend offers lead-generation services for mortgage and refinancing firms on Avalend.com. It also offers affiliate programs to people who want to drum up leads for Avalend in return for a fee for each one. Affiliate programs are considered by many to be a significant source of spam.

According to Habeas, Avalend “intentionally placed Habeas marks in their marketing e-mail and/or that of its affiliates … in order to capitalize on Habeas' widely recognized marks and the valuable and favorable reputation and goodwill that the Habeas marks have earned.”

The defendants could not immediately be reached for comment.

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