Since its inception, the use of unsolicited e-mail, known as spam, has grown exponentially. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) generally regulates the transmission of unsolicited commercial electronic mail messages. All businesses that send commercial e-mail must now comply with the new federal requirements of the CAN-SPAM Act.

1. CAN-SPAM Act
When Do Corporate Activities Become Spam
Karl Larson
June 10, 2005

2. Overview
• Background
• Overview of the CAN-SPAM Act
• Why Corporate Emails May Be SPAM
– Commercial Electronic Mail Messages
– Transactional or Relationship Messages
– What Does Primary Purpose Mean
• Tips for Complying with the CAN-SPAM
Act

3. Background
• Since its inception, spam has grown exponentially
– 76 percent all e-mail traffic and may cost U.S. companies $17
billion or more to fight this year alone
• Many legal and technical attempts to control spam
– blocking and filtering by both recipients and ISPs
– numerous state anti-spam laws with different standards and
requirements

4. Background
• Effective January 1, 2004, all businesses that send
electronic mail messages must now comply with the
Controlling the Assault of Non-Solicited Pornography and
Marketing Act of 2003 (“CAN-SPAM Act”)
– CAN-SPAM Act does not preempt all state laws
• preempts state laws that expressly regulate the use of
electronic mail to send commercial messages
• except to the extent the state law prohibits falsity or
deception in the message or attachment thereto
• does not apply to state laws that are not specific to electronic
mail
– there is no bright line between mass e-mails from large
companies to their customers and spam

5. CAN-SPAM Act
Overview
• Signed into law December 16, 2003
– civil enforcement by FTC and other agencies
– state attorneys general may enforce for residents
– criminal penalties for certain forms of spam
– creates private right of action ISPs
– generally capped statutory damages
• Regulates all unsolicited commercial electronic mail
messages
• Regulates some transactional or relationship messages

6. CAN-SPAM Act 15 U.S.C. § 7704(a)(1)
Overview
• Commercial electronic mail messages and transactional or
relationship messages are prohibited from containing
materially false or materially misleading header
information
– must have sufficient information to allow an ISP, a
person alleging a violation, or law enforcement to
“identify, locate, or respond to” the sender
– “from” line must identify the sender
– must identify the initiating computer

7. CAN-SPAM Act 15 U.S.C. § 7704(a)(2)
Overview
• Commercial electronic mail messages must not include
deceptive subject lines
– deceptive if the sender knows or should have known
that a recipient, acting reasonably under the
circumstances, would be misled by the subject heading
about a material fact regarding the content of the
message

8. CAN-SPAM Act 15 U.S.C. §§ 7704(a)(3), 7704(a)(4)
Overview
• Commercial electronic mail messages must include a functioning
return e-mail address or other Internet-based mechanism
– clearly and conspicuously displayed
– provide the recipient the opportunity to opt-out
• After opt-out by recipient
– sender and agents or other third parties acting on behalf of sender
are prohibited from sending messages after 10 business days
– FTC is seeking comment on 3 business day grace period
– prohibited from selling, leasing, exchanging, or otherwise
transferring or releasing the electronic mail address of an opt-out
recipient

9. CAN-SPAM Act 15 U.S.C. §§ 7704(d), 7704(a)(5)
Overview
• Commercial electronic mail messages containing sexually-
oriented materials without the prior consent of the recipient
must include a warning label
– “SEXUALLY EXPLICIT:”
• Commercial electronic mail messages must include
– clear and conspicuous identification that the message is an
advertisement or solicitation
– clear and conspicuous notice of the opportunity to opt-out
– postal address of the sender

10. CAN-SPAM Act 15 U.S.C. § 7704(b)
Overview
• Prohibited from knowingly collecting e-mail addresses using
automated means from websites or proprietary online servers
(“Harvesting”) that have posted a notice prohibiting such
collecting
– the website or service will not give, sell, or otherwise transfer
addresses maintained by such site or service to any party for
the purpose of sending electronic mail messages
• Prohibited from knowingly obtaining e-mail addresses using
an automated means that generates possible e-mail addresses
using a Dictionary Attack

11. CAN-SPAM Act 15 U.S.C. § 7704(b)
Overview
• Prohibited from the automated creation of multiple e-mail
accounts used to send electronic mail messages in violation of
the CAN-SPAM Act
• Prohibited from the knowing relay or transmission of a
commercial electronic mail message without authorization

12. CAN-SPAM Act 15 U.S.C. § 7706(f)
Overview – Civil Actions
• Enforcement by States on behalf of residents
– enjoin further violations
– actual monetary loss suffered by residents; or
– statutory damages
• $250 per violation
• up to $2 million
• court may treble or reduce damages
• court may award attorneys’ fees

13. CAN-SPAM Act 15 U.S.C. § 7706(g)
Overview – Civil Actions
• Action by ISPs
– enjoin further violations
– actual monetary loss incurred by the ISP; or
– statutory damages
• $100 per violation of 7704(a)(1)
• $25 per violation otherwise
• up to $1 million
• court may treble or reduce damages
• court may award attorneys’ fees

14. CAN-SPAM Act 18 U.S.C. § 1037
Overview – Criminal Actions
• fine and/or imprisonment of 1-5 years
• forfeiture
– any real or personal property constituting or traceable
to gross proceeds obtained from the offense
– any equipment, software, or other technology used or
intended to be used to commit or to facilitate the
commission of the offense

15. CAN-SPAM Act
Why corporate emails may be spam
• Definition of Commercial Electronic Mail Message is
Broad
• Definition of Transactional or Relationship Message is
Limited
• Depends on the Primary Purpose
• Mixed Message Content

16. CAN-SPAM Act 15 U.S.C. §§ 7702(2)(A), 7702(2)(B)
Definition of Commercial Electronic Mail Message
any electronic mail message the primary
purpose of which is the commercial
advertisement or promotion of a commercial
product or service (including content on an
Internet website operated for a commercial
purpose)
does not include a transaction or relationship
message

17. CAN-SPAM Act
Transactional or Relationship Messages – Generally
• Existing relationship between the sender and
recipient (e.g., an existing customer)
• Does not cover all electronic mail messages
between the sender and recipient
– limited to five types of messages
– otherwise may fall under the definition of a commercial
electronic mail message

18. CAN-SPAM Act 15 U.S.C. § 7702(17)(A)
Definition of Transactional or Relationship Message
an electronic mail message the primary purpose of
which is –
(i) to facilitate, complete, or confirm a commercial
transaction that the recipient has previously agreed
to enter into with the sender;
(ii) to provide warranty information, product
recall information, or safety or security
information with respect to a commercial product or
service used or purchased by the recipient;
●●●

19. CAN-SPAM Act 15 U.S.C. § 7702(17)(A)
Definition of Transactional or Relationship Message
(iii) to provide –
(I) notification concerning a change in the terms or
features of;
(II) notification of a change in the recipient’s standing or
status with respect to; or
(III) at regular periodic intervals, account balance
information or other type of account statement with respect
to,
a subscription, membership, account, loan, or comparable
ongoing commercial relationship involving the ongoing
purchase or use by the recipient of products or services offered
by the sender;
●●●

20. CAN-SPAM Act 15 U.S.C. § 7702(17)(A)
Definition of Transactional or Relationship Message
(iv) to provide information directly related to an
employment relationship or related benefit plan in
which the recipient is currently involved,
participating, or enrolled; or
(v) to deliver goods or services, including product
updates or upgrades, that the recipient is entitled to
receive under the terms of a transaction that the
recipient has previously agreed to enter into with the
sender.

21. CAN-SPAM Act
What Does Primary Purpose Mean?
• Both commercial electronic mail messages, and
transactional or relationship messages use the
term “primary purpose”

22. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)
Primary Purpose – Commercial Electronic Mail Message
the “primary purpose” of an electronic mail message
shall be deemed to be commercial . . .
(1) if an electronic mail message consists exclusively of
the commercial advertisement or promotion of a
commercial product or service . . .;
(2) if an electronic mail message contains both the
commercial advertisement or promotion of a
commercial product or service as well as transactional
or relationship content . . . then the “primary purpose”
of the message shall be deemed to be commercial if:
●●●

23. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)
Primary Purpose – Commercial Electronic Mail Message
(i) a recipient reasonably interpreting the subject
line of the electronic mail message would likely
conclude that the message contains the commercial
advertisement or promotion of a commercial product
or service; or
(ii) the electronic mail message’s transactional or
relationship content . . . does not appear, in whole
or in part, at the beginning of the body of the
message.
●●●

24. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)
Primary Purpose – Commercial Electronic Mail Message
(3) if an electronic mail message contains both the
commercial advertisement or promotion of a
commercial product or service as well as other
content that is not transactional or relationship
content . . . then the “primary purpose” of the
message shall be deemed to be commercial if:
(i) a recipient reasonably interpreting the
subject line of the electronic mail message would
likely conclude that the message contains the
commercial advertisement or promotion of a
commercial product or service; or
●●●

25. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)
Primary Purpose – Commercial Electronic Mail Message
(ii) a recipient reasonably interpreting the body of
the message would likely conclude that the primary
purpose of the message is the commercial advertisement
or promotion of a commercial product or service.
Factors illustrative of those relevant to this interpretation
include the placement of content that is the commercial
advertisement or promotion of a commercial product or
service, in whole or in substantial part, at the beginning of
the body of the message; the proportion of the message
dedicated to such content; and how color, graphics,
type size, and style are used to highlight commercial
content.

26. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)
Primary Purpose – Transactional or Relationship Message
the “primary purpose” of an electronic mail message
shall be deemed to be transactional or relationship if the
electronic mail message consists exclusively of
transactional or relationship content as set forth in [15
U.S.C. § 7702(17)(A)].

27. CAN-SPAM Act 15 U.S.C. § 7705(a)
Agents and Other Third-Parties
• CAN-SPAM Act imposes liability on any person whose
trade or business is promoted, if
– promoted in a commercial electronic mail message
containing materially false or misleading transmission
information; and
– that person:
• knows or should have known that the trade or business was
being promoted in the message
• benefits or expects to benefit economically from the
promotion
• fails to prevent the transmission or report the transmission to
the FTC

28. CAN-SPAM Act
Mass Email Considerations
• Primary Purpose
– promotion of a commercial product or service
• Mixed Message Content
– the message content
– the content placement and overall impression
– the subject line
• Limited Transactional or Relationship Message
• Agents and Other Third-Parties

29. The CAN-SPAM Act
Compliance Tips
• Include a clear and conspicuous opt-out notice and mechanism
– operable to allow the recipient to opt-out of receiving future
commercial electronic mail messages
• Periodically test the opt-out mechanism
• Maintain and manage records of those recipients who opt-out
– stop sending commercial electronic mail messages to any opt-
out recipients within 10 business days
– do not provide mailing lists to third-parties containing opt-opt
recipients
– notify agents and other third-parties acting on behalf of the
company

30. The CAN-SPAM Act
Compliance Tips
• Identify your company as the sender
– a “from” line that accurately identifies the sender
– valid return e-mail address
– header information that accurately identifies the computer that
initiated the transmission
– mailing address of the company
• Advertisements or promotions are clearly and conspicuously
identified
• Accurately identify the content of the message body in the
subject line
– avoid anything that could be considered misleading

31. The CAN-SPAM Act
Compliance Tips
• For e-mails that contain sexually oriented material, include the
phrase “SEXUALLY-EXPLICIT:” as the first nineteen
characters of the subject line
• Avoid using any non-compliant mailing lists
– e.g., those that have been obtained by automated means by
harvesting or dictionary attacks in violation of the Act
• Require that agents/third-parties that send commercial
electronic mail messages on behalf of your company adhere to
the CAN-SPAM Act
– e.g., marketing companies and/or distributors
• Establish and implement a CAN-SPAM Act compliance plan

32. Useful Resources
• www.gigalaw.com
– GigaLaw.com® provides an electronic CAN-SPAM Act Library
• www.ftc.gov
– Federal Trade Commission website
• www.spamhaus.org
– This website provides the Spamhous Block List (SBL), a free
real-time DNS-based database of IP addresses of verified
spammers
• www.spamlaws.com/us.html
– This website provides pending federal and state legislations
against spam

33. Gardere Wynne Sewell LLP
Karl Larson
3000 Thanksgiving Tower
1601 Elm Street
Dallas, TX 75201-4761
Phone: 214.999.4582 Fax: 214.999.3582
klarson@gardere.com