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MySpace Wins Big Against Richter?

Venkat Balasubramani

News rumblings are that MySpace is celebrating its $6mm award against Scott Richter and his entities. Click here [PDF] for a copy of the arbitrator's decision awarding the above amount.

Who Won?

On the other hand, Jacqui Cheng at ars technica notes that this could just amount to a "shrug-off" penalty for Richter. Similar sentiments at news.com here. While not entirely clear, the arbitrator seemed to reject some of MySpace's arguments on damages. I'm not sure what MySpace asked for (their complaint is probably not a reliable barometer) but the overall tone of the document written by the arbitrator is that Richter's companies shouldn't be held entirely liable for all damages to MySpace. (In fact, the arbitrator's decision takes pains to show both sides of Richter. Some would say this is typical in arbitration.)

MySpace's Efforts to Curtail In-Network Spam

And, the arbitrator seemed to feel that at one point, it didn't seem entirely clear anyway that sending unsolicited commercial (but accurate) messages through MySpace is illegal. And that's one aspect of this dispute that is interesting. MySpace sued to prevent the proliferation of commercial messaging within its network. It's unclear as to what extent MySpace was complaining about identity/obfuscation issues, and to what extent it was complaining about plain old unsolicited (but accurate messages). Whether sending accurate (but unsolicited) messages via a social network (in violation of the TOS) runs afoul of spam statutes is a gray area legally. This is not the first time a tribunal has passed on this issue in a case involving MySpace. (see previous cursory post)

TOS

The discussion in the award (and multiple mentions) about "no one ever reading" agreements was quite interesting. The subtext here is that MySpace seemed to largely rely on its TOS to show that the conduct was improper. The arbitrator's reaction seemed to be that "this isn't a great argument since everyone knows that no one reads terms of service docs anyway."

* * *

Finally, why was this dispute in arbitration? I would think MySpace would want to be in front of a jury who could inflict its passion and emotion on Richter? It seems like Richter moved to compel arbitration of the dispute. (I say this based on a quick look at the pacer docket.) If Richter moved to compel arbitration, and MySpace opposed this, going to arbitration alone was a victory for Richter.

By Venkat Balasubramani, Tech-Internet Lawyer at Focal PLLC – Follow Venkat on Twitter hereVisit Page
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Arbitration etc - you might want to read the full docket, and get a bit more context, before posting Suresh Ramasubramanian  –  Jun 17, 2008 11:04 PM PDT

Finally, why was this dispute in arbitration? I would think MySpace would want to be in front of a jury who could inflict its passion and emotion on Richter? It seems like Richter moved to compel arbitration of the dispute. (I say this based on a quick look at the pacer docket.) If Richter moved to compel arbitration, and MySpace opposed this, going to arbitration alone was a victory for Richter.

It was in arbitration because Richter's attorney (and his father Steve Richter) came up with a clause in myspace's own user agreement which said arbitration was the preferred course.

The unsolicited email to myspace users was allegedly sent using phished accounts.

There were two parties to this case - with Russian / Eastern European names - who were served with permanent injunctions against phishing myspace or accessing it.

I would suggest that you start reading up on the filings - start at http://www.spamsuite.com/node/64

Not that it'd help though .. Richter's net worth is quite a lot more than the $6 million he's had to pay out in this case.

Text of the arbitration award (OCR'd) - interesting quote there Suresh Ramasubramanian  –  Jun 19, 2008 6:06 PM PDT

http://www.47-usc-230c2.org/2008-06-16-application-to-confirm-arbitration-award-OCR.pdf

particularly page 59 -

The need to award substantial damages is informed by Scott Richter's undisputed admission that he would be willing to pay one million dollars in litigation to make eight million dollars in profit.

Like I said, you need to do a lot, repeat lot more research.

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