All Things Digital

Amazon (AMZN) racked up its second acquisition of the month today, announcing the purchase of Shelfari, a social-networking site for bibliophiles. This just three weeks after the retailer acquired AbeBooks, an online marketplace for rare books that happens to hold an equity stake in Shelfari’s chief rival, LibraryThing. Which makes for an awkward situation, given the bad blood between the two. LibraryThing has been a vocal critic of Shelfari, denouncing it as a “bad actor” that’s built its business through astroturfing and spam. But now that bad actor is owned by one of LibraryThing’s own investors. “LibraryThing is clearly worried about today’s acquisition,” Richard MacManus writes over at ReadWriteWeb. “… Founder and lead developer of LibraryThing Tim Spalding notes that “Amazon can make Shelfari the choice of casual book lovers who see a button on Amazon.com and click on it.” LibraryThing hopes to compete with this by being a superior service. However it’s very difficult to compete against Amazon’s bulk.”

Carl Icahn’s a busy guy–busier than usual lately penning broadsides against Yahoo (YHOO). So he can be forgiven the 138-day delay in lauching “Icahn Report,” the blog he announced back in February, and subsequently failed to debut in April.

Earlier today the blog offered nothing more than a placeholder page, but a few moments ago it went live with Icahn’s promised anecdotes on “the desultory state of corporate governance in America.”

And, specifically, Yahoo.

Which seems to figure in many of Icahn’s first few posts–though the company is never mentioned by name.

• Absurdity of Corporate Board Elections
• About CEOs–Anti Darwinian Metaphor–Survival of the Unfittest
• Absurdity of the Poison Pill
• Corporate Democracy is a Myth

Unfit CEOs. Absurd poison pills. Absurd board elections. It’s pretty clear to whom Icahn is referring, isn’t it? Presumably he’s had his site admins ban Yahoo’s IP address from the blog. I’m told comment spam can be a real nightmare.

The hammer has fallen once again on Stanford “Spamford” Wallace. A federal judge in Los Angeles yesterday awarded MySpace a $230 million judgment against Wallace who, with partner Walter Rines, broadcast some 730,000 junk messages to MySpace members in October of 2006.

The judgment is believed to be the largest anti-spam award to date. Not that it really matters, because MySpace (NWS) is unlikely to collect it. Wallace–who was by some estimates responsible for 80% of the spam on the Net back in his heyday–has rarely paid the judgments against him. Moreover, he has a bad habit of disappearing at the first sign of legal trouble.

And that appears to be exactly what he’s done here. Because the $230 million award given MySpace in this case is a default judgment meted out after Wallace failed to appear in court. “It is … a defendant’s responsibility to respond to discovery, obey court orders and avoid dilatory tactics,” the court wrote in its order. “Taking all of the above factors into account, a default is appropriate. The court finds that Wallace’s noncompliance is due to willfulness, fault or bad faith. … Wallace has had every opportunity to avoid the sanction of default. (He) has never provided any explanation for his behavior to the court.”

Gordon has testified that in 2006 he received no income that was not the result of a settlement of a dispute. He also testified that he has been filing lawsuits over commercial email since at least 2003. … He also admitted that his “clients”–apparently people to whom he provides email accounts–supply him with emails they deem are spam for him to use in his disputes, and that they get an unspecified percentage of the settlements.”

–Man, Oh Man, What a Racket, DIRECT, May 22, 2007

Spam litigation is not the stuff of which cottage industries are made. Just ask James Gordon who’s been ordered to pay attorneys’ fees and costs in the amount of $111,440 to Virtumundo, the email marketer he sued under the CAN-SPAM Act.

In his complaint, Gordon–whose only source of income for the past year was “settlements and disputes,” according to court documents–demanded damages of more than $20 million, claiming Virtumundo had buried him in some 13,800 unsolicited emails. Problem was, Gordon doesn’t operate a traditional ISP, and thus lacked legal standing to sue under CAN-SPAM. And so in May a U.S. district court in Washington state dismissed his claim, ruling Virtumundo was entitled to recover attorneys’ fees.

All $111,440 worth of them, according to the court decision released last week that adds insult to Gordon’s financial injury. “The court finds that the [plaintiff's] instant lawsuit is an excellent example of the ill-motivated, unreasonable and frivolous type of lawsuit that justifies an award of attorneys’ fees to defendants,” according to the decision. “The Court finds that the goal of deterrence is particularly relevant here. Plaintiffs should be deterred from further litigating their numerous other CAN-SPAM lawsuits now that they are aware of their lack of CAN-SPAM standing.”

Ironic, isn’t it? Especially given Virtumundo’s Spamhaus status.

“I believe this ruling represents the first time that a CAN-SPAM plaintiff has been ordered to pay attorneys’ fees and costs to a defendant,” Santa Clara University School of Law professor Eric Goldman wrote in a post to his blog. “As a result, it’s a leading example that courts can and do grow tired of bogus antimarketing lawsuits, and perhaps it will serve as an expensive warning to CAN-SPAM plaintiffs to ensure the merits of their lawsuit. As the court describes, Gordon runs a ’spam business’–basically, a for-profit plaintiff litigation shop to go after spammers (the court also calls it a ‘litigation factory’). The court correctly notes that Congress really wasn’t trying to enable lots of private lawsuits from CAN-SPAM, so the risk of chilled plaintiffs is appropriate in this context.”

Vint Cerf wasn’t kidding when he warned attendees at the World Economic Forum in Davos, Switzerland, last year that the Internet is at serious risk from botnets. These vast networks of compromised PCs–used by criminals for sending spam and spyware and for launching denial-of-service attacks–are a very real and quickly evolving problem. To wit, the FBI’s announcement yesterday that its OPERATION BOT ROAST initiative has identified some 1 million compromised PCs.

Unsettling, isn’t it? The thought of a million machines sitting in homes, schools and businesses around the country just waiting to spew out some nasty piece of malware or the latest “pump and dump” stock scheme. Depressing, too. Said Gadi Evron, who coordinates an international volunteer effort to fight botnets, “The war to make the Internet safe was lost long ago, and we need to figure out what to do now.”

There are some jittery email harvesters out there today, and it’s not because they’ve been popping herbal stimulants. Anti-spam outfit Unspam Technologies filed a federal lawsuit Thursday against the cretins who collect email addresses on the Web and pass them on to spammers.

Filed in U.S. District Court in Alexandria, Va., on behalf of Project Honey Pot, an alliance of 20,000 spam-fighters in more than 100 countries, the suit seeks the email harvesters’ identities and more than $1 billion in damages for violations of the CAN-SPAM Act and the Virginia Computer Crimes Act. “This isn’t just some [Internet service provider] trying to get good press, this is a community of Internet users saying we’re sick and tired of this crap and we want it to stop,” Matthew Prince, Unspam’s chief executive officer, told the Washington Post.

Don’t we all. But can a John Doe suit like this even begin to diminish spam? Lawrence Baldwin, founder of the myNetWatchman.com computer-intrusion reporting service, said it just might. “If they’re successful, I think it will yield some very usable information in terms of identifying who the real miscreants are,” Baldwin said. “Let’s just hope some of them are here in United States and therefore reachable.”