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AOL v. Prime Data Systems

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Citation Edit

America Online, Inc. v. Prime Data Sys., Inc., 1998 U.S. Dist. LEXIS 20226, 1998 WL 34016692 (E.D. Va. Nov. 20, 1998) (full-text).

Factual Background Edit

Over a five-month period, defendants sent numerous batches of unsolicited bulk e‑mails to AOL subscribers, despite receiving several cease-and-desist letters from AOL. Totaling over 130,000,000 messages, defendant's e-mails flooded AOL servers, often interfering with AOL's ability to timely transmit and relay e-mail to its subscribers.

AOL brought suit, asserting various claims, including false designation of origin under Section 43(a) of the Lanham Act. Because defendants never answered the complaint or otherwise appeared in the case, the clerk entered a default.

Trial Court Proceedings Edit

This decision, in the form of a report and recommendation by a magistrate judge, addressed AOL's claims for injunctive and monetary relief. By forging their return e‑mail address to appear as if messages were being sent within the AOL system, the magistrate judge found that defendants' actions willfully infringed AOL's registered marks "by diluting the marks and falsifying the origin of the e‑mail messages," all in violation of the Lanham Act.

The magistrate judge recommended that default judgment be entered against defendants and that AOL be awarded: (1) a permanent injunction enjoining defendants from engaging in various e-mail activities; (2) compensatory damages of $101,400.00 (130,000,000 messages multiplied by AOL's established processing cost of $.00078 per message); (3) punitive damages of $304,200.00 (compensatory damages trebled); and (4) attorney's fees to be determined by the court because defendants' bad faith made this case "exceptional" under the Lanham Act.

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