Facts: Cyberheat, Inc., ran sexually explicitwebsites for consenting adults. It hired other companies, calledaffiliates, to drive potential subscribers to its sites. Theaffiliates were paid a fee for each subscriber they generated. Thecontract that Cyberheat signed with its affiliates explicitlyprohibited them from violating the Can-Spam Act. It alsodiscouraged e-mail promotions. However, Cyberheat did notinvestigate its affiliates, nor did it actively monitor theircompliance. Cyberheat provided affiliates with a hyperlink to usein e-mails that would link them directly to the sexually explicitsite being advertised.
The FTC alleged that ten Cyberheat affiliates violated Can-Spamby sending 642 unwelcome, sexually explicit spam e-mails for whichthey were paid $209,120 in commissions. In some cases thepornographic e-mails had fake subject lines, when in fact thee-mail contained pornographic images.
Cyberheat received about 400 complaints, which it ignored orhandled belatedly. Oftentimes the affiliate was allowed to continuefor more than one year or was never terminated.
The Justice Department filed suit seeking civil penalties of upto $11,000 for each violation and an injunction to prohibit furtherviolations. Both the FTC and Cyberheat filed motions for summaryjudgment.
Did Cyberheat violate the Can-Spam Act? Why, or whynot?
Did Cyberheat know its affiliates were sendingsexually explicit e-mails?