Alleged Spammer Hit With $3.95M Judgment

Rhett Pardon
LOS ANGELES — A federal judge has ordered the owner of a Canoga Park, Calif., Internet company to pay $3.95 million for illegally using Microsoft’s trademarks in “typosquatting” spam messages.

U.S. District Court Judge Manuel Real ordered that Daniel Khoshnood stop using Microsoft's trademarks and name, stop spamming, and pay damages and legal fees to the Redmond, Wash., software giant. The suit named Khoshnood and his companies, Pointcom and Joshuathan Investments.

Microsoft filed the civil case against Khoshnood last year claiming that the owner of Pointcom Inc. was abusing Hotmail and MSN email services by sending unsolicited emails misrepresenting an affiliation with Microsoft.

The “typosquatting” emails used subtle variations of Microsoft properties, such as wwmsn.com and bcentrals.com, and were presented as security patches or system updates. The messages were actually offering a toolbar for download that claimed to automatically update the user's Windows security.

But Microsoft claims that the messages were simply a series of links to Goto.com, which normally pays affiliates 3 cents for delivering traffic to its site.

Khoshnood was accused of sending millions of unsolicited email messages in violation of the Washington Commercial Electronic Mail Act and the Washington Consumer Protection Act. The case was filed in June 2003, before the federal Can-Spam Act went into effect.

Microsoft in court documents also alleged that Khoshnood, through Joshuathan Investments, had been named in no fewer than nine additional actions involving domain names that infringed upon the trademarks of America Online Inc., American Express Co., BMW AG, CompUSA Management Co., Expedia Inc., Grolier Inc., Infospace Inc., Southwestern Bell Yellow Pages Inc., and Sunglass Hut Corp.

According to Microsoft, the July 7 decision represented the company’s first summary judgment handed down in a case alleging illegal spamming, although the damages were awarded mainly for trademark infringement.

Microsoft attorney Aaron Kornblum told XBiz that the company is targeting and filing suits against the “most harmful spammers.”

“These individuals need to understand that their activity is illegal and that if they inundate consumers with spam they will be identified, targeted and sued,” Kornblum said.

Kornblum said Microsoft had been taking legal action against Khoshnood since 1997 and had entered into agreements with him to stop the trademark violations, but the agreements were breached.

Khoshnood could not be reached by XBiz for comment.

The case against Khoshnood and his companies isn’t the only one Microsoft has filed against alleged spammers.

Since launching an anti-spam initiative in early 2003, Microsoft has filed 60 lawsuits in the United States. The software giant so far has been awarded a total of $54 million in resolved cases, including four settlements and six default judgments.

One case involves XPays, which runs a large-scale online adult site affiliate operation in San Francisco. That case continues in King County Superior Court in Seattle.

The cases are Microsoft Corp. vs. Khoshnood, No. 03-4269, and Microsoft Corp. vs. XPays, No. 03-2-27988-9.