Power Ventures, a now defunct startup, found partial success before the 9th Circuit Court of Appeals this week when the appellate court ruled that the company did not violate the CAN-SPAM Act. I say partial because the appellate court then turned around and said that Power Ventures did violate the Computer Fraud and Abuse Act when it continued to access Facebook after receiving a “cease-and-desist” letter from the company. The case has been remanded to the trial court to reassess damages against Power Ventures. The initial damages had been set at $3 million.
As some will recall, this lawsuit stemmed from alleged efforts by Power Ventures or “Power” to scrape user information from Facebook. Power Ventures wanted this information in order to become the one-stop shop for social networking– a site where users could post to all social media sites from one place.
Power Ventures developed a software that allowed users of Facebook to authorize Power Ventures to go into their Facebook accounts and gather information for them for use at Power’s website. This same software allowed Power users to send Facebook messages to other Facebook users for them.
According to testimony from the 2011 trial, “the Defendants developed the PowerScript system and PowerProxy system to scrape information from Facebook, proxy the Facebook website and avoid detection when engaged in such activities.”
The 9th Circuit said that the methods used by Power Ventures did not violate the CAN SPAM Act because users on Facebook affirmatively agreed to allow Power Ventures to share promotions through event invitations.
For more background on this case go here and here. To read Professor Kerr’s criticism of this case which appeared in the Washington Post go here.