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Yahoo! Wins $610 Million Trademark Infringement and CAN-SPAM Award Over Nigerian Advance Fee Fraud Suit

Written by Joseph M. DiCioccio

This week, Yahoo! won a $610 million default judgment in the United States District Court for the Southern District of New York in a case involving the infamous Nigerian Advance Fee Fraud perpetrated through the Defendants' infringing use of Yahoo!’s trademarks and spam.

Online scams and hoaxes are just a fact of life in the Internet era. Some are relatively simple and involve promises of improved sexual performance or sham computer virus software.  Others are far more insidious. One especially pernicious variety of the latter is the so-called “Nigerian Advance Fee Scam”, which essentially involves carpet bombing email accounts with spam claiming that in exchange for allowing a large sum of money to be deposited in the potential victim’s U.S. bank account, the purported Nigerian owner of that large sum of money will give the victim some of it.  The spammer claims the money cannot be sent to Nigeria where s/he resides (for whatever reason). Of course, there is no actual money. Once the deal is agreed upon, the spammer requests (and sometimes gets) an “advance” from the victim on the phantom money by claiming to need it for one of a variety of reasons: to prepay taxes, to bribe government officials to get the money out of the home country, etc. Predictably, once the victim pays the advance,s/he typically never hears another word from the spammer. The scam is so popular that the U.S. Department of State has even written a thirty-three page advisory warning the public about it.

The particular variation at issue in Yahoo! Inc. v. XYZ Companies et involved Nigerian, Thai and Taiwanese spammers who sent millions of emails purporting to be from or sent on behalf of Yahoo! and contained Yahoo! trademarks.  The emails notified the victims that they had just won a Nigerian lottery with which Yahoo! appeared to be affiliated.  In order to collect those winnings, the email required its recipients to pay some up-front fees (thus the “advance fee” fraud moniker). In response, some victims sent sensitive personal or banking information to the spammers who then allegedly used that information for identity theft purposes. Other victims actually sent money to the spammers in anticipation of collecting their winnings; Those who did were predictably disappointed.

After receiving complaints from its own customers, Yahoo! initiated suit in May 2008 alleging trademark infringement, violations of the CAN-SPAM act, and other related claims. After voluntarily dismissing several defendants, Yahoo! was recently awarded a default judgment as to the remaining defendants as follows:

  1. $1 Million in statutory damages per counterfeited Yahoo! trademark for violations prior to October 13, 2008 ($9 Million in total);
  2. $2 Million in statutory damages per counterfeited Yahoo! trademark for violations after that date ($18 Million in total);
  3. $50 for each email sent in violation of the CAN-SPAM Act ($583 in total); and
  4. Attorneys’ Fees – Since the court found the trademark infringements were willful it also awarded Yahoo! reasonable attorneys’ fees in an amount to be determined later.

Even Yahoo! realizes that the likelihood of collecting even a small portion of this award is highly unlikely. Christian Dowell, the company’s legal director of globe brand protection told the Washington Post that the object of the suit was not collecting money: “Our ultimate goal is to ensure that users continue to trust Yahoo as the leading U.S. email provider.”

Regardless of whether they collect anything or not, the publicity around the award and awareness by the public of these types of scams can only be a good thing (unless you're a Nigerian scam artist). Not to be lost is the delicious irony of imagining Yahoo! convincing a local attorney to help collect a Nigerian Advance Fee award in Nigeria… Dear Nigerian Attorney, we have recently won a large default judgment award in the United States (really, we did) which we are having trouble collecting.  In exchange for your assistance we will gladly pay you a portion of the proceeds….

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Joseph DiCioccio