Earlier this week Judge Armstrong of the Northern District of California adopted the Magistrate's Report and Recommendation denying the prevailing Defendant's request for fees under CAN-SPAM. 
Access Judge Armstrong's Order here [pdf] and the R&R here [pdf].  (The R&R contains the bulk of the analysis.)

Plaintiff sued several defendants, including "Worldwide Internet Solutions, Inc."  Worldwide, a Canadian company, apparently had no connection to the dispute or the State of California and was included in the lawsuit on the "mistaken" theory of ownership of Worldwide by some of the other Defendants.  Worldwide ultimately obtained dismissal on jurisdictional grounds.  It then sought approximately $22,000 in fees.  At issue was whether Defendant was required to show that Plaintiff's claims were "frivolous, unreasonable, or groundless" in order to be obtain fees, or whether a more relaxed, discretionary standard was appropriate.  Under the relaxed standard (which is used, for example, in copyright cases) courts can award fees based on a variety of discretionary factors even if the claims are not frivolous or groundless. 

Magistrate Zimmerman applied various factors to conclude that fees were not appropriate.  First, the claims were never adjudicated on the merits so we don't know whether they were reasonable or unreasonable.  Second, there was no evidence of improper motivation:  "[nor] is there any evidence that the suit was motivated by anything other than legitimate concerns over the e-mails plaintiff had received."  Third, CAN-SPAM does not contain any specific Congressional statement of intent or policy regarding its abuse or enforcement.  Finally, CAN-SPAM is relatively new and awarding fees at the drop of a hat would "stunt" growth in this important area of the law.  Judge Armstrong's Order adopts this reasoning in full.

This is a pretty important issue.  Consider the cost/benefit here.  The Plaintiff who brought the case ("Richie Phillips dba R&D Computers") is no giant in the ISP world.  He/it brings a lawsuit forcing Defendant to spend $20,000 dealing with a jurisdictional issue that is ultimately resolved in Defendant's favor.  Phillips/dba R&D Computers would have probably settled with Worldwide for $5,000.00.  While this raises the problem of Phillips coming back with similar suits in the future, the discrepancy in dollar amounts in question (between what the defendant would spend and what plaintiff would accept for settlement) makes it extremely easy for plaintiffs to bring nuisance suits and obtain settlements.  Many lawyers would recommend settling, particularly if there's no chance of fee recovery.  If I were the court I would be curious about R&D Computers and what other suits it brought in the past.  (I see another filed in the Northern District in roughly the same timeframe (Phillips v. Netblue, Inc et al.).)  I would also be curious about what type of revenue R&D Computers has, and whether it actually can be considered the provider of an internet access service.  Granted it probably satisfies the vague and open ended definition in the statute, but I would ask myself whether this was really a private plaintiff who was annoyed by spam or whether this was an ISP who is actually addressing this problem on behalf of a larger group of people. 

Courts are pretty reluctant to tax CAN-SPAM plaintiffs.  This is understandable, and maybe based on the general aversion to spam that everyone (including the judge) shares.  CAN-SPAM is also vague on what sorts of hurdles should be imposed on plaintiffs.  Ultimately, a legislative fix is probably in order.  CAN-SPAM enforcement should be restricted to ISPs of a certain size.  Most other CAN-SPAM litigation just eats up the time and resources of the attorneys and more importantly, of the courts.