The 9th Circuit Court of Appeals held that sending SMS messages potentially violates the federal Telephone Consumer Protection Act, which prohibits companies from using automatic telephone dialing systems to make calls to cell phones unless the owners have consented. The decision appears to mark the first time that a federal appellate court has said that the telephone law applies to text messages.

The ruling could have far-reaching effects on mobile marketers who send SMS ads, says cyberlawyer Venkat Balasubramani of Seattle. "There's a lot of marketing going on by text message, and now there's another regulatory scheme that marketers and brands have to worry about," he said, referring to the Telephone Consumer Protection Act. "There's a whole lot of marketing that's going to come under the umbrella of that law."

The case dates back to 2006, when New York resident Laci Satterfield filed a class-action lawsuit against Simon and Schuster and mobile marketing firm ipsh! Satterfield had signed up for a free ringtone service from Nextones at the request of her son, according to the court ruling. As part of the enrollment process, she agreed to receive promotions from Nextones affiliates and brands.

After registering for this service, she received an unsolicited text message inviting her to join the "Stephen King VIP Mobile Club" and directing her to www.cellthebook.com.

She alleged that this message violated the Telephone Consumer Protection Act's ban on using automated dialing systems to reach wireless devices. She sought class-action status and a minimum of $500 damages per incident for each cell phone customer.

Simon & Schuster argued that the text messages weren't covered by the Telephone Consumer Protection Act and that Satterfield had consented to receive the ads.

Friday, the 9th Circuit ruled against the book publisher on both points. "Reviewing this issue, we hold that a text message is a "call" within the meaning of the [Telephone Consumer Protection Act]," the court said. The appellate court also found that Satterfield had only agreed to receive ads from Nextone brands, and not Simon & Schuster. "The message was a product of Simon & Schuster, not Nextones," the court wrote. "Nextones's only role in this case was simply supplying the numbers."

Friday's decision reversed a 2007 trial court ruling that ended the case in favor of Simon & Schuster and ipsh! But the decision also left open the possibility that the marketer could still prevail in the matter. The appellate court remanded the case back to the trial court for further hearings to determine whether the equipment used to send the text messages should be considered an automated telephone dialing system.

This news story is important. I recommend that everyone read it.