• by Wendy Davis  @wendyndavis, February 5, 2015

Siding with Kraft Foods, a federal appellate court has affirmed a trial judge's dismissal of a lawsuit brought against the company by spam “litigation factory” Beyond Systems.

The 4th Circuit Court of Appeals ruled that Beyond Systems couldn't claim it was injured by receiving spam, because it solicited the material by setting spam-traps.

“Beyond Systems created fake e-mail addresses, solely for the purpose of gathering spam,” a three-judge judge panel of the 4th Circuit wrote in an opinion issued on Wednesday. “It embedded these addresses in Web sites so that they were undiscoverable except to computer programs that serve no other function than to find e-mail accounts to spam. Beyond Systems increased its e-mail storage capacity to retain a huge volume of spam, by which it hoped to increase its eventual recovery under anti-spam statutes.”

The appellate judges said that Beyond Systems' solicitation of emails prohibits it from recovering under the laws of Maryland or California — both of which have spam statutes that go beyond the federal CAN-SPAM law.

The battle between Beyond Systems and Kraft dates to 2008, when Beyond Systems alleged in a complaint filed in federal district court in Maryland that Kraft — and various affiliate marketers — violated spam laws in Maryland and California by sending 600,000 emails advertising Gevalia coffee.

Some of those emails allegedly contained incorrect information about their origin, according to the complaint. For instance, in a two-day period in 2005, Beyond Systems allegedly received more than 4,300 emails that indicated they were from the Apple Store, but promoted Gevalia.

A trial judge dismissed the lawsuit last year, prompting Beyond Systems to appeal.

The appellate panel noted in its ruling that Beyond Systems' “spam-trap-based litigation” accounted for 90% of the company's income in recent years.

Beyond Systems is operated by Paul Wagner, the brother of Joe Wagner, who operates Hypertouch, a similar company. Hypertouch sued Kraft in 2005 for allegedly sending spam. That case was settled the following year, according to court records.

Kraft said in a statement that it aims to “comply with all state and federal laws and regulations, including those governing unlawful spam.”