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By SARA FISHER

Staff Reporter

The tricky issue of regulating junk e-mail will be receiving increased attention as a result of two landmark bills recently signed into law by Gov. Pete Wilson.

One gives California Internet service providers unprecedented power to wrest damages from spammers, or those who distribute unsolicited commercial e-mail. The other requires spammers to label their unsolicited e-mail as advertisements.

Both laws go into effect Jan. 1, 1999.

Industry experts believe that hitting spammers in the pocketbook is the best way to shut them down or reduce their mailings. But some civil liberties groups argue that certain aspects of the legislation open the state to First Amendment lawsuits.

Whatever the failings, both bills along with another measure that prohibits new state and local taxes on the Internet for the next 10 years put California at the legislative forefront for the Internet industry. While a variety of Internet legislation has been introduced in both houses of Congress, none has made significant progress.

"There is no question that California is far and away the leader when it comes to Internet legislation," said Paul Russinoff, state policy counsel for the Internet Alliance, a Washington-based trade association. "Everyone is watching what (California) does, which is why it is important for California to address the issues. The technology industry looks to California as its home base, and Congress has shown a great interest in what the states are doing overall, and California in particular."

Last April, Pasadena-based EarthLink Networks Inc. won a $2 million settlement against Philadelphia-based Cyber Promotions Inc., then one of the nation's most notorious spammers. Cyber Promotions has essentially disappeared since then. Similar cases are expected to be brought to the courts, and more easily won by service providers because of the new legal parameters.

"Internet service providers can go into court with a lot more confidence in their cases than in the past," said Russinoff. "It has also given the service providers a degree of certainty regarding a monetary settlement."

The first bill, authored by Assemblyman Gary Miller, R-Diamond Bar, has attracted wide praise within the Internet industry. It gives Internet service providers the right to sue spammers for $50 per unauthorized message, up to $25,000 per day, or for actual damages to their computer networks. Mass e-mailings have been known to overwhelm the servers used by Internet service providers, causing widespread damage.

Miller's bill also makes "spoofing," the practice of knowingly using someone else's Internet domain name or address on bulk e-mail, illegal. Spammers often spoof return addresses to misdirect complaints and investigations.

"The Miller bill is way ahead of its time," said Jason Catlett, president of Junkbusters Corp., a Green Brook, N.J.-based organization that advocates Internet privacy issues. "It is a well-conceived and well-executed piece of legislation that has gotten the attention of officials across the nation."

John Cusey, a legislative aide in Miller's office, pointed out that the measure shifts the costs of unsolicited mass e-mail back to the spammers.

Unlike traditional mass mailings, in which the marketer has to cover postage costs, mass mailings over the Internet make the recipients pay. E-mail users are charged for their time spent online wading through junk mail, and service providers pay for the time, equipment and staff needed to handle the large volumes of unsolicited e-mail. America Online Inc. estimates that about one-third of the daily e-mail routed through its service is spam.

The new law will apply only to Internet service providers located in California; the point of origin of the spammer doesn't matter.

The other anti-spam law, authored by Assemblywoman Debra Bowen, D-Torrance, requires unsolicited bulk e-mailers to label their mail as such. The tag "ADV," for advertisement, must appear on the subject lines of all spam sent via equipment in California whether it's being sent from a modem in California, or being bounced off a server located in the state.

If the spammer hawks adult-oriented goods and services, the subject line must read "ADV:ADLT." Spammers must also set up a toll-free telephone number or accurate return address so recipients can ask to be taken off the mailing list. If spammers do not comply, district attorneys are authorized to seek six months in jail or a $500 fine per e-mail for violators.

"The Internet is a new and evolving area, and we need to start laying the ground rules now," said Bowen. "Obviously, this one bill cannot stop spam completely, but it is a groundbreaking step and there should be a deterrent effect."

Some civil-liberties groups have cried foul. "The Supreme Court has taken a dim view of states mandating those types of labels," said John Mozena, co-founder of the Coalition Against Unsolicited Commercial E-Mail based in Michigan.

But Bowen points out that both the music and movie industries label the content of their products without violating the First Amendment.

Leaving aside constitutional issues, some also oppose the new law because they say it implicitly legitimizes spam. "Even with labels, companies will still have to spend significant time and money to remove unsolicited e-mail from their networks," said Russinoff. "This is not the right solution to the problem."

California is not the only nor even the first state to tackle the spam problem. Both Washington and Nevada enacted anti-spam laws over the summer. The laws require that unsolicited e-mail contain no misrepresented information, whether in the return address or the content of the advertisement. The Nevada law stipulates that spammers can be held liable for legal fees and court costs that may arise, and the Washington law lets citizens personally sue spammers who violate the law.

So far, one Washingtonian has successfully sued for $200 over an unsolicited e-mail.

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