AOL Uses "Spam - Block" as marketing defense [25th August 2003]

CI Host, a Bedford-based Web-hosting business, has sued America Online, saying the Internet provider has unfairly labeled the company as a spammer and blocked the company's clients from communicating with AOL customers.

The suit alleges that AOL has blocked CI Host customers' IP addresses, the numeric addresses that identify a computer user on the Internet, for almost two weeks from AOL subscribers and told CI Host customers that CI Host was a "spam bag" that promotes the unsolicited e-mailing of AOL customers.

CI Host is accusing AOL of defamation, interference with contractual rights and prospective contractual rights, and unfair competition. It seeks an injunction to stop the alleged blocking as well as punitive damages and accuses AOL of violating the Lanham Act, a trademark law.

State District Judge Bonnie Sudderth issued a temporary restraining order Friday prohibiting AOL from blocking CI Host's IP addresses from AOL customers, according to CI Host Chief Executive Christopher Faulkner.

Faulkner said that by the end of the day, AOL had not complied with the restraining order. In what he called "a snub," he said the online provider removed the blocks on some of CI Host's servers, but then blocked five different servers. He added that CI Host was going to file a motion of contempt against AOL in response.

AOL spokesman Nicholas Graham said the company had not yet reviewed the lawsuit.

A hearing is scheduled for Sept. 12.

CI Host customers who tried to contact AOL about being blocked from communicating with AOL subscribers were told that CI Host customers' communications were blocked because CI Host is a spammer, according to the lawsuit.

"CI Host, Inc. has been humiliated, degraded and disgraced before its peers, associates, and customers due to [AOL's] false statements," the suit says.

CI Host's Director of Abuse Josh Welch and a CI Host customer are swearing out affidavits of their experience with AOL technical support staff, whom they accuse of referring to CI Host as a "spam bag," Faulkner said.

"That's the kind of company AOL is, and that's the kind of company we're going to tell the world about," Faulkner said.

CI Host plans to seek monetary damages of at least $10 million because of damage to the company's reputation, loss of business and loss of good will from its customers, Faulkner said.

The suit alleges that AOL was trying to steal customers from CI Host.

Faulkner said CI Host is also trying to organize companies from its network of thousands of resellers for a class-action lawsuit against AOL.

"AOL has 30 million subscribers, and they spend a lot of money on the Internet and for that seven- or eight-day period, those people could not buy from our customers," Faulkner said.