Free speech or pay per view?

Brian Bergstein

Friday, Aug. 23, 2002 | 9:49 a.m.

SAN JOSE, Calif. -- Fed up with unwanted ads for phone accessories, credit services and stock tips on his fax machine, a Silicon Valley executive sued a company that sends bulk faxes on Thursday, demanding an attention-getting $2.2 trillion in damages.

Yes, that's $2.2 trillion -- or about $100 billion more than this year's total federal budget.

It may seem wildly inflated, but technology entrepreneur Steve Kirsch believes that's the total amount consumers should get if the proper penalty is assessed for each and every junk fax, and the damages are tripled as federal law allows. The suits seek class-action status.

Kirsch decided to pursue a class action against junk faxes last fall, after he got a torrent of ads with no phone number he could call to get his fax number removed. An unwanted fax wastes 10 cents, he estimates, if you factor in the cost of paper, ink, wear and tear on the fax machine and the time lost in sorting through all the incoming.

"This has been going on for years," said Kirsch, founder and chief executive of Propel Software Corp. in San Jose. "But lately it's become more of a science, and both spam e-mails and spam faxes have begun to be more of a problem."

Kirsch filed the suits simultaneously in Santa Clara County Superior Court and U.S. District Court in San Francisco.

Both target Fax.com, an Aliso Viejo, Calif.-based company that sends bulk fax advertisements, and as many as 10,000 advertisers. The state suit also names Cox Business Services, a subsidiary of Atlanta-based Cox Communications Inc., because Fax.com uses network equipment it bought from Cox.

Fax.com's CEO, Kevin Katz, did not return messages seeking comment. Cox spokesman Bobby Amirshahi declined to comment on the litigation.

Kirsch's lawsuits are by no means the first attacks on bulk-fax advertisers, who have millions of fax numbers on file and have been known to ring recipients at all hours of the day.

In 1991 Congress passed the Telephone Consumer Protection Act, which restricted telemarketers' activities but also lets junk fax recipients sue their senders for up to $1,500 per fax. To qualify as illegal, a fax must be unsolicited and advertise some product or service for sale.

Earlier this month the Federal Communications Commission proposed a $5.38 million fine against Fax.com, the largest ever by the commission for violations of the act. The FCC claims Fax.com "engaged in a pattern of deception to conceal its involvement in sending the prohibited faxes, and that the company has not been forthcoming in its dealings with the agency."

At the time, Fax.com lawyer Mary Ann Wymore said the company feels the rules on unsolicited advertising are an unconstitutional restriction of its freedom of speech.

The law has seen mixed results in court.

In some cases, courts have awarded damages to junk-fax recipients. A federal judge in Texas last August ordered American Blast Fax Inc. to pay the state nearly $500,000 for sending unsolicited faxes. The Texas Attorney General's office, which brought that case, had itself received more than 200 unsolicited fax ads from the company.

But in a lawsuit in Missouri against Fax.com, a federal judge ruled in March that unsolicited fax ads amount to constitutionally protected free speech.