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New state law could crimp fax practices

Unsolicited faxes, like unwanted phone calls and spam e-mail before them, have been the target of federal regulations. And now California is weighing in on the fax debate, applying even tougher restrictions to facsimile distribution in a bill recently signed by Gov. Arnold Schwarzenegger.

The new state legislation, which goes into effect Jan. 1, 2006, prohibits a person or entity from sending an advertisement to a fax machine without the recipient's express consent, even when the fax is sent to an existing customer.

Federal law, however, permits the sending of unsolicited faxes without permission when there is an established business relationship between the sender and recipient.

"It's going to be interesting to see whether the federal law pre-empts state law," said San Diego's Andy Serwin, a member of the Information Technology practice group with Foley & Lardner LLP.

Congress prevented California from enacting restrictions on unsolicited emails that were tougher than existing federal legislation, Serwin said, and could do it again.

"Even though California has passed this, that's not to say the federal government can't amend that and say, 'Sorry we're occupying the field,'" he said. "It's far from over."

The federal bill does state that it cannot pre-empt any state restrictions on commerce within a state, but doesn't address the issue of interstate commerce.

"Undoubtedly, there are differences between them," said Gordon & Rees partner Richard Sybert. "There are differences in standards, differences in measure of damages or relief available. The federal statute seems to go out of its way to say, 'No. 1, there is no pre-emption of state law and that nothing restricts the states from imposing tougher requirements on intrastate commerce.' If it's coming from out of state, that may be an issue. States might not have a right to do that."

The California bill has received sharp criticism from several employer groups, including the San Diego Regional Chamber of Commerce.

An amendment was then added several days before the end of the legislative session, exempting trade associations and nonprofits from liability under the measure when sending unsolicited faxes to their members.

The San Diego Regional Chamber of Commerce thinks many of its members will still be impacted.

"There's concern it'll affect business-to-business relations and potential communications," said Jennifer Porter, the chamber's policy coordinator.

"It will cut down on the amount of information that businesses and consumers receive," concurs Sheppard Mullin Richter & Hampton LLP attorney Guylyn Cummins, who deals with First Amendment issues.

Government regulations began when the number of interruptions caused by mountains of faxes and unwanted e-mails became burdensome to consumers. But as the regulations increases, the result is the government standing in front of your fax machine, telling you what you can and cannot receive, Cummins said.

And as nonprofits and others are given exemptions, commercial businesses feel discriminated against.

"You'll probably see a change to it," Cummins said. "Even the early federal laws were challenged by commercial advertisers on the grounds that, 'Look our e-mails and faxes are no more annoying than requests for political donors or requests from nonprofits.'"

There is a question if asking for permission to send a fax -- either with an initial phone call, e-mail or fax -- is, in itself, illegal.

Meanwhile some businesses, like media outlets, depend on receiving tips through faxes that they may not know about, and therefore, didn't request.

That has become an interesting conundrum for public relation agencies like Nuffer Smith Tucker.

"You didn't ask for it, but it's the kind of stuff you want, so where is that line drawn," said Bill Trumpfheller, Nuffer's president. "It's going to be tough to determine what unsolicited means."

He said the problem works itself out anyway.

"If you're not generating revenue, you tend to stop doing something," Trumpfheller said.

Related Article:

Schwarzenegger signs bill banning junk faxes (Oct. 13, 2005)


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