Last year, Spamhaus found itself on the wrong end of an $11.7 million default judgment awarded to online marketing firm e360insight after it decided not to fight the case due to its belief that US courts had no jurisdiction over the group because of its location in the UK. Yesterday, an appeals court overturned the award, sending the case back down to a lower court.

The not-for-profit Spamhaus maintains a blacklist of known spammers and spam operations that is used by ISPs to help filter the spam from legitimate e-mail. Its anti-spam crusade has drawn the ire of some spammers, including e360insight owner David Linhardt, who sued Spamhaus in federal court.

Linhardt argued that Spamhaus is a "fanatical, vigilante organization" that operates with "blatant disregard for US law." After originally filing a response to the lawsuit, Spamhaus decided that, given its location in the UK, it was beyond the reach of the US court system. After Judge Charles Kocoras issued the default judgment—which required the anti-spam group to remove e360insight from its database, post a message saying that Linhardt's company is not a spamming operation, and pay $11.7 million in damages—Spamhaus told Linhardt not to hold his breath waiting for a payment.

A couple of weeks after the judgment, Judge Kocoras issued a proposed order directing ICANN to suspend the spamhaus.org domain as part of a contempt of court ruling. ICANN quickly weighed in on the matter, saying that it lacked the authority to suspend the Spamhaus domain. Judge Kocoras later decided against pulling the plug on Spamhaus, ruling that it was not warranted in this case.

Spamhaus said it wasn't concerned by the threat of having its domain suspended but ultimately decided it was time to jump back into the legal proceedings and attempt to appeal the decision. Spamhaus founder Steve Linford told Ars that the group was looking for a way to "both appeal the ruling and stop further nonsense by the spammer."

In its opinion (PDF), the Seventh Circuit Court of Appeals noted that while Spamhaus intentionally decided against mounting a defense in the case, the court erred by awarding damages and ordering Spamhaus to exonerate e360insight of spamming. "The district court failed to undertake an inquiry into the proof of damages and the necessity of injunctive relief and issued an injunction that is overbroad," wrote the court.

As a result, the default judgment stands, but the lower court will now have to consider the remedy once again. It's important to note that since the appeals court declined to overturn the original finding, further court action will be only related to the damages e360insight should be awarded. Ironically, Spamhaus' original decision to not fight the original lawsuit because it believed that it is not subject to the jurisdiction of a US District Court might have been effective—if it had decided to show up in court and make the argument.