Thursday, December 22, 2011

Calif. Federal Judge Denies Facebook Motion to Dismiss Privacy Suit

Lucy Koh, District JudgeImage via WikipediaImage representing Facebook as depicted in Cru...Image via CrunchBasePALO ALTO, CA - JULY 06:  Facebook CEO Mark Zu...Image by Getty Images via @daylifeIn her 38-page decision last week in Fraley v. Facebook (Case No. 5:11-cv-01726), United States District Court for the Northern District of California Judge Lucy H. Koh refused to dismiss a putative class action suit against  Facebook based on the social media leviathan's use of "Sponsored Story" ads.

Although she dismissed an unjust enrichment count against Facebook, Judge Koh found Angel Fraley and her co-plaintiffs had legal standing to proceed with their claims of unfair competition and violation of California's Right of Publicity statute [Calif. Civ. Code sec. 3344]. The plaintiffs contend Facebook, without their consent, appropriated their names, likenesses and photographs for use in Facebook's "Sponsored Story" paid advertisements.

A "Sponsored Story" ad is generated when a Facebook user clicks on the raised thumb Like icon concerning a product or service, which then appears on the user's friends' Facebook page. At issue is whether that turns the user into a spokesperson/endorser of that product or service.

As reported in the Financial Times and elsewhere, Judge Koh kept the plaintiffs' suit afloat by finding "logical" the plaintiffs' argument that they should benefit from the ad revenues flowing to the defendant social network from their unwitting endorsements.  Unequivocally, Facebook's "Sponsored Story" marketing strategy has been successful.

Judge Koh specifically ruled that Facebook cannot benefit from the defense afforded by Section 230(c)(1) of the Communications Decency Act of 1996 that shields Internet Service Providers from liability as publishers. Facebook has also raised a First Amendment argument that the "Sponsored Story" ads are newsworthy, which characterizes the plaintiffs as public figures rendering newsworthy consumer opinions.
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