Source : Time :December 20, 2011
Ever noticed that your Facebook friends occasionally seem to be advertising products to you in the form of a post telling that they “Like” a particular brand or product? That’s what Facebook calls a “Sponsored Story,” and a San Francisco court has just ruled that it might be unfair exploitation of Facebook’s users.
Friday’s ruling by U.S. District Judge Lucy Koh reverses an October decision–by the same Californian court that exempted Facebook from legal action by users unhappy with the site–allowing companies to use their face and name to promote products without their permission. Instead, the door is now entirely open for a class action lawsuit accusing Facebook for wrongful exploitation, as well as the possibility of the site having to pay $750 to each user whose likeness and name has been used as a result.
Judge Koh overturned the earlier decision after reading evidence (provided by plaintiffs) from Facebook COO Sheryl Sandberg and other experts that using familiar faces made users more likely to purchase goods. Sandberg herself had described “Sponsored Stories” as “the illusive goal we’ve been searching for, for a long time; making your customers your marketers,” going on to say that associating products with friends made users 300% more likely to purchase. Koh struck down Facebook’s defense that “Sponsored Stories” fell under existing Fair Use legal definitions, writing that “Because Facebook’s publication of Plaintiff’s ‘Likes’ is alleged to be for commercial advertising purposes and not part of ‘any news, public affairs, or sports broadcast or account, or any political campaign,’ the Court does not find it appropriate to dismiss the claim.”
Interestingly, Koh also appears to dismiss the defense that use of “Likes” in “Sponsored Stories” is covered by the site’s Terms of Use agreement, siding with the plaintiffs’ claim that, because “Sponsored Stories” wasn’t part of Facebook when they signed up, they had never consented to the practice (though she dodges the issue somewhat by calling it “disputed”). In any event, it strikes me as legally interesting for future cases.
Koh’s decision to allow the lawsuit only affects Californian users, but it’ll be fascinating to see how this case develops, and whether it will result in similar lawsuits across the country. For its part, a Facebook spokesman released a statement that the company was “reviewing the decision and [continues] to believe that the case is without merit.”
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