Published by LawTechie - October 18, 2011 - LawTechie

The Ninth Circuit Court of Appeals has voiced doubts about the Facebook privacy settlement in its recently litigated Beacon app online privacy violation (this was the app that broadcast Facbook account holders’ purchases at online stores on an opt-out basis). Members of the Court’s panel questioned whether any of the class-action plaintiffs would actually benefit from the terms of the deal and also whether the terms would do anything to prevent the social media giant from future online privacy violations. Mediapost reports:

A group of users filed a lawsuit, which Facebook agreed to settle for more than $9 million. But the agreement had some catches. First, Facebook users won’t themselves receive any compensation (except for the 19 who were named in the class-action complaint). Instead, Facebook will donate more than $6 million to a new privacy foundation. But that organization will be subject to considerable control by Facebook because one of the three people on the new foundation’s board of directors will be the company’s chief lobbyist.

True, it is difficult to prove damages in any online privacy lawsuit; at the same time, the judges are rightly concerned that nearly all of the settlement money will be split between the plaintiffs’ lawyers and an online privacy foundation that will, more or less, be in Facebook’s exclusive control (new oxymoron: “Facebook Privacy Foundation”?).

As one of the judges noted of the class plaintiffs:

“They get nothing. All they are is a vehicle for the lawyers to make money.”

Also, as Mediapost points out, this particular Facebook privacy violation is steeped in breaking Federal law, specifically the Video Privacy Protection Act which provides a $2,500 for each violation of a user’s right to privacy in the media he views/rents. Thus, where run of the mill online privacy damages are notoriously difficult to prove and, perhaps, would warrant the foregoing “creative” settlement terms, damages here are pretty apparent.

As far as issues in online social media go, news on Facebook privacy violations never seem to stop coming. Of course Facebook is also at the forefront of the industry, not only with regard to innovation in social media tech, but in internet privacy law as well — so one can’t fault the company too much for constantly trying new things (if, unfortunately, at the expense of user goodwill).

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.


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