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When Liking Cookies Implicates Privacy: Facebook Litigation

A recent New York Times article detailed companies’ obsession with the “intersection of data and human behavior.”  The article noted that while consumer information collection has existed for decades, there exists an arms race for statisticians to analyze consumer data and monetize habits.  This arms race has spawned entire industries of data collection that have caused consumer advocates to question whether the term “privacy policy” is oxymoronic.

Into this fray steps litigation, often in the form of consumer class action lawsuits.  One of the most high-profile targets is Facebook, with its $3.8 billion in 2011 revenue and recent IPO that created paper millionaires overnight.

Facebook faces multiple lawsuits over its consumer data collection habits.  Let’s briefly explore a couple of examples.

First up is ongoing litigation in California courts over Facebook’s use of the “Like” button.  (See Robyn Cohen v. Facebook, Inc., 2011 WL 5117164 (N.D. Cal. October 27, 2011; and Fraley v. Facebook, Inc., 2011 WL 6303898 (N.D. Cal. Dec. 16, 2011).)  The social marketing research group Webtrends reported last year that Facebook suffered from horrifically low click-through rates.  Given that its primary revenue source is advertising, Facebook looked for ways to improve that.  Facebook CEO Mark Zuckerburg insisted that use of the “Like” button was key to this strategy because “a trusted referral is the Holy Grail of advertising.”  Litigants have argued in recent litigation, however, that Facebook is using a person’s “Likes” to advertise to friends without members’ permission, which violates the intellectual property right of publicity.

Second, Facebook is now fending off a class action lawsuit addressing the use of its tracking “cookies.”  A California court has agreed to consolidate and transfer several nationwide lawsuits into a single case that accuses Facebook of violating, among other things, the Federal Wiretap Act,18 U.S.C. § 2511, the Stored Electronic Communication Act (SECA),18 U.S.C. § 2701, and the Federal Computer Fraud and Abuse Act (FCFAA),18 U.S.C. § 2701, by installing cookies that track users even after users log out of Facebook.  The suit alleges, for example, that intercepting cookies falls under the Wiretap Act’s prohibition of willful interception of electronic communications without permission.  The suit also alleges that Facebook’s access of users’ computers for interstate commerce or communication violates the FCFAA.

Privacy concerns will continue to create litigation as consumer groups and plaintiffs’ attorneys craft increasingly creative lawsuits.  And the litigation will certainly not be limited to just high-profile companies like Facebook, Google, or Apple.  It is critical that businesses review their privacy policies to ensure they are acting within both the legal landscape and even their own guidelines.  If you have not reviewed your privacy policy in a while, consider bringing it to an attorney to refresh to help ensure your company does not end up on the wrong side of a consumer complaint or even, in some cases, Congressional hearings.

By Will O’Neill

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March 2012
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