Facebook Loses Motion to Dismiss Lawsuit Against Ads

by Mike Mintz on December 19, 2011 · 0 comments

in martindale.com

On Friday, California U.S. District Judge Lucy Koh denied Facebook’s motion to dismiss a lawsuit, alleging that the social networking giant violated California’s law on commercial endorsements.  The plaintiffs in this case, who are Facebook users, claim that Facebook unlawfully and without authorization used their names, profile pictures and likenesses of brands in sponsored ads.

 Specially, plaintiffs allege that Facebook violated California’s Right of Publicity Statute.  This law prohibits the unauthorized use of another person’s name, voice, signature, photograph or likeness for advertising.  In its motion to dismiss, Facebook claimed that its ads fell under the statute’s “newsworthiness” exemption, which doesn’t require consent. The company argued that plaintiffs are public figures to their friends and expressions of consumer opinion are generally newsworthy.

However, Judge Koh rejected Facebook’s arguments.  In her decision, she wrote that the “plaintiffs have articulated a coherent theory of how they were economically injured by the misappropriation of their names, photographs and likeness.”  Thus, Koh held that plaintiffs may pursue their claims alleging that the sponsored ads violate state law and are fraudulent.

In this action, plaintiffs also claim that Facebook was unjustly enriched by these advertisements.  In 2012, Facebook’s profits will reach $6.9 billion – a significant increase from this year’s $4.27 billion.  While, approximately 90% of the company’s profits come from online advertising, Judge Koh specifically dismissed this claim, finding that plaintiffs failed to state a claim under this allegation.

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