SAN FRANCISCO, June 16 (Reuters) - Facebook Inc has agreed
to pay $10 million to charity to settle a lawsuit that accused
the site of violating users' rights to control the use of their own names, photographs and likenesses, according to court
documents made public over the weekend.
The lawsuit, brought by five Facebook members, alleged the
social networking site violated California law by publicizing
users' "likes" of certain advertisers on its "Sponsored Stories"
feature without paying them or giving them a way to opt out, the
documents said.
A "Sponsored Story" is an advertisement that appears on a
member's Facebook page and generally consists of another
friend's name, profile picture and an assertion that the person
"likes" the advertiser.
The settlement was reached last month but made public this
weekend. Facebook declined to comment on Saturday.
The proposed class-action lawsuit, filed in federal court in
San Jose, California, could have included nearly one of every
three Americans, with billions of dollars in damages, according
to previous court documents.
In the lawsuit, Facebook Chief Executive Mark Zuckerberg was
quoted as saying that a trusted referral was the "Holy Grail" of
advertising.
In addition, the lawsuit cited comments from Facebook chief
operating officer Sheryl Sandberg, saying that the value of a
"Sponsored Story" advertisement was at least twice and up to
three times the value of a standard Facebook.com ad without a
friend endorsement.
U.S. District Judge Lucy Koh said the plaintiffs had shown
economic injury could occur through Facebook's use of their
names, photographs and likenesses.
"California has long recognized a right to protect one's name
and likeness against appropriation by others for their
advantage," Koh wrote.
The settlement arrangement is known as a cy-pres settlement,
meaning the settlement funds can go to charity.
The case in U.S. District Court, Northern District of
California is Angel Fraley et al., individually and on behalf of
all others similarly situated vs. Facebook Inc., 11-cv-1726.
Facebook shares closed at $30.01 on Friday, down 21 percent
since the company's initial public offering last month.
For Fraley: Jonathan Davis of The Arns Law Firm.
For Facebook: Matthew Brown of Cooley LLP.
(Reporting by Dan Levine and Sarah McBride)
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