• by Wendy Davis  @wendyndavis, August 18, 2011

A federal judge has dismissed a consumer's potential class-action lawsuit against four major advertisers -- McDonald's, CBS, Mazda and Microsoft -- that were accused of acting in concert with the ad network Interclick to use controversial "history-sniffing" techniques for online tracking.  

U.S. District Court Judge Deborah Batts in New York also narrowed the consumer's case against Interclick, but did not entirely dismiss the lawsuit against the ad network.

The litigation dates to December, when New York resident Sonal Bose filed suit against Interclick for allegedly violating a host of laws, including a federal computer fraud statute and various state laws. Several weeks later, Bose sued the four marketers, alleging that they worked with Interclick to mine people's Web-surfing history for marketing purposes.

History-sniffing technology exploits a vulnerability in browsers to discover which Web sites users previously visited. Researchers from the University of California, San Diego brought the technique to light last year when they published a paper explaining the technique and naming 46 Web sites where history-sniffing technology was being deployed.

The number of ad networks using history-sniffing technology is not clear, but several weeks ago a Stanford researcher reported that Epic Marketplace was deploying the controversial technique. After the report came out, Epic abandoned the practice.

McDonald's and the other marketers sued by Bose argued that the allegations against them should be dismissed as speculative. Batts agreed, ruling that Bose did not allege any "specific interaction" with the advertisers, or that they even knew about Interclick's alleged activities.

For its part, Interclick successfully argued that the computer fraud allegations should be dismissed because the federal statute only allows for lawsuits if consumers suffer damages totaling at least $5,000. Batts agreed that Bose had not sufficiently alleged economic damages.

But in a portion of the ruling that marks a defeat for Interclick, Batts denied the ad network's motion to dismiss two state law counts, including a claim that it violated a statute regarding deceptive business practices.

Attorney Scott Kamber, who filed the case on behalf of Bose, characterized the ruling regarding Interclick as a partial victory, noting that the litigation could now move forward. "We're satisfied and pleased to see that the judge has recognized that there is a wrong here that can be remedied," he said.

Kamber said he is still evaluating options with regard to the advertisers.

Batts' ruling dismissing the computer fraud count against Interclick was consistent with a decision made 10 years ago in a privacy lawsuit against DoubleClick stemming from its use of cookies to collect data about Web users' activity. In that case, U.S. District Court Judge Naomi Reice Buchwald in New York ruled that DoubleClick's collection of online data didn't violate the federal computer fraud statute because it did not cause $5,000 worth of damage.

More recent rulings have been mixed. Last year, a federal judge in Montana ruled that consumers could proceed with computer fraud allegations against the Internet service provider Bresnan Communications. That case stems from Bresnan's arrangement with defunct behavioral targeting company NebuAd, which partnered with ISPs to glean data about users' Web activity which would then be used to serve them targeted ads.

Earlier this year, however, a federal judge in California dismissed a lawsuit against ad network Specific Media, which was accused of using Flash cookies for tracking. But an revised version of that case was filed in May and remains pending in federal court in the Central District of California.