• by Wendy Davis  @wendyndavis, April 11, 2011

Facebook has been ordered to disclose a host of data, including its source code for systems to identify and filter out invalid clicks, to marketers suing the company for click fraud. 

U.S. District Court Magistrate Judge Howard Lloyd in San Jose, Calif. rejected Facebook's argument that because it considers the source code a trade secret, it need not be disclosed. "The source code in this case implemented Facebook's desired filtering, and whether that filtering lived up to Facebook's claims and contractual obligations is the issue here," Lloyd wrote.

But the decision doesn't mean that Facebook's code for filtering clicks will become common knowledge. Lloyd also ordered the parties to keep the information confidential. Still, companies don't like to disclose their software to any outsiders, since doing so increases the odds it will leak.

The ruling, issued Thursday, grows out of 2009 click-fraud lawsuits filed by sports site RootZoo and several other marketers. RootZoo alleged that it found discrepancies between data provided by its own analytics programs and Facebook's numbers. For instance, RootZoo alleged that on one day in June, its software programs showed that 300 clicks had been generated by Facebook, but the company was charged for 804 clicks.

Other marketers made similar allegations. The lawsuits were subsequently rolled up into one potential class-action.

Facebook unsuccessfully asked for the litigation to be dismissed on the grounds that all cost-per-click advertisers were required to agree to the company's terms and conditions, which the company says included the following language: "I understand that third parties may generate impressions, clicks, or other actions affecting the cost of the advertising for fraudulent or improper purposes, and I accept the risk of any such impressions, clicks, or other actions."

U.S. District Court Judge Jeremy Fogel in San Jose, Calif. instead ruled that the marketers can sue Facebook for allegedly charging them for "invalid" clicks, but not for "fraudulent" ones.

Facebook and the marketers are currently turning over evidence to each other in preparation for trial. But the process does not appear to be going smoothly.

In addition to seeking a court order requiring Facebook to disclose the source code, the marketers also complained to Lloyd -- who is overseeing the discovery process -- about a host of problems. Among others, the marketers criticized Facebook for uploading documents to the site Watchdox.com, where the documents could only be reviewed while connected to the Web. Furthermore, they could not be printed.

Facebook said its ban on printing documents was to prevent disclosure, but Lloyd rejected that argument, calling it "purely speculative." He prohibited Facebook from continuing to use Watchdox.com to turn over evidence.