Commentary

Researchers, Advocates Split $2M In Flash Cookie Settlement

A federal judge has signed off on a $2.5 million settlement of a privacy class-action lawsuit stemming from the alleged use of Flash cookies by Quantcast and Clearspring.

The resolution, which U.S. District Court Judge George Wu in the Central District of California approved this week, calls for the companies to pay around $2 million to various advocacy groups and institutions that do privacy research.

Carnegie Mellon, the Center for Democracy and Technology, Fordham Law School's Center on Law and Information Policy, and University of California, Berkeley will each receive $250,000. Several other law schools and organizations will receive between $50,000 and $100,000, while the 18 consumers who were named in the lawsuit will each receive "incentive" awards of $1,500. Attorneys for the consumers will receive more than $500,000. The resolution was unopposed.

The litigation against Clearspring and Quantcast stemmed from a 2009 report by researchers at UC Berkeley stating that many of the most popular sites store information about users on Flash cookies, which were harder for people to find and delete than HTTP cookies. Some of those sites appeared to be using that information in order to track people.

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Shortly after that report came out, consumers filed class-action lawsuits against Clearspring, Quantcast, Specific Media, and various other advertisers and publishers. The litigation against Clearspring, Quantcast and the companies they allegedly worked with was consolidated into one action. That's the case that was settled this week.

A separate case against ad network Specific Media, and companies it allegedly worked with, is proceeding in front of Wu separately. Wu recently dismissed the lawsuit because the consumers who are suing hadn't sufficiently alleged that they suffered any economic injury. (Specific Media denies that it used Flash cookies to track users.) The consumers revised their complaint and refiled it last month.

Other recent privacy lawsuits have reached a settlement similar to the one in Quantcast and Clearspring. For instance, a lawsuit against Google for its launch of Buzz ended with Google shelling out $8.5 million, of which $6 million went to a host of privacy groups and schools; most of the remainder went to the plaintiff's attorneys. (At launch, Google Buzz caused a privacy uproar by revealing information about users' email contacts, if users activated Buzz without changing the defaults.)

A case against Facebook for the Beacon program -- which told users about their friends' e-commerce activity -- ended with the social networking service agreeing to pay $9 million, around $6 million of which is supposed to fund a new privacy thinktank. Again, much of the rest of the money goes to the lawyers who brought the case. The Flash cookie litigation, Google Buzz and Facebook Beacon were brought by some of the same attorneys, including New York lawyer Scott Kamber and Dallas attorney Joseph Malley.

Unlike the Flash cookie resolution, the Beacon settlement drew several objections, including one from Facebook user (and privacy advocate) Ginger McCall, who says that the social networking site will have too much control over the new foundation. McCall appealed the settlement to the 9th Circuit, which is still considering the matter. (McCall is represented in the appeal by advocacy group Public Citizen, which represents MediaPost in an unrelated matter.)

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