Facebook Loses Round One Against Power Ventures

We recently reported on the Facebook v. Power Ventures case, in which Facebook alleged, among other things, that using automated tools to populate a portal that aggregates a user’s social networking profiles violates its terms of service and the Computer Fraud and Abuse Act and an analogous provision of the California Penal Code. On July 20, 2010, the court said it was unclear whether was a “user” for purposes of the terms of service, but even if it was, feared that finding all user violations of a terms of service as access “without permission,” would create
constitutional problems with the statute. The Court added that terms of service are not well equipped to inform users of what activities might subject them to criminal penalties. The court, in part, relied on the fact that site operators can unilaterally change the terms of service at anytime.

The court did find that Facebook has a potential claim under the California law based on accessing Facebook’s site by circumventing technical or code-based measures. That claim will go forward.

The court rejected’s argument that Facebook did not even have standing to bring the suit because it did not incur any damage or loss. The court found that because Facebook took steps to prevent access, even “a few clicks of a mouse” was sufficient to satisfy the requisite damage or loss for it to have standing, noting that the statute authorizes claims if there is “any amount of damage or loss.”

This decision could have significant ramifications for social media platform providers. It highlights the need for a comprehensive strategy, including both legal and technical measures to prevent unwanted activity on their sites.

Here is a copy of the Facebook Decision