Facebook Agrees to Pay $10 to Each ‘Sponsored Stories’ Victim

Photo: Sean MacEntee/Flickr

Facebook is agreeing to pay up to $10 each to users who appeared in the social-networking site’s “Sponsored Stories” advertising program without their permission.

The revised settlement agreement (.pdf) to a class action, lodged Saturday, comes two months after a federal judge said he had “serious concerns” with the deal, which originally had provided a $10 million payout to attorneys suing Facebook and $10 million to activist and research groups in what is known as a cy pres award.

Under the new plan offered for U.S. District Judge Richard Seeborg’s approval, Facebook and class-action attorneys are proposing that the same size $20 million pot be shared by charity, the class-action attorneys and the 125 million U.S. Facebook users who appeared in a “Sponsored Story” without consent.

Only a small fraction of plaintiffs in a class-action usually fill out the necessary paperwork to collect their rewards. If everybody did in this instance, that would amount to 2 cents each.

Under California law, Seeborg said each plaintiff could be awarded as much as $750 if the case went to trial. Under the new plan, Seeborg has the power to reduce the amount to each victim or give the pot to charity in the event of overwhelming response from class members.

Under the old deal and the new one lodged Saturday, Facebook agreed to give its adult users the right to “control” but not eliminate how the social-networking site uses their faces in ads under Facebook’s “Sponsored Stories” program. Minors have the ability to completely opt out.

“Sponsored Stories” basically turns the act of pressing the Facebook “Like” button into a potential commercial endorsement. If a Facebook user clicks the “Like” button for a product or service with a Facebook page, that user’s profile picture and name may be automatically used in advertisements for that product or service that appear in the their friends’ Facebook pages. Facebook also reserves the right to show such ads on sites other than Facebook.

The suit, (.pdf) filed in April 2011, claimed Facebook did not adequately inform people of the “Sponsored Stories” feature or give them a way to opt out of the advertising program, which began in January 2011. Under the deal, in which Facebook admits no wrongdoing, Facebook agrees to clarify its terms of service:

You give us permission to use your name, profile picture, content, and information in connection with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us. This means, for example, that you permit a business or other entity to pay us to display your name and/or profile picture with your content or information. If you have selected a specific audience for your content or information, we will respect your choice when we use it.

While the deal offers little future protection to Facebook users, about a dozen privacy groups and universities stand to reap millions under the accord if Facebook users and the class-action attorneys don’t exhaust the $20 million pot. Under the deal, the attorneys said they would submit their fee request within three weeks after Seeborg approves the deal.

A hearing before Seeborg in San Francisco is scheduled for Oct. 25.

Child Porn in P2P Share Folder Is Smut Distribution, Appeals Court Says

Photo: bloomsberries/Flickr

A federal appeals court ruled that peer-to-peer file sharers can be prosecuted for distributing child pornography by having the illicit files in their open share folders.

That was the ruling by the nation’s largest federal appeals court, the 9th U.S. Circuit Court of Appeals. “Following the First, Eighth, and Tenth Circuits, we hold that the evidence is sufficient to support a conviction for distribution,” a unanimous three-judge panel of the San Francisco-based appeals court ruled for the first time Friday. (.pdf)

California defendant Max Budziak maintained that he believed he disabled the share folder in 2007, before the FBI detected child porn on his computer and downloaded it using the bureau’s “EP2P” program. Budziak was also prosecuted for possession, which he did not challenge on appeal.

The defendant, who had used the now-defunct program LimeWire, claimed that the federal judge presiding over the trial erred when the court failed to instruct the jury that distribution required a jury to find that Budziak took “affirmative steps” to send child pornography to another person. It was an assertion the appeals court did not buy.

Because of the open nature of peer-to-peer file sharing, IP addresses of users are exposed, and easily traced to their owners if they are not using a virtual private network, on an open public Wi-Fi connection or TOR.

The appeals court, which covers nine states in the West, however, did not immediately uphold Budziak’s conviction. That’s because the trial judge did not require federal prosecutors to turn over to the defense the EP2P program and its technical specifications.

“Budziak also identified specific defenses to the distribution charge that discovery on the EP2P program could potentially help him develop,” the appeals court wrote. “In support of his first two motions to compel, Budziak presented evidence suggesting that the FBI may have only downloaded fragments of child pornography files from his ‘incomplete’ folder, making it ‘more likely’ that he did not knowingly distribute any complete child pornography files….”

The appeals court added that “Budziak submitted evidence suggesting that the FBI agents could have used the EP2P software to override his sharing settings.”

The appellate panel sent the case back to the lower court with directions to determine whether the EP2P materials Budziak requested would have led to a different verdict.

Copyright Scofflaws Beware: ISPs to Begin Monitoring Illicit File Sharing

The nation’s major internet service providers by year’s end will institute a so-called six-strikes plan, the “Copyright Alert System” initiative backed by the Obama administration and pushed by Hollywood and the major record labels to disrupt and possibly terminate internet access for online copyright scofflaws.

The plan, now four years in the making, includes participation by AT&T, Cablevision Systems, Comcast, Time Warner Cable and Verizon. After four offenses, the historic plan calls for these residential internet providers to initiate so-called “mitigation measures” (.pdf) that might include reducing internet speeds and redirecting a subscriber’s service to an “educational” landing page about infringement.

The internet companies may eliminate service altogether for repeat file-sharing offenders, although the plan does not directly call for such drastic action.

“We are farily confident the program will launch by year’s end,” said Jill Lesser, the executive director of the Center for Copyright Information, the name of the group behind the program.

The program, which monitors peer-to-peer file-sharing services, was to have been deployed sooner, according to Gigi Sohn, president of digital rights group Public Knowledge, and an adviser to the center.

Sohn noted that the internet was aflame in January with federal anti-piracy proposals — the Stop Online Piracy Act and the Protect IP Act — both of which went down in flames amid a huge backlash and internet blackout.

“SOPA and PIPA definitely had an impact. There was some concern, if they moved ahead to quickly, public opinion would be so raw, this would be caught in the whirlwind of bad PR,” she said in a telephone interview.

Rights holders remain free to sue internet subscribers who are detected of engaging in infringing activities.

The Copyright Act allows damages of up to $150,000 per infringement of a work registered with the Copyright Office. Peer-to-peer file sharing of copyrighted works is the infringement being targeted. It’s easily detectable, as IP addresses of internet customers usually reveal themselves during the transfer of files. Cyberlockers, e-mail attachments, shared Dropbox folders and other ways to infringe are not included in the crackdown.

To be sure, the deal is not as Draconian as it could have been.

The agreement, heavily lobbied for by the Recording Industry Association of America and the Motion Picture Association of America, does not require internet service providers to filter copyrighted material transiting their networks. U.S. internet service providers and the content industry have openly embraced that kind filtering — though it’s not clear that any ISP actually practices. The Federal Communications Commission, in crafting its net neutrality rules, has all but invited the ISPs to practice it.

Here’s how the program works:

On the first offense, internet subscribers will receive an e-mail “alert” from their ISP saying the account “may have been” misused for online content theft. On the second offense, the alert might contain an “educational message” about the legalities of online file sharing.

On the third and fourth infractions, the subscriber will likely receive a pop-up notice “asking the subscriber to acknowledge receipt of the alert.”

After four alerts, according to the program, “mitigation measures” may commence. They include “temporary reductions of internet speeds, redirection to a landing page until the subscriber contacts the ISP to discuss the matter or reviews and responds to some educational information about copyright, or other measures (as specified in published policies) that the ISP may deem necessary to help resolve the matter.”

Sohn said copyright scofflaws are not going to be dinged each time internet-snoop MarkMonitor detects infringement on peer-to-peer file-sharing networks.

“Each strike is not one infringement. Each strike is dozens or scores or hundreds of infringements,” Sohn said in a telephone interview.

Lesser explained that, when the first infringement is detected, “you will get an alert.”

But after that, strikes will only be counted every seven days. “There’s a grace period between each alert,” Lesser said.

“The goal was to come up with a program that was educational in nature, not with the intention of being punitive,” she said.

A spokeswoman for MarkMonitor said the San Francisco company has a policy of not publicly discussing its clients.

None of the ISPs involved responded for comment. The RIAA did not respond for comment.

Chris Dodd, chairman of the MPAA, said in an interview last week that that the whole purpose of the program was “educational.” Members of the MPAA include Walt Disney Studios, Paramount Pictures, Sony Pictures, Twentieth Century Fox, Universal City Studios and Warner Bros.

The RIAA, which includes Universal Music Group Recordings, Warner Music Group, Sony Music Entertainment and EMI Music North America, kicked off marathon negotiations for the plan in December 2008, when it abruptly stopped a litigation campaign that included around 30,000 lawsuits targeting individual file sharers.

Key leverage in the negotiations included the Digital Millennium Copyright Act, which demands that ISPs have a termination policy in place for repeat infringers. Andrew Cuomo brought the parties together when he was New York’s attorney general.

Top-ranking Obama administration officials, including the U.S. copyright czar Victoria Espinel, played an active role in secret negotiations between Hollywood, the recording industry and ISPs to disrupt internet access for users suspected of violating copyright law, according to internal White House e-mails.

The e-mails, obtained via the Freedom of Information Act, show the administration’s cozy relationship with Hollywood and the music industry’s lobbying arms and its early support for the copyright-violation crackdown system publicly announced in July, 2011.

Under the six-strikes plan, internet subscribers may challenge their dings for a $35 filing fee paid to an arbitration service. They also get a free pass, one time, if they claim the infringement was based on having an open, unencrypted Wi-Fi network.

France has a much more stringent plan. Last month, the nation levied its first fine, $193, under its three-strikes plan.

Hacker Goes on Massive WoW Killing Spree; World Survives

It was a case of death imitating art. Or at least virtual game world imitating cartoon. In a scene reminiscent of a famous South Park episode, a hacker went on a massive killing spree in World of Warcraft over the weekend, taking advantage of a vulnerability to off hordes of characters in the popular online game before game administrators stepped in to stop him. His massacre was captured on video (see above).

The bloodbath is similar to a popular 2006 episode of the animated series South Park called “Make Love, Not Warcraft,” in which the cartoon’s four lead characters faced off against a player in the massive multi-player game who went on a character-killing rampage.

Blizzard Entertainment, the company behind World of Warcraft, acknowledged that a hacker had used an exploit to conduct his massacre over the weekend and said it had administered a fix to keep it from happening again.

“Earlier today, certain realms were affected by an in-game exploit, resulting in the deaths of player characters and non-player characters in some of the major cities,” wrote one of Blizzard’s moderators  on a player forum. “This exploit has already been hotfixed, so it should not be repeatable. It’s safe to continue playing and adventuring in major cities and elsewhere in Azeroth.”

World of Warcraft players didn’t really lose anything in the massacre. WoW characters can get their lives back. WoW players, on the other hand, have already lost theirs.