Facebook has been under heavy fire for the better part of the past year. Last week, the US Court of Appeals for the Ninth Circuit added to the fray in Patel v Facebook Inc. This class action lawsuit was brought in 2015 in California by Facebook users living in Illinois. The basis of the lawsuit was that Facebook’s facial-recognition technology violated the Illinois Biometric Information Privacy Act (BIPA).

By way of background, in June 2016, Facebook brought a motion to dismiss the action while the plaintiffs moved to certify the class of plaintiffs. Much to Facebook’s dismay, the US District Court for the Northern District of California denied Facebook’s motion to dismiss and certified the class of “Facebook users located in Illinois for whom Facebook created and stored a face template after June 7, 2011”. This decision was appealed to the Ninth Circuit appeal court where there lower Court’s decision was upheld.

Facebook’s Facial Recognition Software

The basis of the lawsuit starts with Facebook’s facial recognition technology that was used in a new feature launched in 2010: Tag Suggestions. Every time a user posted a picture on Facebook and “tagged” a friend, the facial recognition software assessed the face using various geometric data points that made a face unique (i.e. distance between the eyes, nose, and ears) to create a face signature/map. Facebook would then store that signature/map in their database. Going forward, if a user posted a new picture, the technology would identify faces in the picture and cross-reference them with their database (i.e. a face signature that has already been created in the past) to suggest tagging the person in the photo.

It is important to note that Facebook’s face template were stored on their servers, which were located in nine data centers, six of which are located in the US: Oregon, California, Iowa, Texas, and North Carolina.

Biometric Data and the Law

Across the globe, biometric data is being used more commonly by businesses as a security screening tool. For instance, smartphones use facial recognition and fingerprints as a security feature to unlock the phone, mobile financial applications are beginning to implement facial recognition to sign into your account, and NEXUS uses iris scans to identify individuals for cross border travel. The complication with biometric data is that it is unlike other unique identifiers. While a social insurance number can be changed if compromised, an individual’s biometric data is biologically unique to that individual. If a database with biometric data is compromised, the individuals affected have no recourse – unless they want to attempt a John Travolta and Nicolas Cage Face/Off scenario. If biometric data is compromised, the individual has a significantly increased risk for identify theft and is likely to completely withdraw from biometric-facilitated transactions.

Recognizing the severity of a potential breach involving biometric data, the Illinois General Assembly passed the BIPA in 2008 to regulate the collection and storing of biometric information. BIPA imposes various obligations on an organization that collects biometric data of their users. The organization is required to establish a retention schedule for permanently destroying biometric identifiers and information; advise users of this policy in writing; and, secure a written release before obtaining a biometric identifier. This law applies to organizations doing business in Illinois and allows private individuals to file a lawsuit for damages stemming from a violation of the BIPA.

Similar laws have been enacted in Washington and Texas, although they are not as stringent and do not have the same damages provisions.

In Canada, neither provincial nor federal governments have passed specific laws regulating the collection and use of biometric data. However, biometric data has been identified as “personal information about identifiable individuals”, which is within the purview of (1) the Privacy Act, that regulates how data is used by the Federal government, and (2) the Personal Information Protection and Electronic Documents Act (PIPEDA), which governs how data is collected, used, and stored by private-sector organizations.

The Appeal

Back to the case at hand. As noted, the District Court denied Facebook’s attempt to have the case dismissed and certified the class action (identified a group of people that can proceed with the lawsuit).

Injury in Fact – Damages

Facebook argued that the plaintiffs were missing a critical element to be able to proceed with the lawsuit. Specifically, the plaintiffs did not suffer a “concrete injury in fact”. Facebook argued that the by violating BIPA, by not obtaining consent from users and identifying a destruction policy, it simply failed to comply with a procedural requirement. Their non-compliance did not cause a concrete injury to the plaintiffs that resulted in damages.

The Ninth Circuit Court disagreed.

With respect to a concrete injury, the Court concluded that an intangible injury could nevertheless be concrete and establish an injury in fact. BIPA was enacted to protect individuals “biometric privacy” by: (1) imposing specific safeguards to ensure individuals’ data was properly collected and used; and, (2) by subjecting private entities who fail to follow the law to liability. In essence, the legislation was created to protect individuals against “the risk of real harm” and this was enough to establish an injury.

With respect to damages, the Court observed that in our digital world, privacy protections are particularly crucial. The Court found “[w]hen a private entity fails to adhere to statutory requirements, the right of the individual to maintain his or her biometric privacy vanishes into thin air.” The Court noted that privacy lawsuits are particularly unique because the invasion of someone’s privacy rights is fundamentally offensive to our society. Therefore, privacy lawsuits do not always require additional consequences, like actual damages, for them to be actionable.

Territorial Limits of the Law

Interesting jurisdictional arguments were raised by Facebook as the lawsuit was filed in California on the basis of an Illinois law. Facebook argued that the Illinois law was not intended to have effect in another state. In other words, an individual in Illinois was not allowed to use an Illinois law to sue a company in California. Facebook argued that the relevant events, the collection and storage of the face scans, occurred on its servers that were not located in Illinois. Therefore, Illinois law could not apply.

The Court did not make a decision directly on this issue but noted that the law does not specify where the essential elements of a violation take place. For example, in this case the violation could be argued to have occurred in Illinois because that was where the person whose privacy rights are impacted used Facebook. Alternatively, the violation could be construed to have occurred in California, where Facebook housed its server and where it scanned the photographs as well as stored the scans. Alternatively, it could be a combination of the two. The Court left this decision for the District Court to decide in the course of the lawsuit, but it noted that it is reasonable to infer that the Illinois lawmakers contemplated the law’s application to individuals who are located in Illinois, even if some relevant activities occur outside the state.

Takeaway

It is particularly important to note that this is a US case. The laws and legal principles are different in Canada from the US; however, US cases may have an effect on how future cases are decided in Canada.

Although Canada does not have a “concrete injury in fact” element, as was discussed in Patel, it does have a requirement that an individual establish damages in the course of a lawsuit. For instance, Jones v Tsige was the Ontario Court of Appeal decision that established the privacy tort of intrusion upon seclusion. In that case, the Court similarly noted that “proof of actual loss in not an element” of the tort. A finding that someone violated another’s right to privacy is enough to presume damages. However, Canadian courts have been reluctant to award any significant sums of damages (a limit of $20,000.00 was established) in individual cases without additional proof of loss. Although we have not seen a biometric date-based lawsuit in Canada, the Patel case may be informative to Canadian Courts when such a case finally comes around.

Another important consideration is identifying which laws govern an organization’s procedures. We previously addressed the extraterritorial application of the General Data Protection Regulation (GDPR) enacted in Europe to organizations outside the EU[1]. The key takeaway in this regard is that organizations may be impacted by other state or provincial privacy regulations if they, knowingly or unknowingly, cater to that territory’s population.

This is a case definitely worth following. Let’s see what hot water Facebook ends up in next!

See Patel v Facebook Inc., No. 18-15982 (9th Cir. Aug. 8, 2019)

[1] https://www.sbalawyers.ca/I-Knew-You-Were-Trouble-When-You-Walked-In—The-GDPR

Stas Bodrov

Once the target of an unsuccessful phishing scam, Stas is a key part of SBA’s cyber liability and privacy group providing services ranging from assessments and prevention to crisis response.

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