• by Wendy Davis  @wendyndavis, April 29, 2011

In a sweeping ruling that could influence a broad array of privacy litigation, a judge has dismissed a lawsuit against ad network Specific Media stemming from the company's alleged use of Flash cookies to track Web users.

U.S. District Court Judge George Wu in the Central District of California ruled on Thursday that the seven Web users who are suing the ad network for computer fraud didn't adequately allege  they suffered any economic losses as a result of the alleged tracking.

The federal computer fraud statute allows consumers to file suit if they have suffered at least $5,000 in damages. The consumers had argued that information about themselves is valuable, and pointed to new sites like personal.com and i-allow.com that offer ways for users to receive compensation for their data.

But Wu found that the consumers hadn't presented enough facts to show the alleged tracking by Specific Media deprived them of the ability to profit from their data. "The complaint does not identify a single individual who was foreclosed from entering into a 'value-for-value' exchange as a result of Specific Media's alleged conduct," he wrote. "It is not obvious that plaintiffs cannot articulate some actual or imminent injury in fact. It is just that at this point they haven't offered a coherent and factually supported theory of what that injury might be," Wu added.

The dismissal was without prejudice, meaning that the Web users can amend their complaint and bring it again. Scott Kamber, a lawyer for the consumers, says he intends to refile by mid-May. He said the ruling offered "clarification regarding the pleading standard," and added that his clients continue to believe there is "a legal remedy for the wrong."

The lawsuit alleged that Specific Media violated consumers' privacy by using Flash cookies for tracking. Flash cookies were originally designed to remember users' preferences for online video players and other Flash-based applications, but some companies use such cookies to store the same type of information that is normally found on HTTP cookies.

Flash cookies historically persist longer than HTTP cookies because users who delete HTTP cookies don't necessarily also delete Flash cookies. But Adobe recently said its upcoming Flash Player 10.3 will make it easier for people to delete Flash cookies.

Specific Media has denied using Flash cookies at all.

A report about Flash cookies published in 2009 by researchers at the University of California, Berkeley and other schools outlined how Flash can be used to circumvent consumers' settings. After the report was published, some Federal Trade Commission officials said they were concerned about the use of Flash for tracking purposes.

That report also led to several lawsuits, including the one against Specific Media. Last year, Web measurement company Quantcast and widget maker Clearspring agreed to pay $2.4 million to settle two class-actions alleging that they violated people's online privacy by using Flash cookies for tracking.