• by Wendy Davis  @wendyndavis, June 30, 2011

Handing Facebook a partial victory, a judge has dismissed a lawsuit alleging that the company's Friend Finder feature misappropriated users' names.

U.S. District Court Judge Richard Seeborg accepted Facebook's argument that the users who sued did not sufficiently allege that they had been injured by the feature, which suggests friends for people based on their email contacts. But Seeborg also ruled that the users could refile their case if they could plausibly assert that Facebook harmed them, even if only by causing "mental anguish."

The ruling stemmed from a lawsuit filed against Facebook in November, alleging that Friend Finder violates a California law prohibiting companies from using names or photos in ads without people's consent.

Facebook's Friend Finder feature searches people's email contacts to determine which ones are on Facebook and then suggests them as friends. The users did not take issue with the feature itself, but with how Facebook advertises it. To promote the tool, Facebook displays members' names and photos in ads to their friends. The accompanying text says that the members shown found other friends by using the feature, and suggests that people "give it a try."

Facebook argued that the case should be dismissed for two reasons. First, the users had not alleged any injury. Second, Facebook argued, its privacy policy provides that users' names and photos are "public" information.

Seeborg agreed with Facebook on its first argument but not the second, ruling that users cannot sue for violations of California's misappropriation law without some show of harm. "Plaintiffs must, at a minimum, plead that they suffered mental anguish as a result of the alleged misappropriation, and a plausible supporting factual basis for any such assertion," he wrote.

But he specifically rejected Facebook's stance that its privacy policy allowed it to use members' names and photos. Seeborg ruled that even if Facebook's terms of service allow it to disclose members' names and photos, the company can't necessarily use that information however it wants.

To illustrate his point, he proposed a scenario where Facebook posted users' names and pictures throughout the site over the caption "The FBI's Most Wanted." "Presumably," Seeborg wrote, "Facebook would not argue that its supposed license to use profile pictures 'in any manner' would insulate it from defamation claims."

Seeborg gave the users until mid-July to refile their lawsuit.