• by Wendy Davis  @wendyndavis, June 5, 2012

In a mixed ruling, a federal judge has narrowed a potential class-action privacy lawsuit alleging that Amazon thwarted users' attempts to block tracking cookies. But U.S. District Court Judge Robert Lasnik in Seattle rejected the online retailer's bid to completely dismiss the case.

The lawsuit stems from allegations that Amazon circumvented privacy filters built into the Internet Explorer browser by giving wrong information to the browser.

The consumers who filed suit alleged that Amazon violated a federal computer fraud law, as well as Washington consumer protection law.

The consumers sued shortly after researchers at Carnegie Mellon published a study concluding that many Web companies thwart users' privacy settings by providing incorrect data to Microsoft's Internet Explorer. That browser has long enabled users to automatically reject tracking cookies, but the feature only works when Web site operators provide accurate data about their privacy policies. The lawsuit alleges that Amazon sent "gibberish" to the browser, rather than using a readable code.

In a ruling issued on Friday, Lasnik dismissed the computer fraud charges on the theory that the consumers didn't allege that Amazon caused them economic injury. The computer fraud allegation at the center of the lawsuit requires damages of at least $5,000.

While the consumer argued that her Web-surfing data was in itself worthwhile, Lasnik ruled that users' "raw information is not valuable."

The judge also rejected arguments that cookies set by Amazon caused users' computers to run slower. "Not one plaintiff alleges that he or she experienced any noticeable difference in his or her computer’s performance traceable to defendant’s actions," he wrote. "This is not surprising. It is a matter of common understanding that cookies are minute in size and thus incapable of noticeably affecting the performance of modern computers."

Lasnik previously dismissed the computer fraud charge for the same reason, but that dismissal was "without prejudice," which left the consumers free to revise their complaint and try again. Friday's dismissal was with prejudice, meaning it is final.

But Lasnik sided against Amazon on one point and ruled that the consumers can proceed -- for now -- with their claim that Amazon violated a Washington state consumer protection law that bans companies from engaging in unfair or deceptive acts.

That victory for consumers might only be temporary. Lasnik said in the 17-page ruling that the consumers will have to convince him that Amazon accessed their computers without authorization in order to continue with that claim. Lasnik indicated that the question will likely turn on whether Amazon's privacy policy adequately notified users that they were being tracked.

While the ruling isn't a complete win for either side, it could pave the way for a settlement, Internet legal expert Venkat Balasubramani tells Online Media Daily. He points out that other Web companies have resolved privacy lawsuits after losing bids to dismiss the cases at an early stage.