A Hidden (and Legal) Method for Tech Companies to Fund Their Friends’ Shadow Campaigns Against Strong IP Protections

Until recently, I did not really pay attention to class action lawsuits or settlement requirements. After all, I’m an intellectual property and technology lawyer. Class action litigation isn’t my thing. 

Now I am really paying attention, and I’m following the money—closely. Here’s why… 

The U.S. Supreme Court recently agreed to investigate a class action settlement in a case filed by search engine users who accused Google of illegally sharing their search histories with advertisers. One of the big problems highlighted in this appeal is the fact that as part of the lawsuit settlement terms, Google agreed to pay millions to third-party privacy focused nonprofits that support its causes in other spheres and will give nothing to the estimated 130 million people who used the search engine between 2006 and 2014 and had their privacy compromised. The Justices will now evaluate this practice–the cy pres remedy–which distributes awards in class actions to parties not affiliated with the litigation in cases when sending the remaining funds to individual plaintiffs would be “unreasonable.” Law360 has listed this case as one of five important cybersecurity and privacy cases to watch in the coming months. 

How Certain Class Action Settlements Benefit Tech Company Defendants (and Hurt the Class) 

In the Frank v. Gaos case, Google and class counsel have argued that their deal, which awards roughly $5.3 million to six internet privacy interested nonprofits and $2.125 million in attorneys’ fees (25% of the settlement fund) to class counsel, is a fair resolution of the privacy class action case. Ahhem, I disagree. This settlement award to third parties includes awards to three organizations that are affiliated with class counsel’s alma maters (seriously) and several other organizations that receive corporate donations from the big tech companies, like Harvard’s Berkman Center for Internet and Society. One notorious Google BFF, the EFF (Electronic Frontier Foundation), has supported a long line of copyright cases that attack copyright protections and copyright holders who are attempting to protect their rights (and receive fair compensation for use of their IP). The EFF received over a million dollars from other Google class action settlements, but evidently it did not make the final list for this settlement payout.  

Like me, you’re probably one of the class members who “enjoyed” having their search histories shared with third parties without their knowledge or consent. Sorry, Charlie, no moolah for you.  

Artists Speak Out on the Harm from Cy Pres Recipients Proxy Wars Against Strong IP Protections 

I had the pleasure and privilege of representing David Lowery, Raymond J. Pepperell, Blake Morgan, and Guy Forsyth in preparing their “friend of the court” brief filed with the Supreme Court (after it agreed to review the Google class action settlement). They are professional recording and performing artists, label owners, and leaders of organizations who support strong and fair protection of intellectual property and privacy rights as well as fair compensation for violation of those rights. 

We filed this brief to alert the Court to the fact that cy pres awards to organizations that are friendly to the class action defendant’s causes harm rather than benefit members of a class. For example, in this settlement and others involving Google and Facebook, the defendant and class counsel have agreed to direct cy pres awards to organizations that lobby with Google against the copyright interests of class members who are in the artist community.  

Google’s shadow campaign efforts at influencing public opinion in its favor on certain causes became such an issue in a recent copyright and patent litigation against Oracle that Judge Alsup required Google to disclose its financial support for certain nonprofit organizations such as the Berkman Center for the Internet & Society, the EFF, Public Knowledge, and others. You should read about Google’s response to this order if you want a better understanding how deep the roots of the tree grow. But this is not just a problem with Google class action settlements, it’s also happened with settlements involving other tech giants, including Facebook and Amazon. 

So, this is why I now care about class action lawsuits. It’s because I also support protection of intellectual property and our ability to understand the motives of seemingly independent organizations that are vocal about their own “views” on this topic. 

The case is Frank et al. v. Gaos et al., case number 17-961, in the Supreme Court of the United States. Stay tuned, when the Court Justices return from summer break it will put this case on the argument calendar. 

Are you interested in reading our friend of the court brief and learn more about what’s happening behind the scenes? You can find it here. 

Photo credit Zenza Flarini via Creative Commons license.

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