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A federal judge has given the green light to a lawsuit brought against video giant Blockbuster over its use of Facebook's privacy-destroying "Beacon" ad system.

A year ago, a Texas woman named Cathryn Elaine Harris sued Blockbuster after it used Beacon to share her movie rentals with her so-called Facebook friends. The suit seeks class-action status, and as MediaPost reports, US District Court Judge Barbara Lynn ruled that the case can go to court - even though Blockbuster's online terms and conditions insist that disputes can't be brought to court and that users must waive their right to class-action suits.

According to Judge Lynn, Blockbuster's online terms and conditions are "illusory" and "unenforceable" because the company reserves the right to change them at any time.

"There is nothing in the Terms and Conditions that prevents Blockbuster from unilaterally changing any part of the contract other than providing that such changes will not take effect until posted on the website," Lynn's ruling reads. "The Blockbuster contract only states that modifications 'will be effective immediately upon posting,' and the natural reading of that clause does not limit application of the modifications to earlier disputes."

Lynn's ruling applies "even when no retroactive modification has been attempted."

The immediate result is that Blockbuster may have to face a mass legal attack from all customers burned by the Beacon - rather than fending them off one by one. But the ruling may have broader implications for the net as a whole. Blockbuster is hardly alone in attempting to unilaterally modify its terms and conditions whenever it feels like it. Lynn's ruling would invalidate online contracts left, right, and center.

With her suit, Cathryn Elaine Harris claims that Blockbuster's Beacon use violated the Video Privacy Protection Act (VPPA), a law laid down in 1988 after a journalist revealed videotapes rented by Supreme Court nominee Robert Bork.

When it was launched in early November of 2007, Beacon automatically tracked the e-commerce habits of Facebookers and shared them with their online buddies. At first, the system was opt-out only - and the opt-out was less than obvious. But after howls of protests from privacy watchdogs everywhere, Mark Zuckerberg and company switched to opt-in model. But that was on an advertiser-by-advertiser basis, and after more howls, Zuckerberg provided a master off-switch for the ill-advised ad system. ®

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