Court Dismisses Some of Remaining Claims in Microsoft Facial Recognition Suit

On Wednesday, Judge James L. Robart of the Western District of Washington issued an order granting in part and denying in part the remainder of Microsoft Corporation’s motion to dismiss a suit alleging that Microsoft used the plaintiffs’ photographs in an image dataset it obtained to improve its facial recognition technology.

The first order, issued last month and pertaining to some of the points on the motion to dismiss, also resulted in a partial grant. According to the new order, there are two remaining portions of Microsoft’s motion to dismiss. In March, the court found that additional briefing would be beneficial because “neither party meaningfully analyzed critical legal questions behind both claims in their original briefing. Accordingly, both parties “filed supplemental briefs to address (1) the interpretation of ‘otherwise profit from’ in § 15(c) of Illinois’s Biometric Information Privacy Act 740 ILCS 14/1, et seq. (‘BIPA’); and (2) whether Washington or Illinois law should govern Plaintiffs’ unjust enrichment claim.”

Considering the claim regarding BIPA § 15(c), which states that “(n)o private entity in possession of a biometric identifier or biometric information may sell, lease, trade, or otherwise profit from a person’s or a customer’s biometric identifier or biometric information.” However, the court noted, Microsoft and the plaintiffs, who are Illinois residents, “disagree on how broadly to read ‘otherwise profit from.’” Specifically, Microsoft contended that “ ‘otherwise profit’ requires ‘an entity receiving a pecuniary benefit in exchange for a person’s biometric data.’ ” Meanwhile, the plaintiffs asserted that “ ‘otherwise profit’ means any use of biometric data that generates profits.” The court stated that it finds the correct interpretation to be somewhere between the two positions.

Specifically, the court claimed “§ 15(c) regulates transactions with two components: (1) access to biometric data is shared or given to another; and (2) in return for that access, the entity receives something of value. … Not all the enumerated examples involve monetary benefits. For instance, one could trade for something of value that is not money. Thus, it does not follow that ‘otherwise profit’ must also be limited to a pecuniary benefit.” Therefore, the court concluded that Section 15 (c) “prohibits the commercial dissemination of biometric data for some sort of gain, whether pecuniary or not.”

However, the court found that the plaintiffs did not allege that Microsoft “otherwise profited” from their biometric data as the term is used in Section 15(c) of BIPA because allegations that Microsoft used “biometric data to ‘improve its facial recognition products and technologies’ ” to “support the inference that Microsoft may have received some benefit,” but their claims “do not establish that Microsoft disseminated or shared access to biometric data through its products.” As a result, the court dismissed this claim without prejudice and with leave to amend.

As for the unjust enrichment claim, the court reiterated that Microsoft’s argument that this claim was inadequately pleaded under Washington law, but the plaintiffs claimed that it was adequately pleaded under Illinois law. The court found that “an actual conflict between Washington and Illinois law exists over whether Plaintiffs must plead that they suffered an economic expense distinct from privacy harm”; therefore, because an actual conflict exists, the court must “determine which state has the ‘most significant relationship’ to the instant claim.” 

The court found that Restatement § 221, which states that it “applies to claims, which are based neither on contract nor on tort, to recover for unjust enrichment,” should apply in this instance. The court stated that three out of the five contact factors are neutral, and the remaining two favor the application of Illinois law. Therefore, Illinois has the most significant relationship. Thus, the court denied Microsoft’s motion as it relates to this claim.

The plaintiffs are represented by Loevy & Loevy and Carlson Lynch. Microsoft is represented by Morgan, Lewis & Bockius LLP and Davis Wright Tremaine LLP.