Yahoo sued over business partner's claim to user data
Universal Image is suing for as much as $4 billion, claiming the portal violated an agreement to provide information about users of Broadcast.com's programming.
Closely held Universal Image, which does business as chalkboardtalk.com, makes educational videos. Broadcast.com, which was acquired by Yahoo this year, used Universal's video on its Web site in return for providing information about its registered users, such as name, age, occupation or other personal data, the suit alleges.
In July, Santa Clara, Calif.-based Yahoo completed its $4.8 billion acquisition of Dallas-based Broadcast.com, which delivers multimedia Webcasts of sports, business conferences and music. Broadcast.com stopped sharing information about its registered users after Yahoo's acquisition, the lawsuit alleges.
"The contract requires Yahoo/Broadcast to share the data with chalkboard," said Larry Friedman, a lawyer who represents Universal. "The [Yahoo] privacy policy violates the contract with chalkboard."
Yahoo declined to comment on the lawsuit.
The suit was originally filed in June. Universal amended the complaint yesterday to seek $1 billion in damages and as much as $3 billion in punitive damages.
Universal has received information about more than 750,000 users from Broadcast.com, Friedman said.
"Universal wants to be compensated," Friedman said. When asked what the company planned to do with the user information, he said, "They can direct-market to them, they can sell the names to advertisers. It's gold, it's currency."
Privacy has become more and more of an issue for consumers who worry about how personal information is used by companies on the Internet. Many companies such Yahoo, Excite@Home and Lycos require users to register some basic information such as name, age and occupation to receive free email, post messages in chat rooms or conduct transactions.
More and more individuals and consumer-advocacy groups have rallied for public disclosure about how companies use the information. Yahoo has a policy posted on its Web sites, stating that it generally doesn't share personal information with its partners unless it has the user's permission.
Friedman is a well-known Dallas litigator. Last year, he won a $108.8 million judgment in a legal malpractice case, one of the state's 10 biggest verdicts of 1998, according to the Texas Lawyer newspaper. Friedman sued Dallas attorney Robert Goldstein, claiming Goldstein botched the divorce case of Lynne Ginsburg, ex-wife of former Chancellor Media president Scott Ginsburg.
As in the Yahoo lawsuit, he filed the case in a Dallas County court-at-law, typically used for probate and family-law cases, so it could be heard more quickly.
Yahoo fell 16.69 to 402.63.
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