An AI startup that doesn't have enough money to settle a privacy lawsuit is giving plaintiffs part of the company's value.

WhatsApp Group Join Now
Telegram Group Join Now
Instagram Group Join Now

Facial recognition startup Clearview AI on Friday reached a settlement in an Illinois lawsuit alleging that its massive photographic collection of faces violated subjects' privacy rights, an agreement That could be worth more than $50 million, according to attorneys.

But the unique agreement gives plaintiffs in federal suits a share of the company's potential value, rather than a traditional payout. An estimated $20 million in attorney's fees will also come out of the settlement.

Judge Sharon Johnson Coleman of the Northern District of Illinois gave preliminary approval to the deal on Friday.

The case brought together lawsuits from across the United States filed against Clearview, which pulled images from social media and elsewhere on the Internet to create a database that it sold to businesses, individuals and government agencies.

The company settled a separate lawsuit in Illinois in 2022 alleging violations of privacy rights, agreeing to stop selling access to its database to private businesses or individuals. The agreement still allowed Clearview to work with federal agencies and local law enforcement outside of Illinois, which has a strict digital privacy law.

Clearview does not acknowledge any liability as part of the latest settlement agreement.

“Clearview AI is pleased to reach an agreement in this class action settlement,” James Thompson, an attorney representing the company in the lawsuit, said in a written statement Friday.

Jon Lowy, an attorney for the lead plaintiff, said the deal was a “creative solution” that Clearview's financial position necessitated.

“Clearview didn't have anywhere near the cash to adequately compensate the class, so we needed to find a creative solution,” Lowy said in a statement. “Under the settlement, victims whose privacy was breached can now participate in any reversal that ultimately arises, thereby regaining some degree of ownership of their biometrics. “

It is unclear how many people will be eligible to join the settlement. The language of the agreement is clear, including those whose images or data are in the company's database and who reside in the US as of July 1, 2017.

A national campaign to inform potential plaintiffs is part of the agreement.

Clearview attorneys and the plaintiffs worked with Wayne Anderson, a retired federal judge who now arbitrates legal cases, to develop the settlement. In court filings outlining the deal, Anderson bluntly writes that the startup could not pay any legal judgment if the lawsuit went forward.

“Clearview did not have the funds to pay the multimillion-dollar judgment,” the filing quoted him as saying. could make it to the end of the trial, much less fund the verdict.”

But some privacy advocates and those pursuing other legal actions called the deal a disappointment that would not change the company's operations.

Sejal Zota is an attorney and legal director of JustFuture Law, an organization representing plaintiffs in the California lawsuit against the company. Zota said the deal “legitimizes” Clearview.

“It doesn't address the root of the problem,” Zota said. “Clearview has to continue harvesting people's faces and selling them without their consent and using them to train their AI tech.” “

Subscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free before launch on June 24, 2024.
WhatsApp Group Join Now
Telegram Group Join Now
Instagram Group Join Now

Leave a Comment