An in-the-closet lesbian mother is suing Netflix for privacy invasion, alleging the movie rental company made it possible for her to be outed when it disclosed insufficiently anonymous information about nearly half-a-million customers as part of its $1 million contest to improve its recommendation system.

The suit known as Doe v. Netflix (.pdf) was filed in federal court in California on Thursday, alleging that Netflix violated fair-trade laws and a federal privacy law protecting video rental records, when it launched its popular contest in September 2006.

The suit seeks more than $2,500 in damages for each of more than 2 million Netflix customers.

In order to get a better movie recommendation algorithm, the online DVD rental company gave more than 50,000 Netflix Prize contestants two massive datasets. The first included 100 million movie ratings, along with the date of the rating, a unique ID number for the subscriber, and the movie info. Based on this data from 480,000 customers, contestants had to come up with a recommendation algorithm that could predict 10 percent better than Netflix how those same subscribers rated other movies.

But video records count among the most privacy protected records in the U.S. — a reaction to a reporter getting Supreme Court–nominee Robert Bork’s records from a video store. The lead attorney on the new suit, Joseph Malley, recently reached a multimillion-dollar settlement with Facebook over its failed Beacon program, which drew fire in part for sharing users’ Blockbuster rentals with their friends.

Thursday’s suit argues that the information is personal data protected by Netflix’s privacy policy, and that NetFlix should have known that people would be able to identify users based on that data alone. In fact, just two months before NetFlix launched the contest, AOL released “anonymized” search-engine logs, which reporters quickly used to track down real people.

via Threat Level | Wired.com.

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