Canada's top court cleared the way on Friday for a lawsuit against Facebook Inc over privacy rights to be heard in the province of British Columbia instead of California where the social media site is based.
British Columbia resident Deborah Douez brought a notice of claim against Facebook in 2012, saying that her name and image were used without consent for the social media platform's "sponsored stories" product.
Douez said her privacy rights under provincial law were violated, a growing concern among social media users in recent years who fear their personal information or photos will be used without their knowledge.
The ads, which the company has since dropped, used Facebook members' names and pictures to advertise companies and products to other members.
Menlo Park, California-based Facebook had sought to suspend Douez's lawsuit, saying that its terms of use require disputes to be resolved in the U.S. state.
In a 4-3 decision, Canada's Supreme Court ruled that the clause is unenforceable.
The justices wrote that there was evidence of "gross inequality of bargaining power" between individual consumers and the company, given users have little choice but to accept Facebook's terms of use.
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Canadian courts also have a greater interest in deciding cases that impinge on citizens' rights "because these rights play an essential role in a free and democratic society and embody key Canadian values," the court said.
A spokesman for Facebook said the company continues to believe the underlying claims are without merit, and it will defend itself "vigorously".
British Columbia's top court is better placed to rule on the province's laws than a California court would be, the court said. Justices said their decision was also supported by the expense and inconvenience of having Canadians travel to California to sue Facebook being greater than any inconvenience the company would face in making its records available in British Columbia.
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A lower court had allowed Douez's case to be considered as a group lawsuit, but the high court did not address the issue of class action status.
Facebook reached a $20 million settlement in the United States in a class action lawsuit over the use of Sponsored Stories. The settlement was given court approval in 2013.
Facebook's shares were up 0.4 percent at $154.09 in mid-day trade.
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