A federal appeals court has said a lawsuit accusing Google of illegal wiretapping can go ahead.
The court said Google wrongly collected people's personal correspondence and online activities from unsecured wi-fi systems as it collected photos for its popular Street View mapping programme.
"The payload data transmitted over unencrypted wi-fi networks that was captured by Google included emails, usernames, passwords, images and documents," the 9th US Circuit Court of Appeals in San Francisco said.
Google apologised after it emerged in 2010 that it had inadvertently collected the data while driving its Street View vehicles through neighbourhoods in 30 countries from 2008 to 2010.
Lawsuits launched soon thereafter were condensed into one case heard by the San Francisco court.
Google had tried to have the lawsuit dismissed.
It argued that its activities were exempt from the wiretap law because data transmitted over a wi-fi network is a "radio communication" and is "readily accessible to the public".
Street View cars with cameras on their roofs can be seen around the worldBut the San Francisco federal appeals court rejected the internet giant's appeal.
"Even if it is commonplace for members of the general public to connect to a neighbour's unencrypted wi-fi network, members of the general public do not typically mistakenly intercept, store, and decode data transmitted by other devices on the network," it said.
The ruling that the practice violates wiretap laws marks a setback for Google.
It also sends a warning to other companies seeking to suck up vast amounts of data from unencrypted wi-fi signals.
"It's a landmark decision that affirms the privacy of electronic communications for wireless networks," said Marc Rotenberg, executive director of the Electronic Privacy Information Center in Washington, DC.
"Many internet users depend on wireless networks to connect devices in their homes, such as printers and laptops, and companies should not be snooping on their communications or collecting private data."
A Google spokeswoman said: "We are disappointed in the 9th Circuit's decision and are considering our next steps."
Attorney Elizabeth Cabraser, representing a class action of plaintiffs who say their privacy was invaded by Google, said they look forward to resuming their case now the federal appeals court has ruled in their favour.
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