Facebook to settle 'sponsored story' lawsuit

Launched in early 2011, the service let brands pay to retransmit users' activities to their friends' pages. For example, if someone clicks the "like" button for a brand, this activity might show up as a "sponsored story" on their friends' pages.

Lawyers for Facebook and the plaintiffs said in a San Jose, Calif. court filing Monday that they have reached a "settlement in principle."

The lawsuit was filed by Facebook users Angel Fraley, Paul Wang and others last year. It claimed Facebook used their images and likeness for commercial activity. In its motion to ask for a dismissal, Facebook said the plaintiffs didn't show they were hurt by the practice.

Facebook declined to comment.