# In re Clearview AI: An Equity Stake to Settle Faceprint Scraping

> A federal court approved a novel settlement giving the class a 23% equity stake in Clearview AI over its scraping of billions of face images. The Seventh Circuit vacated it in July 2026.

Topic: Right of Publicity  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/in-re-clearview-ai-faceprint-scraping-settlement/


In *In re Clearview AI, Inc., Consumer Privacy Litigation*, No. 1:21-cv-00135 (N.D. Ill.), Judge Sharon Johnson Coleman granted final approval on March 20, 2025 to one of the most unusual class-action settlements in recent memory: rather than a cash fund, the class receives an approximately 23 percent equity stake in Clearview AI, valued at roughly 51.75 million dollars. The litigation consolidated claims that Clearview scraped tens of billions of facial images from the public internet, without consent, to build a facial-recognition database and search tool marketed heavily to law enforcement. The plaintiffs asserted violations of the Illinois Biometric Information Privacy Act together with name-and-likeness misappropriation and privacy laws of other states, including Virginia, California, and New York.

The settlement is the marquee resolution to date of mass biometric scraping for artificial intelligence. It shows right-of-publicity and misappropriation statutes deployed alongside biometric-privacy law against the ingestion of identity at scale, and it pioneers an equity-based remedy for a defendant that could not fund a conventional cash payout. That approval did not survive review. On July 13, 2026 the Seventh Circuit vacated it and sent the case back to the district court.

## At a glance

- **Case:** *In re Clearview AI, Inc., Consumer Privacy Litigation*, No. 1:21-cv-00135 (N.D. Ill.), MDL No. 2967.
- **Decided:** Final settlement approval March 20, 2025 by Judge Sharon Johnson Coleman.
- **Holding:** The court approved a settlement granting the class an approximately 23 percent equity stake (about 51.75 million dollars) in Clearview to resolve BIPA and state misappropriation and privacy claims arising from face-image scraping.
- **Status:** Vacated and remanded by the Seventh Circuit on July 13, 2026 (No. 25-1673) for lack of separate representation of the nationwide class. The equity structure itself was not condemned.

## The doctrinal frame: biometric privacy meets misappropriation

The litigation braided together two families of law. The first is biometric privacy, principally the Illinois Biometric Information Privacy Act, which requires informed consent before a private entity collects a person's biometric identifiers, including face geometry, and provides a private right of action with statutory damages. BIPA has become the most potent statute in the country for challenging the collection of biometric data, and it supplied the core of the plaintiffs' claims.

The second family is the right of publicity and its cousin, the tort and statutory prohibition on the misappropriation of a person's name or likeness. The consolidated complaint invoked the laws of several states beyond Illinois. It relied on Virginia's statute barring unauthorized use of a person's name or image, on California's Unfair Competition Law and its commercial-misappropriation statute in the mold of Civil Code section 3344, and on New York's privacy and misappropriation provisions under Civil Rights Law sections 50 and 51. Together, these theories framed the wholesale copying of faceprints not only as a biometric-privacy violation but as an unauthorized commercial exploitation of identity.

## The facts and the scraping model

Clearview built its product by scraping facial images from publicly accessible websites and social-media platforms. The scale grew over the life of the dispute. The early pleadings described a database of more than three billion photographs, the figure first reported in January 2020, while Clearview has since claimed a collection exceeding 60 billion images. From those images Clearview generated biometric faceprints and assembled a searchable database, allowing a user to upload a photo and retrieve matching images and associated links. The company marketed the tool substantially to police and government agencies. None of the individuals whose faces were ingested had consented, and many were residents of states with biometric or misappropriation statutes.

Litigation over these practices proliferated across the country and was consolidated as a multidistrict proceeding in the Northern District of Illinois before Judge Coleman. The parties eventually reached a settlement, but Clearview's financial condition complicated any conventional payout.

## The holding: a novel equity remedy approved

Because Clearview lacked the resources to fund a large cash settlement, class counsel negotiated an equity-based structure. Under the approved deal, the class would receive a payment equivalent to a roughly 23 percent stake in Clearview AI, measured as of September 6, 2023, on an initial public offering or a merger, consolidation, or sale of the company. Judge Coleman estimated that stake at about 51.75 million dollars, working from a January 2024 valuation of Clearview at roughly 225 million dollars. Rather than paying cash now, the settlement let the class capture value from the company's future. In place of waiting for a liquidity event, a court-appointed settlement master could instead sell the settlement stake to a third party for a commercially reasonable price, or make a cash demand equal to 17 percent of Clearview's revenue from final approval through the date of the demand. Recovery was not distributed evenly: Illinois subclass members were allotted 10 shares each, California, New York, and Virginia subclass members 5 each, and members of the nationwide class 1 each.

Judge Coleman granted final approval on March 20, 2025, overruling objections. Class counsel and commentators have described the arrangement as the first class settlement in which members receive an ownership interest in the defendant rather than a share of a cash fund. The structure reflects a pragmatic judgment that an insolvent or cash-poor defendant may still hold substantial contingent value, and that tying the class's recovery to that value can exceed what a bankruptcy or a nominal cash settlement would yield.

## The appeal: vacated on Rule 23 grounds

The approval did not end the matter. Objectors Robert Weissman and Rick Claypool, members of the nationwide class represented by Public Citizen, appealed to the United States Court of Appeals for the Seventh Circuit, docketed as No. 25-1673. A coalition of more than twenty state attorneys general and the District of Columbia filed as amici supporting the objectors. The objectors argued that the settlement provides no injunctive relief, that an equity stake contingent on Clearview's future is too uncertain to count as real relief, and that the nationwide class had no separate representation of its own during the settlement negotiations.

On July 13, 2026 the Seventh Circuit vacated the approval and remanded. Notably, the panel rejected the first two arguments. A fair settlement does not necessarily require injunctive relief, and the uncertainty built into an equity structure is not by itself disqualifying, because uncertainty is inherent in that kind of deal. The defect was structural. The subclasses were paid on very different terms, yet no class representative stood solely for the nationwide class when the settlement allocated benefits among those groups. All eight original class representatives had refused the deal and were replaced by four representatives drawn from favored state subclasses, and the court directed the district court on remand to consider that substitution and the reasons for it in assessing adequacy.

The ruling leaves a broader question open rather than answering it: whether a monetary or equity recovery, without a mandate to stop or reverse the underlying data collection, adequately vindicates statutory rights designed to protect biometric identity. The Seventh Circuit's answer was narrower, holding that the absence of injunctive relief is not automatically fatal.

## Open questions

- **Can the deal be repaired on remand?** The Seventh Circuit did not condemn the equity structure, so the parties may try again with separate representation for the nationwide class. Whether a renegotiated allocation can win approval will influence whether similar deals become a template for cash-poor AI defendants.
- **Does money without deletion suffice?** The objectors' core argument is that failing to require deletion of scraped faceprints leaves the harm in place. The Seventh Circuit held only that injunctive relief is not always required for a settlement to be fair, and courts have not settled whether monetary relief alone can resolve ongoing biometric collection.
- **How do out-of-state misappropriation claims fit?** The settlement resolved claims under several states' publicity and misappropriation laws, but the decision did not adjudicate their merits, leaving the reach of those statutes against scraping untested.
- **What valuation governs an illiquid stake?** Pegging class recovery to a private company's contingent future value raises unresolved questions about how to value and distribute such relief fairly.

## Implications for brands and businesses

- **Scraping identity carries layered exposure.** Collecting faces or other identifiers can trigger biometric-privacy statutes and multiple states' misappropriation and publicity laws at once. Compliance analysis must span all of them.
- **Consent is the pivot.** BIPA and analogous laws turn on informed consent before collection. Businesses building datasets from public images cannot assume that public availability equals permission.
- **Insolvency does not guarantee escape.** The equity settlement shows that a defendant's weak balance sheet may not end exposure, because plaintiffs can reach contingent future value through creative structures.
- **Do not treat the model as settled.** The Seventh Circuit vacated the approval on July 13, 2026 and returned the case to the district court, so the equity-settlement template remains unproven as of July 2026. The reason for vacatur is itself a lesson: when a class is carved into groups paid on different terms, each group needs its own representative.

## Frequently asked questions

**What did Clearview AI do that led to the litigation?**
Clearview AI scraped tens of billions of facial images from public websites and social media without consent and used them to build a facial-recognition database and search tool sold largely to law enforcement. Plaintiffs alleged this violated the Illinois Biometric Information Privacy Act and the name-and-likeness misappropriation and privacy laws of states including Virginia, California, and New York. The cases were consolidated as a multidistrict litigation in the Northern District of Illinois.

**Why was the settlement structured as equity instead of cash?**
Clearview lacked the funds to pay a large cash settlement, so class counsel negotiated an unusual deal giving the class an approximately 23 percent equity stake in the company, valued at about 51.75 million dollars. The class would realize value through an eventual IPO or sale, a percentage of future revenue, or a sale of the settlement stake. It is regarded as the first class action in which members receive an ownership interest in the defendant rather than a cash fund.

**Is the Clearview settlement final?**
No. Judge Sharon Johnson Coleman granted final approval on March 20, 2025, but objectors Robert Weissman and Rick Claypool, represented by Public Citizen, appealed to the Seventh Circuit, docketed as No. 25-1673. On July 13, 2026 the Seventh Circuit vacated the approval and remanded. The panel rejected the objectors' substantive challenges, holding that a fair settlement need not include injunctive relief and that the uncertainty in an equity structure was not disqualifying, but it found a structural Rule 23 defect: no representative of the nationwide class alone took part in allocating the settlement, so that class was not adequately represented.

## Authorities and sources

- Troutman Pepper, Regulatory Oversight, analysis of the 51.75 million dollar Clearview settlement: https://www.regulatoryoversight.com/2025/04/51-75m-settlement-in-clearview-ai-biometric-privacy-litigation-illustrates-creative-resolution-for-startups-facing-parallel-litigation-and-enforcement-action/
- Bloomberg Law, "Clearview AI Gets Settlement Approved in Face-Scan Privacy Case": https://news.bloomberglaw.com/litigation/clearview-ai-gets-settlement-approved-in-face-scan-privacy-case
- Loevy & Loevy (class counsel), approval of the Clearview settlement: https://www.loevy.com/big-wins/judge-oks-loevys-innovative-51-75-million-settlement-in-clearview-ai-class-action-lawsuit/
- National Law Review, "A First in BIPA Litigation: Class Members Receive Equity in Clearview AI": https://natlawreview.com/article/first-bipa-litigation-class-members-receive-equity-clearview-ai
- Appellants' brief, Seventh Circuit No. 25-1673 (Public Citizen): https://www.citizen.org/wp-content/uploads/Doc.-28-Appellants-Brief-as-filed.pdf
- Illinois Biometric Information Privacy Act, 740 ILCS 14: https://www.ilga.gov/Legislation/ILCS/Articles?ActID=3004&ChapterID=57
- Public Citizen, case page for *In re Clearview AI Consumer Privacy Litigation* (reporting the July 2026 vacatur): https://www.citizen.org/litigation/in-re-clearview-ai-consumer-privacy-litigation/
- Duane Morris Class Action Defense, analysis of the Seventh Circuit's July 13, 2026 decision vacating the settlement: https://blogs.duanemorris.com/classactiondefense/2026/07/14/seventh-circuit-undoes-novel-privacy-class-settlement-due-to-lack-of-separate-representatives-for-nationwide-class-and-state-sub-classes/