Facebook has decided to settle a lawsuit over its Sponsored Stories feature by agreeing to pay $10 million to charity.

Initially launched in 2011, the Sponsored Stories ad allows publishers to profit off of people's updates by selling them as ads.

This is done, for example, when someone 'like's a company's page and the company publishes the person's 'like' on their friends' timeline. The purpose of this is for companies to use your 'like' as a way to refer friends to also use the company or its products.

The lawsuit stemmed from California's Civil Code, which states that it is unlawful to use "another's name, voice, signature, photograph, or likeness for advertising, selling, or soliciting purposes."

In May, five California residents went against the idea of companies using their profiles for advertisement purposes.

Facebook refuted by saying that site users have agreed to have their pictures and profiles used in ads once they sign up to become Facebook users.

Facebook founder Mark Zuckerberg stated in the case that these kinds of friend referels are the "Holy Grail" of advertising.

The judge for the case responded by saying that California has set forth the right for people to protect their names and photos.

"California has long recognised a right to protect one's name and likeness against appropriation by others for their advantage," Judge Lucy Koh wrote, reported Reuters.

Facebook has agreed to settle on the lawsuit and will give the funds to charity.