Netflix is in a spot of trouble. The movie rental company has been sued by a woman who claims that it ostensibly revealed her sexual orientation. Against her wishes, obviously. Such an act amounted to an invasion of privacy, the suit argues.

So here’s what’s up. Netflix ran a contest that encouraged users to come up with a better movie recommendation algorithm. As such it provided a bunch of data (movie reviews) to a bunch of people. The thing is, the data was fairly revealing: if you write a glowing review of, I don’t know, Milk, someone would be able to comb the Internet for other similar reviews. Then said investigator finds the very same review on IMDB, puts two and two together, and identifies you.

(This sorta reminds me of a story my old professor told me. Some guy at an Apple Store sent him a nasty e-mail because of a critical article he wrote about article. He took the e-mail address, found a message board name, found a Facebook account, found a place of work, then called the Apple Store to tell his manager, “Hey, your guy is writing some interesting e-mails to me. Please ask him to stop. kthxbye.)

The lawsuit is looking for Netflix to cough up $2,500 for each of its 2 million customers. That’s quite a bit of money, yes.

Movie records are considered private information, something that dates back to the Robert Bork Supreme Court nomination hearings in 1987. (That’s where the term “borking” comes from.)

You should know that the lawyer behind the suit sued Facebook and reached a multi-million dollar settlement with the site just recently.