...most streets in it are privately owned, they threatened Google with trespassing citations if the pics werent removed.

Im surprised they would attempt to use a trespassing citation for this, since it seems a little bit odd to have open streets for people to drive along, ungated, even with the No Trespassing signs. I would think a more viable claim would be copyright infringement since the town might claim that buildings or streets were marked as private, or if they charge some sort of entry fee for vehicles passing through. A similar claim is apparently possible if one takes photos of buildings/places for which admission fees are charged to see/enter " reselling such photos or making money off of them in some way is apparently actionable under copyright law.

Privacy groups have complained about Google Street View since it was introduced, and Google recently responded by initiating the use of software which blurs individuals faces in the streetview pics.

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