In its Friday ruling in the court case involving Facebook and a German privacy watchdog, Administrative Court for Schleswig-Holstein sided with Facebook; arguing that the social network cannot be forced to allow the use of fake names by its users.

With the court favoring Facebook over an order requiring the social network to allow the use of pseudonyms by German users, Schleswig-Holstein state's data protection body said that it intends appealing the court's decision. The privacy watchdog has been challenging the Facebook policy which requires users to register with their real names.

While the data protection body has been arguing that Facebook's ban on the use of pseudonyms by the users marks a violation of German privacy laws as well as European rules designed to protect free speech online, Facebook has put forth the argument that its `real name' policy is essentially aimed at offering increased protection to the users.

The court sided with Facebook on the issue, arguing that German privacy laws were not applicable in this case because the European headquarters of the social network are located in Ireland, which has less far-reaching regulations.

Terming the court's ruling as "a step into the right direction," a Facebook spokesman said in a statement: "We hope that our critics will understand that it is the role of individual services to determine their own policies about anonymity within the governing law - for Facebook Ireland European data protection and Irish law."