As businesses have come to recognize the power of social media, they’re rushing to Facebook, Twitter, LinkedIn, and other social media platforms to connect and do business. The effectiveness of these efforts has prompted businesses to invest more time and money to develop sophisticated social media presences. Recent surveys suggest that this increase will continue. For instance, a Fuqua School of Business survey of CMO’s suggests that the percentage of marketing dedicated to social media will nearly triple over the next five years.
This investment is not without some risk, however, because these social media platforms are controlled by third-party providers that establish their own terms of service and account rights. Whereas a business can have complete control over content on and access to the websites that it owns, things can become a bit dicey in the world of social media, where even large businesses are relegated to being users rather than owners.
A business should be able to maintain substantial control of its Facebook site by limiting access to change its page and through control of information posted by others. But what about Twitter accounts or the even murkier area of LinkedIn profiles that can include contacts which are the heart and soul of a service or sales business? If one of your employees goes south on you or runs off to compete, can he or she claim ownership of the Twitter handle or LinkedIn contact list that he or she used on your behalf to do business for you? Does it matter that you invested time and money developing and marketing that Twitter handle or LinkedIn presence?
These scenarios are now starting to play out and have wound their way to courts, which are finally starting to weigh-in on issues involving ownership of and rights to social media accounts. A review of reported cases indicates that we’re just at the tip of the iceberg. However, two recent decisions indicate that courts are at least willing to consider claims that social media accounts are property that can support claims for misappropriation and conversion. Although these decisions are preliminary and neither court has made a final determination of such claims, businesses investing in social media would be wise to follow this area of the law closely, as court decisions will better enable businesses to assess, and take steps to protect, their investment in social media.
(1) [Whistle!] Come Here, PhoneDog!
Late in 2011, a California federal district court denied a motion to dismiss a claim asserted by a company which alleged that its former employee’s refusal to relinquish his Twitter account constituted misappropriation of a company trade secret and conversion (lawyerspeak for “taking”) a company asset. The case is PhoneDog v. Kravitz, where PhoneDog sued its former employee Kravitz for return of the Twitter account that Kravitz had used to do business for PhoneDog. Here’s a link to the PhoneDog order that’s the subject of this post: Download Phone Dog Order.
PhoneDog is a “news and reviews” site that focuses on mobile products and resources. It uses an array of social media to promote and market its services, including the Twitter handle “@PhoneDog_Noah,” which Kravitz used to publish information on behalf of PhoneDog for about four years. Kravitz apparently had about 17,000 Twitter followers. The trouble started when Kravitz left PhoneDog and refused PhoneDog’s request that he relinquish his Twitter account because PhoneDog claimed the account as its own. Although Kravitz has continued to use his Twitter account, he did change his handle to “@noahkravitz” when PhoneDog asked him to relinquish it.
Kravitz tried to throw an early punch in this fight and moved to dismiss the case on the grounds that his Twitter account was neither capable of being a trade secret, nor capable of being “owned” by an employer. Taking PhoneDog’s allegations as true (which the court must do in response to Kravitz’s motion to dismiss), the court allowed PhoneDog to proceed with its claims that the Kravitz’s Twitter account was capable of being a trade secret that could be misappropriated, and that the account was also capable of being converted.
While this is certainly a judicial nod toward recognizing that an employee’s Twitter account can be property that is capable of misappropriation and conversion, the preliminary nature of this ruling leaves much to be seen. Among other things, it will be interesting to watch and see the effect of Kravitz’s change of his handle to remove PhoneDog’s name, the extent to which PhoneDog may have owned and invested Kravitz’s handle, and arguments that may try to use Twitter’s terms of service to establish rights in and to the account.
(On a side note of interest, the court’s order also generally addressed the value of a Twitter account, because the court had to determine whether PhoneDog’s claims satisfied a jurisdictional requirement that its damages would exceed $75,000 if successful in court. For purposes of this preliminary motion, the court accepted PhoneDog’s claim that a Twitter follower is worth $2.50/month, according to industry standards. Thus, 17,000 followers/month valued at $2.50 each for eight months would result in damages totaling $340,000.)
(2) Fly Like an Eagle
More recently, a Pennsylvania federal district court reached a similar conclusion about rights to a LinkedIn account. The case is Eagle v. Morgan and is pending in a California federal district court. Here’s a link to the Eagle order that’s the subject of this post: Download LinkedIn Order
This case involves Dr. Eagle, a Ph.D. who started a financial education company called Edcomm. Dr. Eagle was apparently successful in her field and had relationships with thousands of clients in the financial services industry. In October 2010, she sold the stock in Edcomm to SISCOM and was to remain on as an employee. Since 2008, Dr. Eagle used a LinkedIn account for her business with Edcomm—so much so that other Edcomm employees had her login/password information and would assist in maintaining her LinkedIn profile.
After a brief honeymoon, relationships soured and it seems that the newly acquired Edcomm decided to involuntarily terminate Dr. Eagle and others who had long been with the company. Because others had Dr. Eagle’s LinkedIn login/password, they were able to hijack her account and change this information so that Dr. Eagle could no longer access the account. The hijackers then changed Dr. Eagle’s LinkedIn profile to an odd mishmash that showed another Edcomm employee’s name and picture, that displayed Dr. Eagle’s biographical information, and that improperly stated that Dr. Eagle had voluntarily resigned from Edcomm.
Because of this, Dr. Eagle sued Edcomm and people there who had hijacked her LinkedIn account. Edcomm, in turn, asserted counterclaims against Dr. Eagle that included a count for misappropriation of her LinkedIn account. In support of this claim, Edcomm alleged an interest in Dr. Eagle’s LinkedIn account and contacts because Edcomm had invested substantial time and money in developing her account and connections. Specifically, Edcomm noted that Edcomm policies adopted by Dr. Eagle required its employees to create an maintain LinkedIn accounts that used an Edcomm email address and other contact information and that utilized a specific template prescribed by Edcomm. Those policies also included monitoring of its employees’ LinkedIn information to ensure that these policies were followed.
Although the court considered whether Edcomm had stated a claim for misappropriation of trade secrets against Dr. Eagle for her use of her LinkedIn account, the court found that she did not because the public nature of her LinkedIn account and connections was too public to qualify as a trade secret. The court also considered whether Edcomm had stated a valid claim for misappropriation of ideas based on Dr. Eagle’s attempted use of her LinkedIn account and contacts. Based in large part on the policies and efforts of Edcomm to control and monitor its employees’ use of LinkedIn, the court held that Edcomm could continue with its claim for misappropriation of ideas.
(3) Lessons Learned
Although it’s not yet clear whether these claims will ultimately be winners, businesses and employees who rely on social media accounts should consider their rights to these accounts. The LinkedIn case especially suggests that businesses that hope to have rights over their employees’ accounts should initiate policies governing use of these accounts. Among other things, this could be part of a social media policy. Rights to social media accounts can be further solidified through the use of employee agreements.
One thing that remains to be seen is the extent to which courts will force employees and others to completely relinquish social media accounts. For instance in the Twitter case referenced above, one would think that Kravitz’s change of his Twitter handle from “@PhoneDog_Noah” to “@noahkravitz” would be a fair balance of addressing PhoneDog’s concerns about misappropriation and Kravitz’s right to continue Tweeting using a handle based on his own name. Similarly, it will be interesting to see how a court would actually strip a former employee such as Dr. Eagle of all right to have a LinkedIn account in her name and eradicate contacts in that account. One wonders whether state laws governing unfair competition (such as covenants not to compete or solicit) will some day address these issues directly. Until this becomes clearer, businesses and employees alike will need to think before investing a lot in social media accounts.