In their quest to harness the marketing power of social media, some companies encourage employees to set up LinkedIn, Twitter or Facebook accounts for the purposes of developing customer or client relationships and communicating targeted messages.
But several recent federal district court decisions discuss the consequences when departing employees leave with their business social media accounts and contacts. Because employees typically use such accounts for personal as well as business purposes, the potential for a dispute over who owns what is high. The cases emphasize the importance of defining social media account ownership in company policies and employee agreements.
One case involved PhoneDog, a mobile phone news and review website. It uses Twitter, Facebook and YouTube to market its services. But it had no written social media policy or agreement with employees concerning ownership of their business social media accounts. The other case involved Edcomm, a company providing financial services training, which had a social media policy but no written agreements regarding ownership rights.
Experts agree that both disputes may have been avoided altogether or countered with successful pretrial motions had the parties entered into clearly written agreements clarifying social media account ownership at the inception of the employment relationship.
“Many companies have implemented social media policies, but these are often mere policies and not contractual agreements. It is important to recognize that a social media policy may not give rise to the same legal rights and remedies as a contractual ownership agreement,” says Seyfarth Shaw Partner Joshua Salinas.
When editor and blogger Noah Kravitz left PhoneDog with his Twitter account @phonedog_noah and its 17,000 followers in October 2010, the company sued him in the Federal District Court for the Northern District of California for misappropriation of trade secrets, interference with prospective economic advantage and conversion. The company sought damages, claiming each of Kravitz’s followers was valued at $2.50 per month based on industry standards.
How a judge or jury may value a Twitter account, however, remains undetermined. In December 2012, PhoneDog v. Kravitz settled under terms that did not disclose damages awarded to the company but allowed Kravitz to maintain his Twitter account and followers while changing its name to @noahkravitz.
The PhoneDog dispute might have been avoided if the company had written policies and ownership agreements consistent with privacy laws, says Jackson Lewis Partner John Snyder.
“Spell out who owns what. If you have employment agreements, make it clear that the employer owns the account. In certain circumstances, an employee gets to keep certain accounts, so make sure those are carved out in writing,” adds Seyfarth Shaw Partner Scott Schaefers.
A case in the Federal District Court for the Eastern District of Pennsylvania, Eagle v. Morgan, involved similar issues, even though the company had a social media policy.
Dr. Linda Eagle was the co-founder of Edcomm, which required employees to create LinkedIn profiles using a company-designated template with their company email addresses. Eagle created such an account and used it to promote Edcomm’s services and build her social and professional network.
It was also the company’s unwritten informal policy that, when an employee left Edcomm, the company would own and access the employee’s LinkedIn account and its content without appropriating the former employee’s identity.
When the company terminated Eagle in June 2011, it accessed her account and changed the password. People searching for Eagle were routed to a LinkedIn page featuring Edcomm’s interim CEO Sandi Morgan’s name and photograph, along with Eagle’s honors and awards, recommendations and connections. Within three weeks, Eagle regained control of her LinkedIn account, but nevertheless she filed a pro se complaint, alleging violations of the Computer Fraud and Abuse Act (CFAA) and other claims.
The court agreed that the value to Edcomm of the LinkedIn account and connections was at issue while dismissing Eagle’s federal claims. In his October 2012 opinion, just two weeks before trial, however, Judge Ronald Buckwalter ordered the case to proceed on Eagle’s state law claims and Edcomm’s counterclaims for misappropriation of the LinkedIn account and unfair competition.
On Dec. 31, 2012, the court ruled in favor of Edcomm, dismissing Eagle’s state claims, awarding the company damages in the sum of $41,000 and enjoining Eagle from accessing or using the LinkedIn account. Post-trial motions were pending at press time.
Eagle holds that even absent a written agreement, an employer may claim ownership of a former executive’s social media account and connections where the employee advertised her employer’s credentials and services on the account and the employer had significant involvement in the creation and maintenance of the account.
A solid agreement defining company ownership rights could have eliminated the litigation in the Eagle case, says Margaret DiBianca, a member of the Labor and Employment Department at Young Conaway Stargatt & Taylor.
“Companies can protect their content and brand with a written agreement setting forth who has what ownership rights in their social media accounts and content, including electronic-access information, such as passwords and login data,” DiBianca says.
The Federal District Court for the Southern District of New York upheld this type of employee agreement in October 2012 in Ardis Health, LLC v. Nankivell.
“The Ardis court granted a preliminary injunction requiring an employee to return the passwords and give her employer access to social media sites pursuant to obligations under the parties’ written non- disclosure and rights to work product agreement,” Snyder says.
In-house counsel should also be aware that bring-your-own-device policies may blur the line between company and personal social media accounts, so social media ownership agreements should address and clearly state the rules affecting these devices, Salinas says.
The extent of the employer’s involvement in the creation, development and supervision of social media content can be a critical factor in determining ownership of that content, DiBianca says.
“Particularly where the process is standardized and a system has been implemented to assist employees in the creation and development of these accounts, the company has a far better chance of success,” she says.