Your employee markets your company through Twitter, Facebook, LinkedIn, and YouTube. The employee develops – as he or she is asked to do – a substantial network. Later, your employee leaves.
Who owns those accounts?
Two recent decisions discuss these very questions.
For the non-lawyer readers of this blog, here’s the point: (1) the accounts may belong to the employer and (2) most importantly, have a written policy.
Lawyers, read on.
The first case, Ardis Health, LLC v. Nankivell, in the Southern District of New York (decided October 19, 2011), involved an employee who was hired to maintain the plaintiffs’ (a family of companies) social media presence. When the defendant left plaintiffs’ employ, she refused to return (among other things) the passwords to the plaintiffs’ websites, blogs, and social media services (Twitter, etc.). The court granted an injunction requiring her to turn over the passwords and other account information to the plaintiff, finding that lack of access to and control of social media could constitute irreparable harm. Instructively, the court did this not on a trade secret theory, but based on conversion.
Most importantly, however, the takeaway from the case is that the plaintiffs had a social media policy stating that the social media belonged to the company. While it’s unclear how much the court relied on this fact, it did include it in its decision – and it’s in good company. See So, Can Your Employees Sext At Work?
The second, PhoneDog v. Kravitz in the Northern District of California (decided on November 8, 2011), involved an employee who continued using a Twitter account following his departure from the plaintiff company. Rather than “return” the account, the defendant merely changed the Twitter handle.
The case was in federal court on the basis of diversity of citizenship, which (for the non-lawyers who continued reading despite the warning) requires the dispute to involve at least $75,000. Plaintiff met this threshold by claiming that defendant misappropriated its 17,000 followers (on Twitter), each of which (according to industry standards) was worth $2.50, for a total value of $340,000 (17,000 x $2.50).
The two causes of action of consequence were the misappropriation of trade secrets claim and conversion claims.
With regard to the trade secret claim, the plaintiff asserted that both its password and its followers were trade secrets. As for the followers, the plaintiff argued “that the list of followers is akin to a business customer list, in which it has an intangible property interest.” The court ruled that at the early stage in the case (a motion to dismiss), it could not say that the password or followers were not trade secrets.
With regard to conversion, the main issues were right of ownership and intent to convert. The plaintiff company appears to not have had a policy. Accordingly, the company argued “that, even if [defendant] created the [account], he did so at PhoneDog’s request and for its benefit and in the course and scope of his employment with PhoneDog.” With regard to the intent, the plaintiff argued that it requested return of the account, and the defendant refused, instead, changing the Twitter handle. The court accepted these arguments, and refused to dismiss the conversion claim.
For a longer discussion of the PhoneDog case, see Who gets custody of Twitter when an employee quits?
While these two cases are the latest to raise ownership issues in the social media, given that they are both at the very early stages, they leave most of the questions unanswered. Nevertheless, as previously noted in a similar context, these are not really new issues, they’re just a new twists on old concepts. See Social Media, the New World?