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Mixing Business with Pleasure:
February 20, 2012, 11:44 am
Does an employer have an ownership interest in the social media accounts and activities of its employees? Federal district courts in Pennsylvania and California say…maybe.
Social media such as Facebook, Twitter and LinkedIn has made the world a smaller place by allowing people to connect and communicate with the click of a button. Many social media users strongly identify with their social media accounts and may even consider them a virtual extension of their person.
It is not surprising that as the popularity of social media has skyrocketed, businesses have recognized the potential for social media to be used to conduct and solicit business. Many businesses have jumped on the social media bandwagon to market products and services, or to develop professional networks. Many businesses prefer to communicate via social media because it is relatively inexpensive and can lend an air of grassroots authenticity to a business’ message.
Things get complicated, however, when a business encourages or mandates employees to use social media accounts to conduct business. For instance, an employer may hire an employee to use social media to post articles and reviews of the employer’s products or services. An employer may also encourage or require an employee to create social media accounts to interact with and solicit clients. As discussed below, two recent federal district court cases show that when an employer uses an employee to deliver business messages via a social media account, an important question is raised, namely: Who owns the social media account, the employer or the employee?
Eagle v. Morgan
The United States District Court for the Eastern District of Pennsylvania recently held in the case of Eagle v. Morgan that an employer could potentially have an ownership interest in an employee’s LinkedIn account and the account’s connections with other LinkedIn users.
The employee in Eagle, Dr. Linda Eagle, was a prominent member of the financial services industry. In 1987, Dr. Eagle founded Educomm, Inc. While owner of Educomm, Dr. Eagle, and with the assistance of Educomm staff, established a LinkedIn account to promote Educomm’s services, foster her professional reputation, and reconnect with family and friends.
In 2010, Educomm was sold, and shortly thereafter Dr. Eagle was terminated. Following Dr. Eagle’s termination, the new owners of Educomm reset the password associated with Dr. Eagle’s LinkedIn account and modified the profile to display the name and photograph of Educomm’s new Interim Chief Executive Officer. The profile retained Dr. Eagle’s “honors and awards, recommendations, and connections.” Eventually, Dr. Eagle regained control of the account, and sued Educomm for misappropriation of an idea and for damages to her reputation and good will.
Educomm filed counterclaims for misappropriation of a trade secret, misappropriation of an idea, and unfair competition.
The Eagle court dismissed Educomm’s claim for misappropriation of a trade secret on the basis the professional connections contained in the LinkedIn account could not qualify as Educomm’s trade secrets because they were “generally known in the wider business community or capable of being easily derived from public information.”
However, the Eagle court denied Dr. Eagle’s motion to dismiss Educomm’s counterclaim of “misappropriation of an idea,” which under Pennsylvania law consist of two elements: (1) the plaintiff had an idea that was novel and concrete; and (2) the idea was misappropriated by the defendant. The Eagle court appeared to accept, without discussion, that the LinkedIn professional connections could potentially be considered a “novel and concrete” idea of Educomm, and focused on whether the idea was misappropriated. Drawing on the Pennsylvania test for basic, common law misappropriation, the Eagle court determined that there existed a question of fact as to whether Educomm had ownership of the idea on the basis that it “[had] made substantial investment of time, effort, and money” in creating and maintaining the professional connections contained in Dr. Eagle’s LinkedIn account.
The Eagle court appeared to attach importance to the fact that Educomm, under Dr. Eagle, had a policy in place that gave the company significant control over the creation and maintenance of employee LinkedIn accounts.
PhoneDog v. Kravitz
The United States District Court for the Northern District of California, recently held that an ex-employee’s continued use of a Twitter account, initially set up by the employer for the employee’s use in promoting the employer’s products, could potentially constitute “misappropriation of a trade secret.”
The employee in PhoneDog v. Kravitz, Noah Kravitz, began working for PhoneDog as a product reviewer and video blogger in April 2006. One of Mr. Kravitz’s duties consisted of promoting PhoneDog’s products through various social media, including a Twitter account set up by PhoneDog. Mr. Kravitz accessed the Twitter account via a password provided to Kravitz by PhoneDog. Approximately 17,000 people “followed” the messages Mr. Kravitz posted through the Twitter account. In October 2010 Mr. Kravitz left PhoneDog but continued to use the Twitter account. PhoneDog then sued Mr. Kravitz under a number of theories, alleging at least $340,000 in damages.
The PhoneDog court granted Mr. Kravitz’s motion to dismiss PhoneDog’s claims for “interference with prospective economic advantage,” essentially holding that PhoneDog failed to plausibly allege that it had a economic relationship with any parties or that such relationship was more than “a hope for an economic relationship and desire for a future benefit.”
However, PhoneDog’s claim for “misappropriation of a trade secret” survived Mr. Kravitz’s motion to dismiss. Mr. Kravitz had argued that neither the password, nor the 17,000 followers of the Twitter account, were a “trade secret” under California law; the former because it did not possess independent economic value and the latter because the identity of the followers were publicly available to view at all times. The Court held that whether or not the password or the Twitter followers were “trade secrets” could only be answered with the benefit of a “fully-developed evidentiary record.”
While, it is premature to draw any firm conclusions from the Eagle or PhoneDog, both decisions show that a court may be willing to find that an employer has an ownership interest in a social media account used by an employee or an account registered under the name of an employee, when the employer has used the account to communicate a business message. These cases have, and will continue to provide insight as to how employers should protect themselves when they delve into social media. If you or your business are preparing social media campaigns, it is important to have the most up-to-date information and strategies at your fingertips. Moreover, you should have a well thought out and developed social media policy in place to protect you to the greatest extent possible. Should you have such concerns or require advice as to how you or your business should lay the groundwork for social media use, contact Hugh C. Carlin, Esq. or Trevor M. Torcello, Esq. of Gross, Shuman, Brizdle & Gilfillan, P.C. at (716) 854-4300.