April 07, 2014
Increasingly, employers use social media to develop their businesses. A recent study states that more than 70 percent of online adults use some kind of social networking site, and more than 40 percent use multiple sites.1 Of the Fortune 500 companies, 77 percent maintain Twitter accounts, 70 percent are on Facebook, and 34 percent have a corporate blog.2 Social media usage frequently grows quickly, and traffic to an employer's social media platforms may exceed traffic to an employer's website.
Some employers who have allowed or encouraged employees to promote the employer's business on social media have discovered, too late, that they took insufficient precautions in establishing ownership of the social media. As we discuss in this column, legal disputes over social media ownership may arise where an employee's efforts lead to the creation of content or the expansion of followers. This may occur, for example, when an employee uses a social media account for both business and personal promotion.
Employers may correctly believe that social media marketing is more effective when projected through a human rather than corporate persona, and may thus encourage employees personally to connect with other users.4 However, employers should not assume that the account automatically belongs to the employer rather than the employee merely because the employer directed the employee to create the account or produce its content while on the job, or because the employee was compensated for efforts associated with the account.
Both employers and employees have asserted a variety of federal and state statutory and common law claims over different aspects of ownership. "Ownership" of a social media account may be divided into several components: (1) the right to access and control the account; (2) ownership of the account name; (3) ownership of the account content; and (4) ownership of the relationships the account has forged via connections to other social media users. Ownership of account name and content can be protected through the doctrines of trademark and copyright, as well as through written agreement. In this article, we examine several recent cases analyzing account access and control, and ownership of an account's relationships, and provide recommendations for employers in crafting policies to address each.
Access and Control
Various federal and state laws may prohibit an employer's access to social media accounts that are maintained by the employee. For instance, the Stored Communications Act (SCA) provides a private cause of action and criminal penalties for unauthorized, intentional access to communications held in electronic storage.5 Many states have also enacted social media password protection laws, which place varying restrictions on employers in asking employees or prospective employees for login information to their personal social media accounts.6 1n addition, claims regarding account access may be brought under common law doctrines such as misappropriation, invasion of privacy, conversion, and tortious interference.
One way employers may seek to avoid disputes over account ownership is for employers affirmatively to establish account access and control while the employee is still working for the employer. Courts have suggested that the absence of a written agreement or clear policy may leave the employer with limited recourse against a departing employee who chooses to exercise control over the account. For instance, in PhoneDog v. Kravitz, 2011 WL 5415612 (N.D. Cal. Nov. 8, 2011), the plaintiff-employer, a mobile news and review resource company, required the defendant, a former product reviewer and video blogger for the plaintiff, regularly to post his opinions and reviews of mobile products and services under a Twitter account. This account amassed approximately 17,000 followers during the defendant's tenure, and the account name incorporated the name of the employer until the defendant changed it upon his departure.
The employer did not have a written policy or contract governing social media ownership, and had permitted the defendant to use the account for both professional and personal communications. Despite allegedly creating and maintaining the account at the direction of the employer, and admittedly using the account to promote the employer's services, the defendant retained control of the account pursuant to the terms of the settlement. However, the employer's claims for conversion, misappropriation, and tortious interference did survive motions to dismiss.
In Eagle v. Morgan, 2013 WL 943350 (E.D. Pa. March 12, 2013), the court identified the absence of a policy as a factor weighing against the employer in establishing account access and control. There, a former employee asserted various claims against her employer for accessing and controlling her Linked In account after her termination, where the employer had encouraged the creation and use of Linked In accounts, and the plaintiff had provided her password to other company employees to help maintain her account.
In finding for the plaintiff on the defendant-employer's counterclaim for misappropriation, the court noted that the employer: (1) never had a policy of requiring its employees to use Linked In; (2) did not dictate the precise contents of an employee's Linked In account; (3) did not pay for its employees' Linked In accounts; (4) did not itself maintain any separate account, whereas the Linked In User Agreement expressly states that the account is between Linked In and the individual user; and (5) failed to present evidence that the former employee's contact list was developed through the employer's investment rather than the employee's own time, money, and extensive past experience.
By contrast, in Ardis Health, LLC v. Nankivell, 2011 WL 4965172 (S.D.N.Y. Oct. 19, 2011), the court viewed favorably the presence of an express contract governing the rights to the defendants work product, even though the contract did not appear explicitly to reference social media. In the plaintiff-companies' suit to seek the return of login information to social media accounts that the defendant managed as plaintiffs' video and social media producer, the court cited an agreement executed by the parties at the commencement of employment, which stated that all work created or developed by the defendant "shall be the sole and exclusive property" of the plaintiff, and that the defendant must return all confidential information to the company upon request. The court concluded that it was "uncontested that plaintiffs own the rights to [the login information for the social media accounts]," and granted plaintiffs' preliminary injunction for the login information's return.
While courts may regard traditional customer and client lists as trade secrets, courts are divided on whether relationships associated with social media accounts are entitled to similar protection. In Eagle v. Morgan, 2011 WL 6739448 (E.D. Pa. Dec. 22, 2011), the court held that Linked In connections did not constitute trade secrets because they were "either generally known in the wider business community or capable of being easily derived from public information." By contrast, in evaluating publically viewable relationships on a MySpace account, the court in Christou v. Beatport, LLC, 849 F.Supp.2d 1055 (D. Colo. 2012) noted that the trade secret would not merely be the list of users, but the users' preferences, contact information, and the ability to notify and promote to the users directly, which are unlikely replicable without effort. It therefore allowed the plaintiff's trade secret claim to survive a motion to dismiss.
Issues involving account relationships may also arise in the context of restrictive covenants. In PrePaid Legal Servs., Inc. v. Cahill, 924 F.Supp.2d 1281 (E.D. Okla. 2013), the court concluded that an ex-employee's Facebook posts, which were viewable by certain former colleagues, did not constitute actionable solicitation. While the defendant's posts did describe the benefits of working at his new employer, the court noted that "[t]here was no evidence that [these] posts have resulted in the departure of a single [employee at plaintiff-company]," nor was there evidence that the defendant attempted to target the plaintiff's employees through more direct forms of Facebook communication, such as private messaging.
Another court held that a former employee's Linked In profile update, which automatically alerted her connections to her new position and expertise, did not constitute actionable solicitation because the former employee's new position was in a field outside the scope of her restrictive covenant.8 By contrast, the court in Amway Global v. Woodward, 744 F.Supp.2d 657 (E.D. Mich. 2010) affirmed an arbitrator's decision that a defendant ex-employee's untargeted blog and website postings violated his non-solicitation agreement. There, the defendant had posted a blog entry announcing his decision to join a competitor because "[i]f you knew what I knew, you would do what I do." The court remarked that "common sense dictates that it is the substance of the message conveyed, and not the medium through which it is transmitted, that determines whether a communication qualifies as solicitation."
To reduce the risk of litigation, employers should register their social media accounts under the employer's name and designate multiple employees as account administrators. Employers may wish to clarify ownership rights and expectations in writing, ideally at the commencement of employment, and reiterate these terms during the exit interview. If a dispute escalates to litigation despite a written policy or agreement, the writing should enhance the prospect of disposition through pretrial motions.
In drafting a policy or agreement, employers should state who owns the account name, content, and any relationships or contacts associated with the account, as well as establish who may access the account. The writing should state that the account in question is a business rather than personal account. It also should state that the login information for business accounts is confidential, that business accounts should be kept separate from personal accounts, that only authorized employees may publish content on the business account, and that employees must follow designated procedures for returning login information upon extended absence or departure. In addition, the writing should specify that employees may not share or make public any information pertaining to the accounts' relationships, if the employer wishes to maintain that such relationships constitute trade secrets. Due to the difficulty of establishing damages in ownership litigation, the writing might further include a liquidated damages provision or stipulate irreparable harm in the event of breach.
Explicitly addressing social media in non-competition and non-solicitation agreements can help reinforce prohibitions against social media misuse following an employee's departure. For example, a restrictive covenant might describe a departing employee's permissible scope of social media activity, including limitations on (passive or untargeted) forms of communication with former colleagues and clients.
From a business perspective, employers should strike a balance between an agreement that adequately protects the employer's assets, and one that appears heavy-handed in scope. Adopting a policy that asserts ownership too broadly may affect recruitment in industries like marketing and news media, where an employee's personal brand may carry distinct value. It may also affect external perceptions of company culture or values, and discourage employees from undertaking personal brand promotion that would simultaneously benefit the employer. Employers may therefore consider carve-outs for existing personal accounts, or for discrete projects involving personal promotion that relate to the employer's industry.
Jeffrey S. Klein and Nicholas J. Pappas are partners at Weil, Gotshal & Manges. Linda Shen, an associate at the firm, assisted with the preparation of this article.
1. Maeve Duggan and Aaron Smith, Social Media Update 2013, PEW RESEARCH CTR. (Jan. 2014 ), available at http://www.pewinternet.org/files/2013/12/PIP_Social-Networking-2013.pdf.
2. Nora Barnes et al., 2013 Fortune 500 Are Bullish on Social Media: Big Companies Get Excited About Google+, lnstagram, Foursquare and Pinterest, UNIV. OF MASS. DARTMOUTH CTR. FOR MKTG. RESEARCH (July2013), available at http://www.umassd.edu/media/umassdartmouth/cmr/studiesandresearch/2013_Fortune_500.pdf.
3. Andrew Lipsman et al., The Power of Like 2: How Social Marketing Works, COMSCORE (June 2012), available at http://www.slideshare.net/idegasperi/the-power-of-like-facebook-ebook#.
4. See Clara Shih, What's the Endgame for Social Media?, HBR BLOG NETWORK (Jan. 9, 2014, 1:00 PM), http://blogs.hbr.org/2014/01/whats-the-endgame-for-social-media.
5.18 U.S.C. §2701 et seq. See, e.g., Maremont v. Susan Fredman Design Grp., Ltd., 2014 WL 812401 (N.D. Ill. March 3, 2014) (permitting plaintiff-employee's SCA claim to survive summary judgment upon finding a genuine dispute regarding whether defendant-employer accessed her social media accounts without authorization, where plaintiff registered accounts in her name and used them for personal communications, but also admittedly used them in part to promote the employer's business).
6. These states include: Arkansas; California; Colorado; Illinois; Maryland; Michigan; Nevada; New Jersey; New Mexico; Oregon; Utah; and Washington.
7. See Daniel Terdiman, "Curious Case of Lawsuit Over Value of Twitter Followers is Settled," CNET, (Dec. 3, 2012, 4:23 PM), http://www.cnet.com/news/curious-case-of-lawsuit-over-value-oftwitter- followers-is-settled.
8. KNF&T Staffing, Inc. v. Muller, 2013 WL 7018645 (Mass. Super. Oct. 24, 2013).
Reprinted with permission from the April 7, 2014 edition of the New York Law Journal © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.