United States: Ownership Of Business-Related Social Media Accounts

Last Updated: December 18 2013
Article by Aaron P. Rubin and Anelia V. Delcheva

Social media platforms have become an increasingly important means for companies to build and manage their brands and to interact with their customers, in many cases eclipsing companies' traditional ".com" websites. Social media providers typically make their platforms available to users without charge, but companies nevertheless invest significant time and other resources to create and maintain their presences on those providers' platforms. A company's social media page or profile and its associated followers, friends and other connections are often considered to be valuable business assets.

But who owns these valuable assets – the company or the individual employee who manages the company's page or profile? Social media's inherently interactive nature has created an important role for these individual employees. Such an employee essentially acts as the "voice" of the company and his or her style and personality may be essential to the success and popularity of that company's social media presence. As a result, the lines between "company brand" and "personal brand" may become blurred over time. And when the company and the individual part ways, that blurring can raise difficult issues, both legal and logistical, regarding the ownership and valuation of business-related social media accounts.

Such issues have arisen in a number of cases recently, several of which we discuss below. Although these cases leave open a number of questions, the message to companies who use social media is loud and clear: it is imperative to proactively establish policies and practices that address ownership and use of business-related social media accounts.

PhoneDog v. Kravitz

A recently settled California case, PhoneDog v. Kravitz, Case No. C 11-03474 (N.D. Cal.), raised a number of interesting issues around the ownership and valuation of social media accounts. The defendant, Noah Kravitz, worked for the plaintiff, PhoneDog, a mobile news and reviews website. While he was employed by PhoneDog, Kravitz used the Twitter handle "@PhoneDog_Noah" to provide product reviews, eventually accumulating 17,000 Twitter followers over a period of approximately four and a half years. Kravitz then left PhoneDog to work for one of its competitors but he maintained control of the Twitter account and changed the account handle to "@noahkravitz." When Kravitz refused PhoneDog's request to relinquish the Twitter account that had been previously associated with the "@PhoneDog_Noah" handle, PhoneDog filed a complaint against Kravitz asserting various claims, including trade secret misappropriation, conversion, and intentional and negligent interference with economic advantage.

Kravitz filed a motion to dismiss the complaint based on a number of arguments, including PhoneDog's inability to establish that it had suffered damages in excess of the $75,000 jurisdictional threshold. Kravitz also disputed PhoneDog's ownership interest in either the Twitter account or its followers, based on Twitter's terms of service, which state that Twitter accounts belong to Twitter and not to Twitter users such as PhoneDog. Finally, Kravitz argued that Twitter followers are "human beings who have the discretion to subscribe and/or unsubscribe" to the account and are not PhoneDog's property, and asserted that "[t]o date, the industry precedent has been that absent an agreement prohibiting any employee from doing so, after an employee leaves an employer, they are free to change their Twitter handle."

With respect to the amount-in-controversy issue, PhoneDog asserted that Kravitz's continued use of the "@noahkravitz" handle resulted in at least $340,000 in damages, an amount that was calculated based on the total number of followers, the time during which Kravitz had control over the account, and a purported "industry standard" value of $2.50 per Twitter follower. Kravitz argued that any value attributed to the Twitter account came from his efforts in posting tweets and the followers' interest in him, not from the account itself. Kravitz also disputed PhoneDog's purported industry standard value of $2.50 per Twitter follower, and contended that valuation of the account required consideration of a number of factors, including (1) the number of followers, (2) the number of tweets, (3) the content of the tweets, (4) the person publishing the tweets, and (5) the person placing the value on the account.

With respect to the ownership issue, PhoneDog claimed that it had an ownership interest in the account based on the license to use and access the account granted to it in the Twitter terms of service, and also that it also had an ownership interest in the content posted on the account. PhoneDog also pointed to a purported "intangible property interest" in the Twitter account's list of followers, which PhoneDog compared to a business customer list. Finally, PhoneDog asserted that, regardless of any ownership interest in the account, PhoneDog was entitled to damages based on Kravitz's interference with PhoneDog's access to and use of the account, which (among other things) purportedly affected PhoneDog's economic relations with its advertisers.

The court determined that the amount-in-controversy issue was intertwined with factual and legal issues raised by PhoneDog's claims and, therefore, could not be resolved at the motion-to-dismiss stage. Accordingly, the court denied without prejudice Kravitz's motion to dismiss for lack of subject matter jurisdiction. The court also denied Kravitz's motion to dismiss PhoneDog's trade secret and conversion claims, but granted Kravitz's motion to dismiss PhoneDog's claims of interference with prospective economic advantage.

The parties subsequently settled the dispute, so, unfortunately, we will never know how the court would have ruled on the variety of interesting issues that the case presented. Interestingly, although the terms of the settlement remain confidential, as of mid-September, Kravitz appears to have kept control of the Twitter account and its attendant followers. It is worth noting that the case might have been more straightforward—and the result more favorable to the company—had PhoneDog established clear policies regarding the ownership of business-related social media accounts.

Ardis Health, LLC et al. v. Nankivell

A New York case, Ardis Health, LLC et al. v. Nankivell, Case No. 11 Civ. 5013 (S.D.N.Y.), more clearly illustrates the fundamental point that companies should proactively establish policies and practices that address the ownership and use of business-related social media accounts.

The plaintiffs in Ardis Health were a group of closely affiliated online marketing companies that develop and market herbal and beauty products. The defendant was a former employee who had held a position at Ardis Health, LLC as a "Video and Social Media Producer." Following her termination, the defendant refused to turn over to the plaintiffs the login information and passwords for the social media accounts that she had managed for the plaintiffs during her employment. The plaintiffs then filed a lawsuit against the defendant and sought a preliminary injunction seeking, among other things, to compel her to provide them with that access information.

Fortunately for the plaintiffs, they had required the defendant to execute an agreement at the commencement of her employment that stated in part that all work created or developed by defendant "shall be the sole and exclusive property" of one of the plaintiffs, and that required the defendant to return all confidential information to the company upon request. This employment agreement also stipulated that "actual or threatened breach . . . will cause [the plaintiff] irreparable injury and damage." On these facts, the court noted that "[i]t is uncontested that plaintiffs own the rights to" the social media account access information that the defendant had refused to provide. Interestingly, the court held that the plaintiffs were likely to prevail on their conversion claim, effectively treating the disputed social media account access information as a form of intangible personal property. The court also determined that plaintiffs were suffering irreparable harm as a result of the defendant's refusal to turn over that access information. Accordingly, the court granted the plaintiffs' motion for a preliminary injunction ordering the defendant to turn over the disputed login information and passwords to the plaintiffs.

As far as we can tell from the reported decision in Ardis Health, the defendant's employment agreement did not expressly address the ownership or use of social media accounts or any related access information. Nonetheless, even the fairly generic work product ownership and confidentiality language included in the defendant's employment agreement, as noted above, appears to have been an important factor in the favorable outcome for the plaintiffs, which illustrates the advantages of addressing these issues contractually with employees—in advance, naturally. And as discussed below, companies can put themselves in an even stronger position by incorporating more explicit terms concerning social media into their employment agreements.

Eagle v. Morgan and Maremot v. Fredman

Former employers aren't always the plaintiffs in cases regarding the ownership of business-related social media accounts.  In an interesting twist, two other cases – Eagle v. Morgan, Case No. 11-4303 (E.D. Pa.), and Maremont v. Fredman, Case No. 10 C 7811 (N.D. Ill.) – were brought by employees who alleged that their employers had taken over and started using social media accounts that the employees considered to be personal accounts.

Eagle began as a dispute over an ex-employee's LinkedIn account and her related LinkedIn connections. The plaintiff, Dr. Linda Eagle, was a founder of the defendant company, Edcomm. Dr. Eagle alleged that, following her termination, Edcomm personnel changed her LinkedIn password and account profile, including by replacing her name and photograph with the name and photo of the company's new CEO. Among the various claims filed by each party, in pretrial rulings, the court granted Dr. Eagle's motion to dismiss Edcomm's trade secret claim and granted Edcomm's motion for summary judgment on Dr. Eagle's Computer Fraud and Abuse Act (CFAA) and Lanham Act claims.

Regarding the trade secret claim, the court held that LinkedIn 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." Regarding her CFAA claims, the court concluded that the damages Dr. Eagle claimed she had suffered – putatively arising from harm to reputation, goodwill and business opportunities – were insufficient to satisfy the "loss" element of a CFAA claim, which requires some relation to "the impairment or damage to a computer or computer system." Finally, in rejecting the plaintiff's claim that Edcomm violated the Lanham Act by posting the new CEO's name and picture on the LinkedIn account previously associated with Dr. Eagle, the court found that Dr. Eagle could not demonstrate that Edcomm's actions caused a "likelihood of confusion," as required by the Act.

Eventually, the Eagle case proceeded to trial. The court ultimately held for Dr. Eagle on her claim of unauthorized use of name under the Pennsylvania statute that protects a person's commercial interest in his or her name or likeness, her claim of invasion of privacy by misappropriation of identity, and her claim of misappropriation of publicity. The court also rejected Edcomm's counterclaims for misappropriation and unfair competition. Meanwhile, the court held for the defendants on Dr. Eagle's claims of identity theft, conversion, tortious interference with contract, civil conspiracy, and civil aiding and abetting. Although the court's decision reveals that Edcomm did have certain policies in place regarding establishment and use of business-related social media accounts by employees, unfortunately for Edcomm, those policies do not appear to have clearly addressed ownership of those accounts or the disposition of those accounts after employees leave the company.

In any event, although Dr. Eagle did prevail on a number of her claims, the court concluded that she was unable to establish that she had suffered any damages. Dr. Eagle put forth a creative damages formula that attributed her total past revenue to business generated by her LinkedIn contacts in order to establish a per contact value, and then used that value to calculate her damages for the period of time when she was unable to access her account. But the court held that Dr. Eagle's damages request was insufficient for a number of reasons, primarily that she was unable to establish the fact of damages with reasonable certainty. The court also denied Dr. Eagle's request for punitive damages. Therefore, despite prevailing on a number of her claims, Dr. Eagle's victory in the case was somewhat pyrrhic.

In Maremont, the plaintiff, Jill Maremont, was seriously injured in a car accident and had to spend several months rehabilitating away from work. While recovering, Ms. Maremont's employer, Susan Fredman Design Group, posted and tweeted promotional messages on Ms. Maremont's personal Facebook and Twitter accounts, where she had developed a large following as a well-known interior designer. Although Ms. Maremont asked her employer to stop posting and tweeting, the defendant continued to do so. Ms. Maremont then brought claims against Susan Fredman Design Group under the Lanham Act, the Illinois Right of Publicity Act, and the Stored Communications Act, as well as a common law right to privacy claim. The parties filed cross-motions for summary judgment, which the court denied with respect to the Lanham Act and Stored Communications Act claims, largely due to lack of evidence on whether or not Ms. Maremont suffered actual damages as a result of her employer's actions. The court granted Susan Fredman Design Group's motion for summary judgment with respect to Ms. Maremont's right of publicity claim, based on the fact that the defendant did not actually impersonate Ms. Maremont when it used her accounts. The court also granted Susan Fredman Design Group's motion for summary judgment with respect to Ms. Maremont's right of privacy claim because the "matters discussed in Maremont's Facebook and Twitter posts were not private and that Maremont did not try to keep any such facts private."

Proactive Steps

Considering how vital social media accounts are to today's companies, and given the lack of clear applicable law concerning the ownership of such accounts, companies should take proactive steps to protect these valuable business assets.

For example, companies should consider clearly addressing the ownership of company social media accounts in agreements with their employees, such as employee proprietary information and invention assignment agreements. Agreements like this should state, in part, that all social media accounts that employees register or manage as part of their job duties or using company resources – including all associated account names and handles, pages, profiles, followers and content – are the property of the company, and that all login information and passwords for such accounts are both the property and the confidential information of the company and must be returned to the company upon termination or at any other time upon the company's request. In general, companies should not permit employees to post under their own names on company social media accounts or use their own names as account names or handles. If particular circumstances require an employee or other individual to post under his or her own name – for example, where the company has engaged a well-known industry expert or commentator to manage the account – the company might want to go a step further and include even more specific contractual provisions that address ownership rights to the account at issue.

In parallel, companies should implement and enforce social media policies that provide employees with clear guidance regarding the appropriate use of business-related social media accounts, including instructions on how to avoid blurring the lines between company and personal accounts. (Keep in mind, however, that social media policies need to be carefully drafted so as not to not run afoul of the National Labor Relations Act, state laws restricting employers' access to employees' personal social media accounts, or the applicable social media platforms' terms of use.) Finally, companies should control employee access to company social media accounts and passwords, including by taking steps to prevent individual employees from changing account usernames or passwords without authorization.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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