Many employers encourage their employees to create and use LinkedIn and other social media accounts to raise their external profiles and generate business.  A recent federal court case–Cellular Accessories for Less, Inc.  v. Trinitas, LLC, No. CV 12–06736 DDP (SHx), 2014 WL 4627090 (C.D. Cal. Sept. 16, 2014)–suggests that whether or not an employee's LinkedIn contacts constitute "public" information versus protectable trade secrets is an open question.

The facts of the Cellular Accessories case are not unlike those in hundreds of other trade secret disputes between employers and their former employees.  David Oakes (Oakes) worked for Cellular Accessories for Less, Inc. (Cellular) as a Sales Account Manager for six and one half years.  At the inception of his employment, he signed an employment agreement that precluded him from removing any proprietary information from Cellular, including Cellular's "customer base."  He also signed a statement of confidentiality that required him to maintain Cellular's proprietary information as confidential, including any information that is not known by actual or potential competitors or is generally unavailable to the public.

Oakes left Cellular and started his own company, which eventually became known as Trinitas, LLC (Trinitas).  Trinitas competes directly with Cellular in the corporate mobile phone accessory market.  Before leaving Cellular, Oakes emailed himself a digital file containing the contact information for some 900+ business and personal contacts, as well as certain client billing and pricing information.  Most notably for purposes of this discussion, he also maintained his LinkedIn contact information after his termination.

In ruling on the parties' cross motions for summary judgment, the court evaluated the plaintiff's claim that, by maintaining his LinkedIn account, Oakes engaged in misappropriation in violation of the California Uniform Trade Secrets Act.  Defendants argued that the LinkedIn contacts were not a trade secret because Cellular encouraged its employees to create and use LinkedIn accounts, and Oakes' LinkedIn contacts would have been viewable to any other contact he had on LinkedIn.  Cellular argued that the information was only available to the degree that the user chooses to share it, which means that it is not necessarily the case that contact information is viewable to any other contact and therefore public.  The court declined to take judicial notice of the functions of LinkedIn, and instead determined that there remained issues of material fact concerning whether the contacts were made public and whether this was done with Cellular's explicit or implicit permission.

Employers should be mindful that they might be diluting the potential trade secret status of their client lists to the extent that they encourage their employees to foster client relationships in a semi-public social media forum without any restrictions.   There are a few ways in which companies can attempt to protect themselves from the scenario in Cellular Accessories:

  1. Have a clear social media policy that encourages the use of LinkedIn and other social media accounts as part of the employees' job duties.  The policy should specify that the accounts remain the property of the company;
  2. Require employees to use their company email addresses and corporate logos in creating their accounts to make it clear that they are for business purposes only;
  3. Require employees to create a separate, internal database to which they should add any client contact information that they obtain through social media or otherwise;
  4. Strengthen the company's restrictive covenants to ensure that client information, in social media or otherwise, constitutes a trade secret, and to prohibit the use post-termination of any client information to compete; and
  5. Document the costs–both time and money–expended by the company to develop the LinkedIn contacts.

While these methods are not foolproof, they will create a stronger argument that any LinkedIn contacts developed on company time or with its assets are protectable trade secrets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.