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Update on Social Media Ownership Cases Impacting Trade Secret and Non-Compete Law

 
by John Marsh 6. December 2012 09:45

I have been meaning to provide an update on the social media, cybersecurity and cloud computing issues that were addressed at the California State Bar's 37th Annual IP Institute at which I presented a little over three weeks ago (thanks again to co-panelists Robert Milligan and Janet Craycroft for the opportunity to speak with them).  I will get a series of posts out over the next couple of weeks providing the highlights by topic. 

In light of developments this past week, I thought it made sense to start with cases dealing with disputes over ownership of social media accounts.  At the presentation, and in this update, I focused on the four leading social media ownership cases from the past year:  PhoneDog v. Kravitz, Eagle v. Morgan, Ardis Health v. Nankivel and Christou v. Beatport, LLC.  While PhoneDog and Eagle have commanded the most attention, the Ardis Health decision remains, in my view, the most important because it is the only one that involves a written agreement establishing that the employer in question had ownership over the social media at issue.  Indeed, the absence of agreements in the other cases, and the resulting litigation because of that lack of clarity, reinforces the importance of having written agreements that spell out what is the employer's and what is the employee's.

PhoneDog v. Kravitz, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal. Nov. 8, 2011):  It has been reported that the PhoneDog case has recently settled, and apparently favorably to the former employee, Noah Kravitz (if spending thousands of dollars of legal fees for a twitter handle can be deemed a victory).  PhoneDog sued Kravitz over his Twitter handle and the log-in information needed for that Twitter account, and had asserted, among others, claims for misappropriation of trade secrets and conversion.  This case has probably generated the most media attention, as Twitter has become an important source for news content and sharing.

Kravitz had been responsible for assisting PhoneDog with its branding and marketing efforts through Twitter and, as a result, he had generated more than 17,000 followers, a significant number under Twitter standards.  As a result of the parties' conflicting accounts of ownership, the district court denied Kravitz's motion to dismiss.  Again, no written agreement was signed by the parties documenting ownership of the social media account.  (For more on the PhoneDog case, see my post earlier this year).  Consequently, as I suspected earlier this year, Kravitz may have been in a stronger position as to the Twitter handle since it was presumably set up in his name.

Eagle v. Morgan, 2011 WL 6739448 (E.D. Pa.. Dec. 22, 2011):  Trial for this case was scheduled for October and postponed to November; as of the date of this post, I have not been able to find out about the trial's results or whether the case has settled.  According to one blog account that I read a couple of months ago, the plaintiff Dr. Linda Eagle is now representing herself pro se because she could no longer afford counsel.

Dr. Eagle had formed a company called Edcomm and created a LinkedIn account to help her and her company better network and market.  She eventually sold Edcomm and was terminated.  When she was denied access to her LinkedIn account, she sued Edcomm's new owners under a host of different theories.  Her misappropriation of trade secrets claims were dismissed because the LinkedIn information was readily ascertainable to the public and her Computer Fraud and Abuse Act and Lanham Act claims were recently dismissed because of the absence of credible damages.  However, her common law claims, including conversion, were allowed to proceed.

Again, like PhoneDog, there was no agreement as to what social media was owned by the company or Dr. Eagle.

Christou v. Beatport, LLC, 2012 WL 872574 (D. Colo. March 14, 2012):  This Colorado district court decision found that there were sufficient allegations to support a trade secret claim in a dispute between two former business partners over a social media account.  Again, like PhoneDog and Eagle cases, this decision is of limited precedential value because it was only at the motion to dismiss stage.  Again, the absence of a written agreement clouds this issue, and will lead to a decision, if the case is not settled, that will likely turn on the facts and circumstances surrounding the establishment and maintenance of the accounts.

Ardis Health, LLC v. Nankivell, Case No. 11 5013 (NRB) (Oct. 19, 2011, S.D.N.Y.):  In Ardis Health, a former employee who was responsible for Ardis Health's social media and related websites refused to return the access information for those accounts. Relying on a Work Product Agreement that the employee signed, Ardis Health was able to secure a preliminary injunction compelling the return of the access information for those accounts. This decision was straightforward as the employee had signed an agreement and there was no dispute over who owned the social media accounts.  This is the only case with an agreement, and not surprisingly, it ended up in favor of the employer.

The Takeaway.  At the 37th IP Institute, Robert and I both believed that written agreements are the key to demonstrating ownership, and this is borne out by the cases that I have listed above.  Policies are certainly important and need to be kept up to date as well, but for social media accounts that are important to an employer, or an employee, it is always prudent to have a written agreement spelling out who owns what.  Otherwise, courts will be forced to look to factors such as who set up the account, in whose name the account was in, and other traditional indicia of ownership to determine who truly owns the social media at issue.
 
I will follow up with a post (or posts) in the next week or so addressing some of the other issues that we addressed on social media, cybersecurity and cloud computing.

Tags:

California | New York | Pennsylvania | Social Media | Trade Secrets

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About John Marsh

John Marsh Hahn Law AttorneyI’m a Columbus, Ohio-based attorney with a national legal practice in trade secret, non-compete, and emergency litigation. Thanks for visiting my blog. I invite you to join in the conversations here by leaving a comment or sending me an email at jmarsh@hahnlaw.com.

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The information in this blog is designed to make you aware of issues you might not have previously considered, but it should not be construed as legal advice, nor solely relied upon in making legal decisions. Statements made on this blog are solely those of the author and do not necessarily reflect the views of Hahn Loeser & Parks LLP. This blog material may be considered attorney advertising under certain rules of professional attorney conduct. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon advertisements.

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