Social Media: Who Owns The Rights?

Social MediaIt is no surprise that companies today actively encourage their employees to engage in marketing and business development through use of social media outlets like Twitter and LinkedIn. But when an employee decides or is asked to leave the company, a dispute can, and with increasing frequency likely will, ensue over who owns these social media accounts. They were created and developed on company time with company resources, seemingly making them a company asset. The followers (or connections in the case of LinkedIn) of such accounts are, however, unique to the individual employee. They follow the tweets of the employee typically without regard for the identity of that employee’s company. It is these followers and connections that are the real essence of social media from a marketing perspective. So, who gets the rights to these accounts? Are they an asset belonging to the company simply because the company provided the capital? Or are they really the personal goodwill of the individual employee? These issues are at the center of two unrelated lawsuits, filed only days apart, now pending in the federal courts of Pennsylvania and California.

In the Pennsylvania case, Linda Eagle filed suit against her former company, Edcomm, Inc., and a group of its new owners and employees for a variety of business torts stemming from being locked out of her LinkedIn account after she was fired. Eagle claims Edcomm hijacked her LinkedIn account, changing the password and account profile to display the new CEO’s name and picture, but maintaining Eagle’s honors, awards, recommendations and connections. Defendants responded with a counterclaim against Eagle also asserting a variety of business tort claims, including conversion, misappropriation, violation of the Pennsylvania Unfair Trade Secrets Act, tortious interference with business, and numerous others. Eagle moved to dismiss the counterclaim. As it relates to the LinkedIn account, the federal court in Pennsylvania ruled that the LinkedIn account connections are not trade secrets under the Pennsylvania statute, but declined to dismiss the common law count of misappropriation of an idea. According to the court, there was a dispute of fact regarding the role Edcomm versus Eagle played in developing and maintaining the LinkedIn account that influenced the viability of misappropriation claim. Eagle v. Morgan, Civil Action No. 11-4303, 2011 U.S. Dist. LEXIS 147247 (E.D. Pa. Dec. 22, 2011).

Owns Rights

The California case is the reverse of Eagle. Noah Kravitz was employed by PhoneDog, a mobile phone review site. While there, he created a Twitter account gradually amassing nearly 17,000 followers. Kravitz decided to leave PhoneDog and changed his Twitter handle from @PhoneDog_Noah to @noahkravitz. PhoneDog sued Kravitz for misappropriation of trade secrets, conversion and other business torts, all arising out of his departure with the Twitter account. Kravitz’s followers were likened by PhoneDog to a customer list since PhoneDog requires its employees to tweet links to PhoneDog’s website in hopes of directing traffic to the site and thereby create advertising revenue. Unlike Eagle, the Kravitz court has declined to dismiss the trade secrets and conversion counts on motion to dismiss finding the claims to be adequately pled. In another order entered on January 30, the Kravitz court also refused to dismiss PhoneDog’s intentional interference and negligent interference with prospective economic advantage claims. The court acknowledged Kravitz’s concern that Twitter followers may not be “economic relationships” for purposes of these business tort claims, but declined to rule on this issue. The court held that because PhoneDog had also pled economic relationships with its advertisers, the claim was adequately pled and the issue regarding the status of the Twitter followers was one more appropriately left for summary judgment. PhoneDog LLC v. Kravitz, 11-cv-03474 MEJ (N.D. Calif.).

The outcome in both these cases will be instructive to businesses hoping to maintain ownership of their social media accounts. One thing is already clear, however. The more engaged the company is with developing and maintaining the content for such accounts and the more a company does to track revenue derived from such accounts, the better the company’s chances are for having a viable claim to the accounts later.

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