Lawsuits Highlight Social Media Quandary: Who Owns Accounts, Company or Employee?

The last day at work: after the office party, employees routinely are asked to provide their identification badges, computer passwords, and a forwarding address.

Should departing employees also be required to hand over the social media accounts they used to promote their companies on Twitter, LinkedIn, and Facebook? Who owns those social media accounts and the contacts accrued over the years?

The question is one facing Noah Kravitz and Linda Eagle. In separate lawsuits, Kravitz and Eagle have argued about the ownership of Twitter and LinkedIn accounts they used while on the job, and that their former employers believe they should have relinquished when they left their respective companies.

In each case, employers contended that the corporate social media accounts in question were valuable company property that they could not take with them on their way out the door, any more than they could pocket a flash drive that stored sensitive corporate data.

The issues raised in the cases have vast implications, as more and more employees today are encouraged, or even required, as part of their jobs to market their companies through social media.

When Kravitz, who was hired by PhoneDog to promote the company on social media, left the job in October 2010, he changed his Twitter handle from @PhoneDog_Noah to @noahkravitz, thereby keeping the account’s then 17,000 Twitter followers.

The U.S. District Court for the Northern District of California in January declined to dismiss PhoneDog’s claims against Kravitz for misappropriation of trade secrets, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, and conversion (27 DLR BB-1, 2/9/12).

According to the case docket, the dispute is in mediation.

In another case, Linda Eagle has battled with EdComm Inc. over her LinkedIn account, which the company argues contains valuable business information. Eagle alleged EdComm improperly changed the password on her personal account and replaced her photo and the name attached to the account with a former colleague appointed interim chief executive officer for the company after she was fired.

The U.S. District Court for the Eastern District of Pennsylvania let EdComm’s misappropriation of an idea and unfair competition counterclaims go forward, but rejected conversion and misappropriation of trade secrets claims (Eagle v. Morgan, E.D. Pa., No. 2:11-cv-04303, 12/22/11).

The court is considering EdComm’s summary judgment motion, according to the case docket. If the matter is not dismissed, it is slated to proceed to trial on Oct. 16.

Who Owns a Social Media Account?

The cases highlight the need for employers to set policies governing ownership of social media accounts.

Adam S. Forman of Miller, Canfield, Paddock & Stone in Detroit told BNA Aug. 14 that “a lot could have been avoided” in PhoneDog and Eagle if the companies had comprehensive policies governing social media accounts. Forman said such policies could be standalone or joined with other company policies, but he favored the standalone approach.

Forman stressed that the most important objective is for a company is to “think through these issues,” and the “biggest mistake is they don’t consider” establishing a social media policy. Such a policy might treat a corporate social networking account like a firm laptop or business email address that an employee would be expected to surrender at the exit interview.

Susan Gross Sholinsky and Maxine Neuhauser, with EpsteinBeckerGreen’s New York and Newark, N.J., offices, similarly told BNA Aug. 14 that a corporate policy was vital.

“Where the employee is Tweeting, maintaining a LinkedIn page, or otherwise posting to a branded social media site, the employer should require the employee to sign an agreement specifically acknowledging that (i) the Twitter, LinkedIn, Facebook, etc. account belongs to the employer (and not to the employee), (ii) the employee is posting to the account on behalf of, at the request of, and in connection with his/her employment with, the employer, (iii) the account is the property of the employer, and that (iv) the employee understands that, upon termination of employment for any reason, the account will stay with the employer, and not follow the employee,” they said.

Sholinsky and Neuhauser also suggested that the agreement “require the employee to provide the employer access to the account at any time, including providing passwords. The employee should be required to provide his/her supervisor, or other designated individual, with current passwords for the social media accounts.”

Hugh C. Carlin of Gross Shuman Brizdle & Gilfillan in Buffalo, N.Y., told BNA Aug. 15 that in addition to creating corporate social media policies or contracts, he has proposed that clients tell employees to create separate social networking accounts for personal use and business purposes.

An employer should ensure that it has access to the company account’s password at all times and impose an obligation on an employee to let it know if the password has changed, he said. There should not be one “cookie cutter” social media policy but instead policies that specifically address each platform, according to Carlin.

How to Deal With Departure.

Joshua Briones and Anahit Tagvoryan, both of DLA Piper’s Los Angeles office, said there was a need for company policies and agreements with provisions specifying corporate ownership of social media accounts used by employees for business purposes. They added that a company should change the account password when an employee departs.

Dealing with these matters at the front end, when an employee’s corporate social media account is created, is the best course of action, Sholinsky and Neuhauser said.

However, if a company failed to set a policy up front, they suggested “that the employer remind the employee of the existence and terms of the applicable agreement(s), and how those terms will play out in practice. Such instruction may occur during an in-person exit interview or in writing (i.e., a `reminder letter’), or both.”

An employer, they added, might also rename the account and send a message to all followers or links announcing the change in name and who might be taking over the account.

Carlin said companies offering severance pay to a departing employee probably should consider making one condition of the payment that the employee disclose all social media account passwords and any other changes to the account the employer deems important.

Blurred Private and Public Lives.

Because of the rapid development of social media and its relative novelty, many employers likely have not yet set up policies governing ownership of accounts. Many employers also may have permitted employees to use their private social media accounts for company purposes, such as marketing, resulting in a blurring of personal and private lives on social media accounts.

“The situation becomes more complicated where the employee is posting to his/her own account, such as a personal LinkedIn account. In such circumstances, it will be much more difficult (if not impossible) for a company to assert ownership of the social media site. In this situation, the employer may be best served by a confidentiality agreement prohibiting employees from disclosing trade secret and proprietary information, which, in some businesses, could include the identity of customers and could form the basis for prohibiting employees from, for example, ‘friending’ or ‘Linking In’ with company clients,” Sholinsky and Neuhauser said.

Forman noted that Kravitz’s answer and counterclaim in the PhoneDog case stressed what the former employee felt was the private nature of the account. Kravitz’s filing said he “used the [@PhoneDog_Noah] Account to share information concerning his life, opinions, work and a variety of other subjects—for example, his favorite TV shows, sports teams and music. Kravitz estimates that more than 50 [percent] of the tweets from the Account were personal in nature and completely unrelated to PhoneDog.”

Similarly, Eagle commented on the personal aspects of her LinkedIn account in her complaint. She said she “used LinkedIn not only for purposes of promoting EdComm’s banking education services, but also to foster her reputation as a businesswoman; to reconnect with family, former friends, and colleagues; and to build social and professional relationships.”

Social Media Account: What’s the Monetary Value?

The cases also raise the question of why a company might zealously guard a social media account. Indeed, one issue the federal court dealt with in PhoneDog was whether it even had diversity jurisdiction over the case, which requires an amount in controversy of at least $75,000.

PhoneDog argued that a Twitter account is valuable, and at the time of its complaint said it had suffered $340,000 in damages over eight months. To obtain that figure, it used what it called an industry standard valuation of $2.50 per Twitter follower per month. Because Kravitz’s account had approximately 17,000 followers, the monthly damages were alleged to be $42,500.

Kravitz disputed the notion there was any evidence that a Twitter account has a monetary value. If it does, he said, “it requires more than simply multiplying each user by $2.50; rather multiple factors must be considered, 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 of the account.”

Carlin added that a company may have invested time and resources into a social media account. In many companies, he noted, “it may be very likely that someone else drafted the tweets” and another employee—not the person officially attached to the account—may have invested company time to amass a large number of followers. The company thus is spending a great deal of money developing goodwill.

Outcome of Cases Hard to Predict.

Experts also told BNA that it was hard to say which company or employee in PhoneDog and Eagle had a strong case.

Carlin said it may be hard for an individual to bring the same legal resources to such a case that a corporation could, and added that the docket showed that Eagle was now pursuing her case pro se.

Sholinsky and Neuhauser also noted that the cases were expensive and an “uphill battle for the party who has lost control of the account(s) in question.” The determination of the claims likely would center on “whether (i) there is a written agreement clarifying ownership rights to the accounts, (ii) the account was used for both personal and business purposes, (iii) the accounts were managed by others besides the employee, and (iv) the company asserted ownership over the account(s) immediately upon the employee’s departure.”

Briones and Tagvoryan added that the “law in this area has not developed nearly as quickly as the technology or the number of ways in which employees use social media.” Therefore, they said, “lawyers and employers are left to speculate as to what may be legally sufficient to establish exclusive control and ownership in social media sites.”