Can an Employee Steal Social Media Influence?

In the last year, there has been one reported case involving Twitter and three cases involving LinkedIn and, to a lesser extent, Facebook.

In PhoneDog v. Kravitz (N.D. California, Jan. 30, 2012, http://bit.ly/GEIZFh), an employer sued a former employee claiming that its Twitter followers remained company property after the employment relationship ended. PhoneDog had hired Noah Kravitz to write product reviews and post and link blog entries in the hopes of driving traffic to the PhoneDog website, thereby generating advertising revenues.

PhoneDog provided Kravitz with a password and the Twitter handle “@Phone Dog_Noah.” Over the course of about four years, @PhoneDog_Noah developed approximately 17,000 followers. In October 2010, Kravitz left PhoneDog, and PhoneDog asked that he hand over control of the account. Kravitz refused, changed the Twitter handle to “@noahkravitz” and continued using the account.

PhoneDog sued Kravitz claiming: 1) misappropriation of trade secrets; 2) intentional and negligent interference with prospective economic advantage; and 3) conversion. Kravitz moved to dismiss, asserting that the identity of the Twitter
followers and the account's password were not “trade secrets” because the followers are publicly known and the password does not generate any “substantial business advantage.” PhoneDog countered that followers are akin to customers because customer traffic on PhoneDog's website generates advertising revenue. Furthermore, PhoneDog argued that Kravitz “misappropriated” the followers by changing the handle and continuing to tweet.

The court denied Kravitz's motion to dismiss the misappropriation claim because PhoneDog had sufficiently pled the existence of a trade secret, and also sufficiently alleged that Kravitz's refusal to turn over the account constituted misappropriation of that trade secret. This does not mean that the Twitter followers will ultimately be deemed a trade secret ' that determination will be made at a later stage of the litigation.

The court initially dismissed PhoneDog's intentional and negligent interference claims because it was unclear with what economic relationship Kravitz interfered. PhoneDog then claimed interference with Twitter followers, advertisers and media outlets. The court accepted the argument concerning interference with advertisers because PhoneDog presented evidence that advertisers pay based on page views generated from users visiting PhoneDog's website. Notably, the court did not address whether Kravitz interfered with PhoneDog's alleged relationships with the Twitter followers.

In Eagle v. Morgan, et al. (E.D. Pennsylvania, Dec. 22, 2011, http://bit.ly/GEJSO1), the founder and subsequent purchasers of a company sued each other over ownership and control of the founder's Linked- In account and the “connections” associated with that account. After the company terminated the founder (Dr. Eagle) and other senior executives, the company, which had Dr. Eagle's LinkedIn account password, changed Dr. Eagle's profile to display the photo and profile of Dr. Eagle's replacement. Dr. Eagle sued, claiming, among other things, invasion of privacy and tortuous interference. The company asserted counterclaims of, among other things, misappropriation of the LinkedIn account and unfair competition.

Dr. Eagle moved to dismiss the company's counterclaims. As to the misappropriation claim, the company maintained that it was the rightful owner of the LinkedIn account connections (not the account itself) because company personnel developed, maintained and furthered the LinkedIn account for the company's sole benefit and use.

The court rejected the misappropriation of a trade secret claim because the LinkedIn account connections were publicly available, both on the LinkedIn profile of the connections and on the company's website. However, the court ruled that the company might be able to prove misappropriation of an idea because company personnel allegedly developed and maintained a connection for the company's sole benefit. And as misappropriation is a form of unfair competition, the court also allowed that claim to proceed.

In TEKsystems, Inc. v. Hammernick, the employer recruiting firm accused former employees of using their knowledge of the company's customer lists to contact customers via LinkedIn, in violation of the employee's restrictive covenants. While the TEKsystems case settled without judicial resolution, the permanent injunction and settlement restricted the defendant and other former employees from contacting a list of former customers, clients, candidates and employees.

In another executive search case, Sasqua v. Courtney (E.D.N.Y., Aug. 2, 2010, http://scr.bi/GEL1Fp), the court was asked to consider the issue from a different direction. Instead of the defendant being accused of using LinkedIn as an offensive tool to contact former customers, the defendant used LinkedIn as a shield to argue that information on the former employer's customer list was publicly available ' and therefore not a trade secret. The court agreed and rejected trade secret protection because the employer's list of clients and candidates was publicly available through sites like LinkedIn, Facebook and Bloomberg. The court also took note of the employer's failure to impose restrictive covenants. The court commented that, at one time, the employer's database may have been protectable, but “the proliferation of information made available through full-blown use of the [I]nternet and the powerful tools it provide[s]” has placed the protection of similar information at risk.

Some Observations and Lessons

Putting aside for the moment that PhoneDog did not make reference to a social media policy (discussed below), which could have helped its cause with the court, the reality is that the fact pattern in the PhoneDog case was extremely favorable to the employer. For example: 1) Kravitz's Twitter account was created at the employer's urging; 2) Kravitz's position was to market the company via Twitter and other forms of social media; 3) the Twitter handle included the name of the employer; and 4) PhoneDog made a credible economic connection between Twitter activity and website traffic.

The more difficult case will arise in more typical employment scenarios, such as: 1) an employee holding a non-marketing position; 2) with a Twitter account created before or during employment for personal use; 3) the Twitter handle does not reference the employer's name; and 4) the employee tweets content promoting company products or services, or connects with customers via Twitter without a direct mandate from the company.

We anticipate that this fact pattern will be of great concern to most employers. And it will arise in the context of employees' use of forms of social media beyond Twitter, including LinkedIn and Facebook. To address these concerns, we recommend that employers implement the following two simple measures.

First, keeping in mind the requirements of certain jurisdictions, employers should use restrictive covenants, including confidentiality and customer non-solicitation provisions. To the extent companies already have such provisions in place, they should be updated to reflect:

1. The importance of social media to the company's business;
2. That customers and clients developed through the use of social media are company property;
3. That the names, handles and walls used to communicate with clients via social media are company property; and
4. That those social media names, handles and walls may not be used by the ex-employee to communicate with customers after leaving the company's employ.

Second, implement comprehensive social media policies that address the company's expectations and the employee's responsibilities. In addition to reminding employees that they represent their employer and should act accordingly, special instruction should be given regarding the dissemination of company information. The policy should specify that all work product and content (along with customers, clients, followers and walls) developed through social media, are ' and will remain ' company property.

As the cases above illustrate, some companies have failed to fully anticipate the novel challenges that social media brings. The more clarity you build into explicit company policies on social media among your employees, the less trouble you will have with employees who later leave the company.

As employment disputes commonly involve communications between or among employees, management and customers, it should come as no surprise that social media's role in workplace disputes has drastically increased in the last year. Indeed, recent decisions from around the country have turned on the application of Twitter, LinkedIn, Facebook, YouTube and blogging.

Cases have arisen in varied contexts, including post-employment obligations; ownership of handles, walls and contacts; assessments of “concerted activity” versus insubordinate behavior under the National Labor Relations Act; and privacy and discrimination/hostile work environments claims. This article discusses recent social media cases and makes recommendations for what employers can do to better protect confidential information and trade secrets.

Post-Employment Obligations

In the last year, there has been one reported case involving Twitter and three cases involving LinkedIn and, to a lesser extent, Facebook.

In PhoneDog v. Kravitz (N.D. California, Jan. 30, 2012, http://bit.ly/GEIZFh), an employer sued a former employee claiming that its Twitter followers remained company property after the employment relationship ended. PhoneDog had hired Noah Kravitz to write product reviews and post and link blog entries in the hopes of driving traffic to the PhoneDog website, thereby generating advertising revenues.

PhoneDog provided Kravitz with a password and the Twitter handle “@Phone Dog_Noah.” Over the course of about four years, @PhoneDog_Noah developed approximately 17,000 followers. In October 2010, Kravitz left PhoneDog, and PhoneDog asked that he hand over control of the account. Kravitz refused, changed the Twitter handle to “@noahkravitz” and continued using the account.

PhoneDog sued Kravitz claiming: 1) misappropriation of trade secrets; 2) intentional and negligent interference with prospective economic advantage; and 3) conversion. Kravitz moved to dismiss, asserting that the identity of the Twitter
followers and the account's password were not “trade secrets” because the followers are publicly known and the password does not generate any “substantial business advantage.” PhoneDog countered that followers are akin to customers because customer traffic on PhoneDog's website generates advertising revenue. Furthermore, PhoneDog argued that Kravitz “misappropriated” the followers by changing the handle and continuing to tweet.

The court denied Kravitz's motion to dismiss the misappropriation claim because PhoneDog had sufficiently pled the existence of a trade secret, and also sufficiently alleged that Kravitz's refusal to turn over the account constituted misappropriation of that trade secret. This does not mean that the Twitter followers will ultimately be deemed a trade secret ' that determination will be made at a later stage of the litigation.

The court initially dismissed PhoneDog's intentional and negligent interference claims because it was unclear with what economic relationship Kravitz interfered. PhoneDog then claimed interference with Twitter followers, advertisers and media outlets. The court accepted the argument concerning interference with advertisers because PhoneDog presented evidence that advertisers pay based on page views generated from users visiting PhoneDog's website. Notably, the court did not address whether Kravitz interfered with PhoneDog's alleged relationships with the Twitter followers.

In Eagle v. Morgan, et al. (E.D. Pennsylvania, Dec. 22, 2011, http://bit.ly/GEJSO1), the founder and subsequent purchasers of a company sued each other over ownership and control of the founder's Linked- In account and the “connections” associated with that account. After the company terminated the founder (Dr. Eagle) and other senior executives, the company, which had Dr. Eagle's LinkedIn account password, changed Dr. Eagle's profile to display the photo and profile of Dr. Eagle's replacement. Dr. Eagle sued, claiming, among other things, invasion of privacy and tortuous interference. The company asserted counterclaims of, among other things, misappropriation of the LinkedIn account and unfair competition.

Dr. Eagle moved to dismiss the company's counterclaims. As to the misappropriation claim, the company maintained that it was the rightful owner of the LinkedIn account connections (not the account itself) because company personnel developed, maintained and furthered the LinkedIn account for the company's sole benefit and use.

The court rejected the misappropriation of a trade secret claim because the LinkedIn account connections were publicly available, both on the LinkedIn profile of the connections and on the company's website. However, the court ruled that the company might be able to prove misappropriation of an idea because company personnel allegedly developed and maintained a connection for the company's sole benefit. And as misappropriation is a form of unfair competition, the court also allowed that claim to proceed.

In TEKsystems, Inc. v. Hammernick, the employer recruiting firm accused former employees of using their knowledge of the company's customer lists to contact customers via LinkedIn, in violation of the employee's restrictive covenants. While the TEKsystems case settled without judicial resolution, the permanent injunction and settlement restricted the defendant and other former employees from contacting a list of former customers, clients, candidates and employees.

In another executive search case, Sasqua v. Courtney (E.D.N.Y., Aug. 2, 2010, http://scr.bi/GEL1Fp), the court was asked to consider the issue from a different direction. Instead of the defendant being accused of using LinkedIn as an offensive tool to contact former customers, the defendant used LinkedIn as a shield to argue that information on the former employer's customer list was publicly available ' and therefore not a trade secret. The court agreed and rejected trade secret protection because the employer's list of clients and candidates was publicly available through sites like LinkedIn, Facebook and Bloomberg. The court also took note of the employer's failure to impose restrictive covenants. The court commented that, at one time, the employer's database may have been protectable, but “the proliferation of information made available through full-blown use of the [I]nternet and the powerful tools it provide[s]” has placed the protection of similar information at risk.

Some Observations and Lessons

Putting aside for the moment that PhoneDog did not make reference to a social media policy (discussed below), which could have helped its cause with the court, the reality is that the fact pattern in the PhoneDog case was extremely favorable to the employer. For example: 1) Kravitz's Twitter account was created at the employer's urging; 2) Kravitz's position was to market the company via Twitter and other forms of social media; 3) the Twitter handle included the name of the employer; and 4) PhoneDog made a credible economic connection between Twitter activity and website traffic.

The more difficult case will arise in more typical employment scenarios, such as: 1) an employee holding a non-marketing position; 2) with a Twitter account created before or during employment for personal use; 3) the Twitter handle does not reference the employer's name; and 4) the employee tweets content promoting company products or services, or connects with customers via Twitter without a direct mandate from the company.

We anticipate that this fact pattern will be of great concern to most employers. And it will arise in the context of employees' use of forms of social media beyond Twitter, including LinkedIn and Facebook. To address these concerns, we recommend that employers implement the following two simple measures.

First, keeping in mind the requirements of certain jurisdictions, employers should use restrictive covenants, including confidentiality and customer non-solicitation provisions. To the extent companies already have such provisions in place, they should be updated to reflect:

1. The importance of social media to the company's business;
2. That customers and clients developed through the use of social media are company property;
3. That the names, handles and walls used to communicate with clients via social media are company property; and
4. That those social media names, handles and walls may not be used by the ex-employee to communicate with customers after leaving the company's employ.

Second, implement comprehensive social media policies that address the company's expectations and the employee's responsibilities. In addition to reminding employees that they represent their employer and should act accordingly, special instruction should be given regarding the dissemination of company information. The policy should specify that all work product and content (along with customers, clients, followers and walls) developed through social media, are ' and will remain ' company property.

As the cases above illustrate, some companies have failed to fully anticipate the novel challenges that social media brings. The more clarity you build into explicit company policies on social media among your employees, the less trouble you will have with employees who later leave the company.