The scenarios may be quite different, but claims in two lawsuits have now survived the motion-to-dismiss phase and are grabbing employers’ attention as they raise the issue of ownership of social media accounts used for company purposes.  

Ninety percent of chief marketing officers now participate in three or more social media activities, a 2011 survey by Bazaarvoice, a software company, and the CMO Club found. And as more and more businesses rely on social media for marketing and managing their public personae, experts say similar lawsuits will become more common.

One case deals with an allegedly company-controlled LinkedIn account. Linda Eagle co-founded Edcomm, a communication consulting and bank training firm, in 1987, and a Saudi Arabia-based IT services firm bought it in October 2010. Eagle remained an Edcomm executive for a while, but the new owners eventually terminated her and also changed the password on her LinkedIn account to block her access. Eagle regained control of the account three weeks later.

But Edcomm, which claims that its personnel had developed, maintained and expanded the LinkedIn account for its sole benefit and use, believed it was the rightful owner of the account, and it sued Eagle in the U.S. District Court for the Eastern District of Pennsylvania in June 2011.

Another case deals with a Twitter account and something of a reverse fact pattern—a social network less geared toward individuals and an employee who seemed to have full control of the account. PhoneDog, a mobile news and reviews website, requests that its employees maintain Twitter accounts for marketing and pageview purposes. When the company hired Noah Kravitz in April 2006, Kravitz created a Twitter handle, @PhoneDog_Noah, which flourished, garnering 17,000 followers.

When Kravitz resigned from the company in October 2010, he changed the handle to @noahkravitz, and he continues to use the account under his own name. In July 2011, PhoneDog sued Kravitz in U.S. District Court for the Northern District of California, filing claims for misappropriation of trade secrets, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage and convergence.

In both cases, employers could have avoided or simplified litigation by crafting effective social media policies and getting employees to agree to them in writing.

“I expect to see companies learning from the Eagle and PhoneDog cases and writing this stuff into social media policies, employee handbooks and employee agreements,” says Michelle Sherman, head of the Social Media Industry Team at Sheppard Mullin. “Companies are going to have much better facts so that if they’re presented with one of these situations … they’ll be able to say it is a breach of a written contract, and they’ll have a much better claim to be proceeding under.”

Legal Eagle
In the LinkedIn case, Eagle countersued, and in response Edcomm countersued, and on Dec. 22, 2011, the court allowed some of Edcomm’s counterclaims to survive a motion to dismiss.

The court in Eagle v. Morgan rejected the defendant’s counterclaim that Eagle had, under Pennsylvania law, misappropriated a trade secret by using her LinkedIn account and an Edcomm cell phone number because they don’t qualify as trade secrets (See “Higher Hurdles”).

However, the court wrote that the defendant’s allegation of misappropriation of an idea “gives the court somewhat more pause.” Edcomm’s claims that its employees developed the LinkedIn account and maintained the connections created enough of an issue of fact to require further discovery, so the court denied Eagle’s motion to dismiss on that claim.

“Here it was argued that the company put in the time and effort to develop this marketing piece,” says Nick Akerman, a partner at Dorsey & Whitney. “It would be kind of like putting up a billboard on the highway, which the company pays for [and creates]. There’s some truth to that, although what makes this different is that LinkedIn is really geared toward the individual.”

The facts of the case—namely the allegation that Edcomm ran the account—make it unique, because such a situation is uncommon.

“What makes this case challenging in terms of looking at it as a precedent-setting case is that [Eagle] basically gave up control of that account,” says Courtney Hunt, founder of Social Media in Organizations (SMinOrgs), a professional community that offers guidance and information to members.

Power Struggle

In the Twitter case, the court in November 2011 granted Kravitz’s motion to dismiss with respect to PhoneDog’s claims of intentional interference with prospective economic advantage and negligent interference with prospective economic advantage. PhoneDog filed a first amended complaint on Nov. 29.

The court’s initial dismissal of PhoneDog’s intentional interference claim rested on the fact that PhoneDog had failed to allege which economic relationships Kravitz’s conduct had disrupted. The original claim only pointed to the relationships between the company and the Twitter account’s 17,000 followers. In the amended complaint, PhoneDog maintained that the Twitter account was part of its confidential information, but its claims relating to the disruption of relationships were expanded to include advertisers and CNBC and Fox News, with whom they claim to have economic relationships. That allowed the claims to survive a motion to dismiss on Jan. 30.

“What I found noteworthy about the amended complaint was that [PhoneDog] began to realize that they would have problems showing they have an ownership of Twitter followers,” Sherman says. “It could be that the case doesn’t end up being per se about who owns Twitter followers.”

Although the case raises good questions, Sherman says PhoneDog didn’t go into it with very good facts for itself—for example, the complaint makes clear that PhoneDog let Kravitz set up the account and create its username and password, which is why the company was so dependent on Kravitz giving back control of the account.

Employer Takeaways

Despite the fact-specific nature of both cases, they are making employers think hard about the ownership of employee-maintained social networking accounts and about reassessing or creating social network policies.

“No one’s thinking about this issue ahead of time, that’s the problem,” Akerman says. “This is an easy thing to solve if you have some system in place that you agree to at the time you set these accounts up.”

A 2011 Symantec survey found that 22 percent of organizations have social media policies in place; other surveys reveal similar figures. Any company with employees should have a social media policy, Hunt says. And in light of Eagle and PhoneDog v. Kravitz, employers should reassess their existing policies to make sure they include language on ownership and rights to the accounts—more commonly, policies focus on trade secrets/insider information and respectful use.

For company-run accounts, such as a Twitter account or Facebook fan page, employers should make clear in written agreements that the account belongs to them, that employees are maintaining and using the account in conjunction with their job and being paid to do so. And that if the employee leaves the company, the account remains with the company.

“If you do think there are things related to the use of social media that are confidential, as PhoneDog is asserting,” Sherman says, “make sure you have a clear and specific written confidentiality agreement [with the employee] and that you take measures to maintain the confidentiality of the account … to indicate that the company thinks of it as its own account.”

It’s harder for employers to claim that an individual’s social network account, such as a LinkedIn account, is company property, but they can set guidelines on LinkedIn use. While it may be legally feasible for an employer to claim ownership over an account, it may not be prudent.

“It’s important for the employer to be balanced and fair,” Hunt says. “Trying to make it so one-sided—‘It’s all our property, we have claim to it all’—well, who wants to work at a company like that? Respect the fact that with LinkedIn, it’s an individual’s network.”