October 21, 2014
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Keep Your “Friends” Close: Protecting Employers’ Ownership Interests in their Corporate Social Media
What would happen if someone stole your Twitter password?
Individuals might fear that a hacker will post something embarrassing under their name that they would have to explain later. Employers with corporate Twitter accounts might worry about a disparaging tweet’s effect on their brand’s image or their relationship with their customers.
Employers who use social media probably see their online “friends” or “followers” as current or future business opportunities, and realize that losing those online connections could harm their business. But does an employer have any ownership interest in its social media-based relationships? This article looks at a recent federal case that raises that question, and also suggests steps that employers can take to establish ownership of their corporate social media accounts and the economic benefits that come with them.
Social Media Use by Today’s Businesses
The growing popularity of social media use among consumers has been followed by a growth in social media use among businesses. A recent University of Maryland study found that social media adoption among small businesses doubled from 2009 to 2010. Those businesses use their social media presence for low-cost marketing, more visibility in search engine results, and increased website traffic. Larger businesses have taken advantage of social media as an advertising outlet as well, offering sweepstakes contests and product giveaways in order to attract consumers to their brands.
But who spends the time posting, tweeting, blogging and updating these corporate accounts? The answer is probably “an employee.” A pending federal case, however, raises questions about the possible dangers of having employees run their employers’ social media operation.
The PhoneDog Case
In PhoneDog, LLC v. Kravitz, Case No. C11-03474 MEJ (N.D. Cal.), an employer sued a former employee who allegedly swiped a corporate Twitter account—and its roughly 17,000 followers—on his way out the door. PhoneDog, the employer, reviews mobile phone-related products and services, and it posts articles and video reviews on its website. According to the complaint filed in the case, around 1.5 million people visit PhoneDog’s website each month; additionally, an average of three million people view its videos each month. PhoneDog maintains an extensive online presence - along with its website, it also uses YouTube, Facebook, and Twitter.
PhoneDog uses social media to “market and promote its services” and to drive consumers to its website. The increased pageviews on its website, in turn, result in higher advertising revenue. PhoneDog, therefore, requested that all of its employees open Twitter accounts and tweet about PhoneDog and its services. The employee accounts had a common format for their names: @PhoneDog_Name.
Noah Kravitz, a former employee, used the Twitter handle “@PhoneDog_Noah” while he worked as a product reviewer and video blogger for PhoneDog. After roughly four years of employment, Kravitz had amassed around 17,000 Twitter followers.
Kravitz left PhoneDog and, allegedly, changed his PhoneDog Twitter handle to @noahkravitz—but kept the 17,000 followers of the @PhoneDog_Noah account. Kravitz then performed freelance work for a period of time before ultimately landing a job with one of PhoneDog’s competitors, TechnoBuffalo. Nevertheless, PhoneDog claimed he kept on communicating with PhoneDog’s followers via the Twitter account.
PhoneDog subsequently sued Kravitz for $340,000, alleging that the passwords to its Twitter accounts were trade secrets that Kravitz stole. And as a result of that theft, PhoneDog said, it lost advertising revenue and current and prospective consumers of its services. It also alleged that Kravitz unjustly enriched himself by stealing the roughly 17,000 followers of the @PhoneDog_Noah Twitter account. As for the amount of money damages it claimed, PhoneDog alleged that each Twitter follower was worth $2.50 per month according to “industry standards.” That figure, multiplied by 17,000 followers, meant that the account was worth $42,500 per month. PhoneDog reasoned that because Kravitz had been misusing the account for eight months, he had swiped a Twitter account worth more than $300,000.
The PhoneDog case is in its early stages, but there are some takeaways for employers who use social media as part of their business strategy. PhoneDog’s suit recently survived a motion to dismiss, which means that the court believes there may be a legal basis for PhoneDog’s claims that it owns the Twitter accounts, and that the passwords to those accounts are trade secrets. The court’s ruling also means that it believes PhoneDog’s claims that Kravitz interfered with its current and prospective economic relationships with the Twitter followers of the @PhoneDog_Noah account and advertisers may have merit as well.
What Should Employers Do?
The law surrounding social media use in the workplace is still developing, and employers should be careful about using social media as part of their business strategy. To protect any rights that might stem from social media use, employers should consider taking steps to strengthen their claim that they—not their employees—own all aspects of their corporate social media presence. These steps might include the following:
- allowing corporate social media accounts to be opened only at the company’s direction and only with a company-issued password;
- controlling access to social media account passwords;
- changing account passwords and/or usernames, or deactivating accounts when the employment relationship ends;
- requiring that the company be identified in any account name or handle, or prescribing a common name format (e.g., @CompanyName_UserName);
- explicitly stating in employee handbooks, employment contracts (such as confidentiality agreements), and independent contractor agreements that the employer owns its corporate accounts (and any legal rights that might come with those accounts), even when employees or contractors operate those accounts; and
- requiring employees to disclose their affiliation with the company in every post or tweet they publish.
Taking these steps might help establish corporate ownership of the employer’s social media presence and the fruits of that presence. That said, until the law has developed more, it will be uncertain how much is enough to establish corporate ownership of social media.
The law on social media has not developed as quickly as social media use has, but new cases are frequently making their way to courts and administrative agencies. Employers who have questions about implementing social media in their business should contact their counsel to get timely guidance on the legal issues that accompany social media use.
 See University of Maryland, Social Media Adoption by U.S. Small Businesses Double Since 2009: Small Businesses Mainly Use Social Media to Identify and Attract New Customers, available at http://www.rhsmith.umd.edu/news/releases/2010/021610.aspx/ (last visited Feb. 8, 2012).