The explosive growth in the use of social media for commercial advertising, product development and customer engagement, including via “influencers,” is well known and those accounts may have significant value. However, the development of a legal regime designed to address disputes regarding the ownership of these accounts has not been nearly as rapid. Below, we review two bankruptcy court decisions, one very recent, writing on a fairly clean slate and addressing the rights to such accounts.

Background

There have been very few cases addressing the ownership of social media accounts. The first was in 2015, CTLI, LLC, 528 B.R. 359 (Bankr. S.D. Tex. 2015). A more recent, 2023 case is Vital Pharmaceuticals, Inc. v. Owoc, Adv. P. No. 23-1051 (Bankr. S.D. Fla. June 16, 2023).

In CTLI, the debtor operated a gun store and shooting range called Tactical Firearms. At issue were a Facebook page titled Tactical Firearms and a Twitter account @tacticalfirearms. Both the debtor and its controlling member claimed ownership of the accounts, with the principal relying on his personal use of these accounts in an attempt to establish ownership separate from the debtor.

Vital was founded by Jack Owoc, a “fitness guru” with a wellness/fitness persona who promoted various fitness products, including an energy drink marketed under the name “Bang.” A significant amount of Vital’s success was attributed to its social media promotions. In its chapter 11 case, the company sought to sell its business, including the related social media accounts, but Mr. Owoc, relying on his personal use, claimed ownership of three social media accounts – Instagram, Twitter and TikTok.

So, is there a test?

The CTLI court held that the creation of social media accounts in the Tactical Firearm’s name established a presumption that the accounts are owned by the company. That presumption was supported by other facts: the Facebook page was linked to the company’s website, the owner used the Facebook page for company-related business updates, the Facebook page was used to promote the company, company employees had access to post to the site and use it as a marketing tool, and a vendor was allowed to post in order to promote the company’s products. Similar considerations applied to the Twitter account. The alleged personal posts by the owner, e.g. documenting his attendance at gun shows, were insufficient to overcome the presumption because they were business-related and were essentially used as an indirect marketing tool to promote the business.

Vital recently rejected the CTLI presumption as being outdated in light of the rapid developments in, and explosive growth of, the social media space, including the use of influencers to promote a variety of products and businesses. Although the court developed an entirely new framework, the holding was the same – the debtor prevailed:

First, a court should look to any agreement documenting the parties’ rights to a social media account. Such an agreement would create a rebuttable presumption that the parties’ negotiated rights should be respected and enforced.

Second, where there is an agreement concerning the social media rights, the rebuttable presumption can be overcome by evidence establishing control over the access to the account. Such evidence can include a party’s exclusive access rights and the power to prevent access by others. The court noted that “access control” will rarely overcome the contractual presumption, but in cases where there is no contrary documentary evidence, access control will create a similar rebuttable presumption that control indicates ownership.

Third, where a party has both documented rights and access control, that ends the matter. But, in a case where only one of these presumptions arises, it may be rebutted by the actual use of the account. Use evidence could include the name of the account (business or personal), whether it is used to market the company’s products, whether it is used to promote an individual’s persona, and whether a determination as to ownership would change how the account is used.

Applying the test to the facts, the court held the accounts were debtor company accounts. There was no agreement establishing the rights to the accounts, nor was there an established access control as both the owner and company’s employees had access to the account. The evidence did establish, however, overwhelming use of the accounts for business and marketing purposes with only minimal personal use.

Where do we go from here?

With only sporadic case law and no meaningful legislative guidance, the landscape concerning rights to social media accounts remains relatively uncharted territory. While CTLI and Vital are helpful in attempting to delineate judicial considerations, the decisions are likely only the beginning of the legal journey dealing with this issue.

All players in the social media universe would be well served to document in writing their respective rights in social media accounts to avoid costly litigation and unanticipated results. This is particularly true given that an individual’s social media presence may often precede any significant commercial use.

The Vital opinion is available here.