Social Networking Contacts Could Be Trade Secrets


Like it or not, Facebook, LinkedIn, Twitter, and other social media is playing a larger role in our everyday business lives.  Nowadays, many companies are using social networking to maintain their client list and further their business development and marketing efforts.  But what do you do when an employee with access to your social media accounts leaves the company, and tries to take your "friends" and "contacts" with them?  Christou v. Beatport, LLC and PhoneDog v. Kravitz give us a clue... 

In Christou v. Beatport, LLC, plaintiff sued a former employee who once had the responsibility of promoting plaintiff's nightclub, alleging that the employee misappropriated a "MySpace" profile and its attendant "friends" list when the employee opened a competing nightclub.  Was this a misappropriation of "trade secrets"?  Maybe.  The District Court of Colorado found the plaintiff's claim to be viable and the case survived a motion to dismiss.  Among other things, the court considered the fact that the passwords to the accounts were only given to certain employees, that the personal information accessed by "friending" someone through the account was not otherwise readily available, and that the plaintiff had spent considerable money investing in and developing its large social network. 

Similarly, in PhoneDog v. Kravitz, plaintiff had 17,000 Twitter subscribers who regularly received "tweets" authored by members of his staff, one of whom used the name "@PhoneDog_Noah." When "Noah" left plaintiff's employ, he refused to relinquish use of the Twitter account.  Instead, he changed the account name to his own name, "@noahkravitz," and continued to use the account -- "tweeting" to all 17,000 of PhoneDog's followers.  Plaintiff sued, alleging misappropriation of trade secrets.  "Noah" moved to dismiss, arguing that Twitter followers could not be "trade secrets" because the account was available to everyone at all times.  The Northern District of California disagreed, finding the claim to be viable and denying the motion.

Even if company contacts are not considered "trade secrets", there are other ways to protect the information so that contact lists remain company property and do not belong to current or former employees.  Creating well thought-out and understandable social media policies tailored to your business is critical in addressing the social media explosion.  Likewise, it is important to obtain your employees' consent to your social media policy, and to enforce it.  Does your social media policy protect your company? 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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