We have become involved in an increasing number of disputes between companies and their former employees over ownership and use of personal social media accounts. In a typical situation, the employee will use their personal account for business purposes, promoting the employer’s products and communicating with customers through the account.
When the employee resigns, the employer claims that it owns the account as a result of the employee’s work during the period of employment. Established employment law does not clearly address ownership rights in these situations, and courts have struggled with how to determine the rights of the employer and former employee.
Last week, the Second Circuit Court of Appeals took a traditional view of the parties’ rights to social media accounts. In JLM Couture Inc. v. Gutman, the former employee was hired to design a line of bridal gowns. Her employment agreement gave the employer a proprietary interest in the brand, along with rights to tangible business property retained by the employee. She used her pre-existing social media accounts to promote the new line. When the employment relationship began to deteriorate, the employee changed the passwords to her Instagram and Pinterest accounts and refused to give the employer access. Her employer sued, seeking an injunction requiring the employee to give it control over the accounts.
After several rounds of appeals, the district court issued a preliminary injunction based on the former employer’s request. It developed a novel six-part test for determining when an employer can claim an ownership interest in an employee’s social media account. On appeal, the Second Circuit Court of Appeals rejected this test, instead concluding that the ownership issue is determined under traditional property law principles. The central question is whether the employment contract transferred ownership rights to the employer. In this case, does the contract’s language detailing rights to tangible property such as sketches also apply to social media accounts?
Employers can boost their argument for ownership of these accounts by including clear language in the employment agreement stating that the employer owns all accounts used to conduct its business as well as requiring assignment upon request. Unfortunately, this language may conflict with the social media company’s terms and conditions of use, which often prohibit such assignments. Perhaps a better approach for employers is to prohibit employees from using personal social medial accounts to conduct business and opening company-owned and controlled accounts for that purpose.
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