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A Reminder to Employers of the Need for Social Media Policies

Posted in Trade Secrets and Competition

By:   James Kachmar

Those of you who attended our seminar on protecting confidential and trade secret information last Spring may recall our discussion about a trade secret misappropriation case involving a Twitter account. In that case, PhoneDog v. Kravitz, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal. 2011), a product news and review company, PhoneDog, claimed it issued Twitter accounts to its employees so that they could publish content for users to support PhoneDog’s business. When one employee, Kravitz, left PhoneDog, he refused to provide PhoneDog with access to the Twitter account he was assigned, changed its handle to delete references to PhoneDog, and continued to use it (with its 17,000 followers) for personal purposes.

PhoneDog filed a trade secret misappropriation claim against Kravitz claiming that the Twitter account was its trade secret and that it had incurred damages of more than $250,000 given the large number of “followers” the Twitter account had attracted. In denying Kravitz’s motion to dismiss this claim, the federal district court held that PhoneDog had stated a claim for trade secret misappropriation because: (1) it had adequately identified its alleged trade secret (i.e., the Twitter account and password) and (2) Kravitz refused to return control of the account/password to its claimed owner, PhoneDog.

This week, several news outlets are reporting that PhoneDog and Kravitz have settled their dispute after more than a year of litigation. (See, e.g.,http://mountpleasant-sc.patch.com/articles/twitter-suit-settled-out-of-court.) Although the terms of the settlement appear to be confidential, Kravitz will apparently retain control of the subject Twitter account.

Could this lawsuit (and its outcome) have been avoided by the employer? Maybe. Although the Court’s file is silent on this issue, it does not appear that PhoneDog had a social media policy in place at the time it issued the Twitter account to Kravitz. (This may have been because Kravitz began working for PhoneDog just as social media sites like Twitter were gaining popularity.)

Employers, especially those who rely on employee use of social media to further their business interests, should have a written social media policy in place. Their employees should be made aware of the policy at the time of their hiring and provided periodic reminders. The Policy should make clear that: (1) any social media accounts that are issued by the employer or opened at its direction to further its business, remain the property of the employer; and (2) the employee must return access to the account (including providing any passwords) to the employer upon the termination of the employment relationship. Had PhoneDog had such a policy in place, it may have strengthened its argument that it owned the Twitter account and could have possibly obtained an injunction from the Court barring Kravitz from further use of it.