In this era of multiple online communication channels, and in an environment of increased employee mobility, employers need to focus on the legal and practical ways of securing their ownership of online company accounts that are registered or otherwise created by employees or contractors. In the three cases discussed below, organizations learned that lesson the hard way.
Whose Tweet Is It Anyway?
PhoneDog LLC v. Kravitz, No. 113474 (N.D. Cal. Nov. 8, 2011), involves a Twitter account that was used by an employee to publish product reviews and other messages on behalf of his employer. The handle on the account, “@PhoneDog_Noah,” incorporated both the employer’s name and the employee’s name. According to the employer’s complaint, the employee was quite successful in his marketing efforts using the account, generating approximately 17,000 Twitter followers.
When the employee quit, he retained the account and began using it on behalf of a competitor of the employer, having changed the handle on the account to his own name, “@noahkravitz.” The employer brought an action in federal court alleging claims of trade secret misappropriation, intentional and negligent interference with prospective advantage and conversion, and asserting damages in excess of the jurisdictional amount of $75,000. Specifically, the employer alleged that the value of each individual Twitter follower, according to “industry standards,” is $2.50 per month; multiplied by 17,000 followers, multiplied by eight months (the period of time over which the employee refused to turn over the account) yields damages of $340,000. In the context of determining whether the federal jurisdictional minimum was met, the court concluded that the employer’s calculation of the value of the account was sufficient, but only as a preliminary matter.
The court refused to dismiss the employer’s trade secret claims, finding that the complaint had sufficiently alleged that both the password and the names of the followers were protected trade secrets. The court also refused to dismiss the employer’s conversion claim finding that it had sufficiently alleged that it owns or has the right to possess the account, and that the employee knowingly or intentionally refused to relinquish the account.
But the court dismissed the employer’s intentional and negligent interference with prospective economic advantage claims, finding that actual disruption of the employer’s relationship with the Twitter followers and economic harm had not been sufficiently alleged.
Although the employer has been at least partially successful on some preliminary motions in this dispute, as a practical matter, nothing has changed and the employee still maintains control of the Twitter account. What could the employer have done differently to avoid this problem?
Whose Blog Is It Anyway?
Ardis Health, LLC v. Nankivell, 2011 U.S. Dist. LEXIS 120738 (S.D.N.Y. Oct. 19, 2011), involves a situation similar to that in PhoneDog v. Kravitz, and is instructive on legal measures that an employer can take to improve its position with respect to a dispute over an online account. In Ardis, the employee had control over a number of social network and Web site accounts that the employer used to advertise its business, and was able to obtain a preliminary order requiring the turnover of the accounts.
The court concluded that the employer’s reliance on its online presence to advertise its business supported a finding of irreparable harm and the issuance of the preliminary injunction requiring the turnover of usernames and passwords enabling access to the Web sites and online service accounts controlled by the former employee. The court noted that the employer required access to the sites to continuously update profile information and pages and react to online trends, and that its inability to do so would have an unquestionably negative effect on its reputation and ability to remain competitive.
The court also suggested that the unauthorized retention of the account access information could form the basis for a claim of conversion, citing Thyroff v. Nationwide Mutual Insurance Co. (2d Cir. 2006). Unlike the situation in PhoneDog, where the employee claimed the right to control the Twitter account, the court in Ardis found that there was no dispute that the employer owned the rights to the accounts in question. The court noted that the employee had executed a Work Product Agreement that required, among other things, the return of the employer’s confidential information upon request, and providing that any breach of the agreement would cause the employer irreparable damage and injury.
Whose Tea Party Is It Anyway?
The Tea Party Patriots, a nonprofit organization that grew from a small group of like-minded activists to a force in U.S. politics, learned that disputes over ownership and control of online accounts can impair the ability of an nonprofit organization to pursue its business and require costly litigation to resolve.
One of the founders of the organization, Amy Kremer, registered domain names and set up a Web site and social network accounts on behalf of the organization in 2009. But Kremer was ousted from the group’s board of directors following a dispute over the group’s policies. Kremer retained control over some of the accounts, as well as an online e-mail list, allegedly after having changed the account password.
The group’s remaining board members filed suit against Kremer in Georgia state court. The board ultimately prevailed, but only after a week-long jury trial over the ownership of the accounts. No reported opinion was issued in this case.
One important difference between these three cases is that the Work Product agreement in Ardis v. Nankivell appeared to foreclose any argument over ownership rights in the accounts. In the employment context, employers should consider explicitly nailing down that issue even further in their proprietary rights agreements with employees, as well as their Internet use and similar policies that cover the use of company online accounts on behalf of the employer, with an express provision covering the ownership of such accounts.
Employers should also consider a practical protocol covering online accounts that requires registration in the name of the employer where possible, or inclusion of the employer’s identifying information in the account registration. Duplicate recordation of account registration and access information in a place within the company’s control should also be required. Quick action by the employer to change account access information when an employee leaves may avoid the cost and delay involved in litigation to recover account control.
It is also important to note that this issue arises not only in the case of employees, but also in the context of agents and contractors as well. For example, often an advertising agency will register a Twitter account for a client, or a developer or designer will register a domain name, create a blog or other online presence. It is essential that the agreements with such agents expressly address ownership of the credentials to such accounts, and that the agent is expressly required to provide those credentials to its principal.