Grant Machum and Richard Jordan

Employers carefully safeguard customer or client lists as confidential information. Gone are the days, however, where an employer’s customer list is only found in a Rolodex or in a closed database. Now, many employers and employees use social media channels to create, nurture and expand their customer base. What recourse does an employer have when an employee departs and takes with them the social media contacts, connections or followers they have obtained during the course of their employment?

While Canadian courts have yet to face these questions, several cases involving Twitter and LinkedIn from the United States and the United Kingdom shed light on how Canadian courts may approach the complex legal issues which arise.

This article considers what lessons we can learn from this case law. A forthcoming client update will provide some suggestions as to what steps employers can take to protect themselves with respect to social media.

1. The United States

• PhoneDog v. Kravitz

Noah Kravitz worked as a reviewer and video blogger for PhoneDog, an online company which reviewed cell phones.  PhoneDog alleged that Kravitz was given use of and maintained the Twitter account, “@PhoneDog_Noah” to disseminate information and promote PhoneDog’s services.  During the course of his employment, Kravitz amassed 17,000 followers on Twitter. When Kravitz left PhoneDog in 2010, he ignored PhoneDog’s request that he relinquish use of the Twitter account, changed his handle to “@noahkravitz”, took his followers with him and used his Twitter account to promote his new employer, a PhoneDog competitor.

PhoneDog sued Kravitz for the unauthorized use of the Twitter account, alleging four claims, including misappropriation of trade secrets. The District Court in California denied Kravitz’s attempt to dismiss the case and held that (1) the Twitter account and its password could constitute a trade secret under California law, and (2) Kravitz’s refusal to “relinquish use of the password and account” could constitute misappropriation. The case eventually settled in 2012 with Kravitz keeping his Twitter handle and followers.

• Eagle v. Morgan

Dr. Linda Eagle co-founded EdComm, a banking education company. In 2009, EdComm decided to use LinkedIn as a sales and marketing tool and encouraged Eagle and other senior executives to create LinkedIn accounts. Eagle was an industry leader and connected with over 4000 people; she also gave staff her password and directed them to maintain her account. When Eagle was terminated in 2011, an EdComm employee changed Eagle’s LinkedIn password, replaced her photo with that of her replacement and changed some content.  EdComm was in control of Eagle’s LinkedIn account for 17 days before LinkedIn took over the account and returned it to her.

Eagle brought eight causes of action against EdComm for the unauthorized use of her account for 17 days. She was successful in three: the tort of invasion of privacy by misappropriation of identity, the unauthorized use of her name, contrary to a Pennsylvania statute and the tort of misappropriation of publicity. However, Eagle’s damages were set at zero because she did not establish “one contract, one client, one prospect, or one deal that could have been but was not obtained during the period she did not have full access to her LinkedIn account.”

In its counterclaim, EdComm argued Eagle misappropriated the LinkedIn account as her own.  The Court disagreed, finding EdComm never had a policy of requiring its employees use LinkedIn.  The Court noted that the LinkedIn User Agreement expressly states that the account is between LinkedIn and the individual user. In addition, EdComm failed to put forth any evidence that Eagle’s contacts were developed and built through the investment of Edcomm’s time and money as opposed to Eagle’s own time, money and past experience.

2. The United Kingdom – more employer-friendly?

• Hays Specialist Recruitment v. Ions, [2008] EWHC 745 (Ch),

Mr. Ions left his employment with Hays, a specialist employment agency, and established his own company which competed with Hays. Hays accused Ions of merging confidential business contacts onto his personal LinkedIn account and then using the contacts for his own company.  The Court ordered Ions to disclose all of the LinkedIn business contacts he made while at Hays.  The Court rejected Ion’s argument that once the contact had accepted his LinkedIn invitation, the contact ceased to be confidential. Accordingly, while Mr. Ions may have owned his account, the Court found that Hays continued to own the information that Ions had taken from Hays.

• Whitmar Publications Ltd. v. Gamage, [2013] EWHC 1881 (Ch),

The employer, Whitmar, successfully sought an interim injunction against three ex-employees who used the company’s LinkedIn group contacts to market the launch of a rival business. One of the employees had maintained the Company’s LinkedIn group and refused to provide Whitmar with the user name, password and other access details for the LinkedIn groups. The Court found that the LinkedIn groups (rather than personal accounts) were operated for Whitmar’s benefit and promoted its business. The Court granted the injunction, finding that this was a misuse of “confidential information” and a breach of the implied duty of good faith owed by the employees. However, the Court did not determine who actually owned the LinkedIn groups.

3. Conclusion

These cases suggest that an employee will generally own their social media account, even where an employer has suggested creating the account, or where the employee permits other employees to use or maintain the account. While the results of the cases are fact-specific, the client lists and email addresses were found to be the employer’s property in both UK cases, whereas the employee was able to keep their followers or contacts in both of the American cases (one of which was the result of a settlement). The PhoneDog case reveals that ownership of social media accounts or followers may also raise intellectual property issues.

All four of these cases went to Court following the departure of an employee. Accordingly, in a follow-up article, we will address what steps an employer can take to protect their confidential information and mitigate the risk of a lengthy legal proceeding with a departing employee over social media accounts.

This update is intended for general information only. If you have questions about the above information, and how it applies to your specific situation, please contact a member of our Labour & Employment group.

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