The Continuing Impact of PhoneDog v. Kravitz on the Ownership of Business-Related Social Media Accounts

It’s been almost seven years since PhoneDog v. Kravitz, a pioneering case that helped establish that business social media accounts could constitute trade secrets. In PhoneDog, the United States District Court for the Northern District of California denied the defendant’s motion to dismiss the trade secret misappropriation claim. During these past seven years, the use of social media has only increased in importance, as social media can heavily influence the success of a business. Businesses are overwhelmingly using multiple social media websites to promote their businesses and to communicate with their customers or clients. Therefore it is vital for employers to address who owns the business’ social media accounts and for employees to know what constitutes acceptable use of these accounts.

The PhoneDog Lawsuit and the Court’s Decision

In April 2006, Noah Kravitz began working for PhoneDog, LLC, a company that reviews mobile products and services. In order to market and promote its services, PhoneDog used various social media websites, and each PhoneDog employee was given access to an account. Kravitz, as an employee of PhoneDog, was given access to the Twitter account “@PhoneDog_Noah,” which he used to provide information to users about PhoneDog’s services and to promote PhoneDog. Over the course of Kravitz’s employment, the Twitter account amassed 17,000 followers. When Kravitz left PhoneDog in 2010, he refused to turn over the Twitter account, and instead changed the username to “@noahkravitz,” retaining the Twitter followers. Kravitz used the Twitter account to promote his new employer, a PhoneDog competitor.

PhoneDog, represented by Donahue Fitzgerald’s John Kirke as lead counsel, sued Kravitz for misappropriation of trade secrets and interference with economic advantage. PhoneDog claimed that the Twitter accounts used by its employees, as well as the passwords and other information associated with all “@PhoneDog_NAME” Twitter accounts, constituted proprietary, confidential information. PhoneDog argued that Kravitz’ continued use of PhoneDog’s property to promote a competitor was illegal and harmful to its business. On November 8, 2011, the U.S. District Court for the Northern District of California denied Kravitz’ attempt to dismiss the case, holding that the Twitter account and its password could constitute a trade secret under California law and that Kravitz’ actions could constitute misappropriation. The parties subsequently settled the matter. Kravitz continues to use the “@noahkravitz” Twitter account.

Effect of the Lawsuit on Businesses and Legislation

The case drew national attention to the importance of social media on businesses and the necessity of creating policies in regards to social media accounts. Similar cases arose across the country, brought by both business and its employees, and involved disputes over the ownership of MySpace friends, LinkedIn contacts, and multiple social media accounts. These cases show that courts are recognizing an employer’s interest in social media accounts. In addition, California has since enacted legislation to separate personal and work social media sites. A 2013 law protects employees from being forced to disclose their personal social media sites, including information pertaining to those sites or access the sites in the employer’s presence.

In the year following the case, the number of employers with written policies regarding ownership of social media accounts and written guidelines on how employees should professionally communicate with customers increased from 55% to 69%[1]. Kravitz, himself, has since advocated for written policies: “Good contracts and specific work agreements are important, and the responsibility for constructing them lies with both parties.”[2]

What Should Businesses Do?

Does your company use social media to promote your services and products and engage with customers? Are your employees responsible for posting and adding content on your company’s social media pages? If so, does the company have clear policies in place to protect its ownership of the social media accounts? With the rise of social media marketing, it is essential that companies manage and protect their business’ social media accounts.

1. Social media account names: Businesses should create company-owned and company-named social media accounts linked to the business’ website. This prevents confusion regarding the ownership of the accounts and its subsequent followers, and prevents an employee’s name or employee’s personal social media account from becoming associated with the company’s social media account, creating a clear separation between the employee’s and business’ social media accounts.
2. Access to the social media accounts: Businesses should allow multiple employees to access the accounts. This enforces that the business and not the individual employees owns the accounts, and allows the business to access the accounts in the event that an employee separates from the company.
3. Employment contracts: Employers should include provisions addressing social media account ownership in employment contracts.  This is especially important when a company hires an employee specifically because of that person’s strong social media presence, or when a business allows an employee to use his/her personal social media account to advertise the business.
4. Written policies and guidelines: Employers should create written policies, signed by employees to acknowledge review and/or receipt, regarding ownership of social media accounts and guidelines on how employees should handle these accounts. Clearly written and communicated guidelines help to ensure employees are aware social media accounts are owned by the company and to ensure employees know what conduct is acceptable. At a minimum, the guidelines should clarify that employees are:
   • Prohibited from using their own names in association with the business’ social media account
   • Prohibited from using their personal social media account when communicating with clients or advertising the business
   • Allowed to use the business’ social media accounts only for business purposes such as communicating with clients or advertising the business
   • Prohibited from disclosing private company information
   • Prohibited from changing the username or passwords without authorization
   • Required to turn over all account information, including usernames, passwords and communications, and discontinue use of all company-owned social media accounts upon separation from the company

Contact an attorney if you need help revising your employee handbook or creating employee contracts that properly address ownership of social media accounts or need assistance litigating an employee’s misuse of your business’ social media accounts.

The article entitled “The Continuing Impact of PhoneDog v. Kravitz on the Ownership of Business-Related Social Media Accounts” authored by Padmini Cheruvu was published in the 2018 Legal & Accounting Resource Guide published by the North Bay Business Journal.

This article was originally published on August 4, 2016 and has been updated.

[1] http://fortune.com/2012/12/13/who-owns-your-twitter-followers-you-or-your-employer/
[2] http://www.cnet.com/news/curious-case-of-lawsuit-over-value-of-twitter-followers-is-settled/