Earlier this week, I summarized recent federal district court decisions addressing whether social media accounts can be considered protectable trade secrets. In each of these cases, a former employees retained the login credentials for their employers’ business social media accounts, refused to turn over the credentials, and used the information and friends list in connection with their new employment and to the detriment of their former employer. Each court determined that the plaintiffs alleged sufficient facts to state a claim that their social media accounts were trade secrets.
While these decisions illustrate a potential remedy for the theft of social media information, prevention is much more efficient (and less costly) method of protecting social media information. Careful planning to protect a company’s social media presence and its business connections can save time and money in litigating against a former employee’s theft of social media information and credentials. In the article Are employer social networking accounts protectable trade secrets?, Kara Maciel and Matthew Sorensen provide the following suggestions for protecting this valuable information:
- Employers should ensure that they maintain a log of their social media account login credentials and that the log is appropriately updated.
- Require employees who establish and maintain such accounts on behalf of the company to enter agreements that provide that the accounts and their login credentials are the sole property of the company.
- Departing employees should be interviewed in connection with their exit to ensure that all company social media login credentials to which they had access have been returned.
Maciel and Sorensen also explain that in the event that an employee takes the login credentials for the employer’s social media accounts when he or she leaves the company, it is essential for the employer to take prompt action to recover the information as delay can result in the loss of legal protections for the accounts and any connections that they hold.
An ounce of prevention is truly worth the effort and expense of a litigation cure. Employers should consider including a provision within their existing social media policies or employment documents to prevent the unlawful use of their social media information from their current and former employees.
Social media has become an increasingly important tool for businesses to market their products and services. As the use of social media in business continues to grow, companies will face new challenges with respect to the protection of their confidential information and business goodwill. One of those potential challenges is protecting valuable social media information as trade secrets.
Consider this scenario: An employee creates or manages a social media sites for their employer. The employee is privy to the user name and password credentials in order to access and operates the site on behalf of the employer to share information, interact with users, and obtain new “friends” for the company. The employer and employee gain valuable competitive information through the site’s unique list of friends, along with their personal information and their preferences. Following a resignation or termination, the former employee retains the login credentials for their employers’ business social media accounts, refuses to turn over the credentials, and uses the information and friends list in connection with their new employment. Would the employer have the ability to protect their social media information as a trade secret?
In the article Are employer social networking accounts protectable trade secrets?, Kara Maciel and Matthew Sorensen analyze several recent federal district court decisions addressing whether social media accounts can be considered protectable trade secrets. In each of the reported decisions, the court determined that the plaintiffs alleged sufficient facts to state a claim that their social media accounts were trade secrets. Factors the courts considered in reaching these decisions included:
- The significant negative consequences on the employer’s ability to effectively compete and market their products and services.
- The list of “friends” and other information could only be access through password protection.
- The “friend” connections for social media pages were more than just lists of potential customers, they also provided personal information about the “friends” and their preferences.
- The lists of “friends” could not be duplicated without a substantial amount of effort and expense.
- In one instance, the former employee had entered an agreement in which she had agreed that any work she created or developed during her employment would be the property of the company.
Maciel and Sorensen note that the courts did not find that the plaintiffs had established that their social media accounts were trade secrets, but rather held that they had alleged sufficient facts to state a claim that those accounts were trade secrets. The question of whether the employers will be able to prove the facts necessary to prevail on their claims was left open for determination at an evidentiary hearing or trial.
Trade secrets are one of many emerging areas where social media is affecting the law in unique ways. Unlike traditional websites, a social media site’s list of “friends,” followers, or connections and their corresponding personal information arms employers, companies, and social media users with unique access to valuable customer information. On Thursday, I will share the authors’ advice on how employers and other social media users can protect their social media information and hopefully avoid the situation described above in the future.
Earlier this year, the JAPCA Ethics Alert Blog reported on San Diego Bar Opinion 2011-2 (May 24, 2011) addressing a hypothetical involving a lawyer who represents former employees in an employment lawsuit and sends “friend” requests on social media websites to higher level employees of the opposing party/employer identified by the client as being disgruntled. Here’s a summary of the JAPCA Ethics Alert and San Diego Bar Opinion:
- An attorney representing a former employee against his former company in a wrongful discharge action sends a “friend” request to two high-ranking employees with the client’s former company whom the client had identified as being dissatisfied with the employer and therefore likely to make disparaging comments on their social media pages. The attorney intended to use information obtained from the social media websites to advance his client’s interests in the litigation. The request provided the name of the attorney but did not reveal the reason for the request. The opinion focused on whether the friend requests violated California Bar Rules prohibiting contact with represented parties and prohibiting a lawyer from engaging in deceitful conduct.
- Even though the friend requests makes no reference to anything other than the sender’s name, the request was found to relate to the “subject matter of the representation” since the communication was motivated by a search for information about the subject matter of the representation. The opinion rejected the argument that sending a friend request to a represented party was no different from accessing an opposing party’s public website since the only reason for the friend request is to get past the restricted access on the social media page in order to gather information from the represented employee.
- The friend request violated California Bar Rules prohibiting contact with represented parties and prohibiting a lawyer from engaging in deceitful conduct. According to the opinion, a lawyer seeking to obtain information from a represented party on restricted social media websites must either: (1) obtain the consent of the represented party’s attorney and fully disclose his or her affiliation and the purpose of the friend request; or (2) seek the information through discovery.
The JAPCA Ethics Alert notes that the California Rule in question is the equivalent of Florida Bar Rule is 4-4.2. While other state’s Bar Ethics Opinions are not binding and are for prepared for guidance only, attorneys should be mindful of how a similar situation would be analyzed under the rules of their local jurisdiction. You can read more posts from the JAPCA Ethics Alert here.