If you are like many companies, you likely have a Twitter, Facebook, YouTube or other social media account used for public relations, product promotion or simply advertising and marketing. Such accounts are valuable to a business; however, the ownership and exact value of such accounts is uncertain. A recently filed lawsuit in California federal court raises these issues and may provide some guidance.
The California Lawsuit
California company PhoneDog is suing Noah Kravitz alleging harm from his continued use of a Twitter account that was created while Kravitz was employed at PhoneDog. During his time at PhoneDog, the account grew to 17,000 followers. The suit seeks $340,000 in damages, as well as an injunction against Mr. Kravitz from disclosing or trading the list of followers or soliciting business from them.
PhoneDog offers an interactive web site with mobile news and mobile phone plan comparisons and claims 2.5 million unique visitors each month (See phonedog.com). A significant source of the company’s income derives from the sale of ad space on its website. To increase page views, PhoneDog requests its agents and employees to maintain Twitter accounts and to tweet links directing followers to PhoneDog’s website.
Defendant Kravitz was a social media specialist while employed by the company. He published tweets on Twitter under the “handle” or account name “@Phonedog_Noah.” Kravitz resigned on good terms with PhoneDog and he kept the Twitter account, changing his handle to “@noahkravitz.” When PhoneDog asked Kravitz to return control of the Twitter account, he refused and PhoneDog filed suit alleging conversion, misappropriation of trade secrets and other claims.
To quantify the harm caused by Kravitz, PhoneDog valued the ability to send tweets to each follower at $2.50 per month. They multiplied this value by the number of months Kravitz retained the Twitter account after his departure ($2.50 x 8 months x 17,000 customers) to reach the total of $340,000.
Other cases involving similar ownership issues are also working through the courts (See e.g., Eagle v. Morgan, 2011 WL 6739448 (E.D. Pa. 2011). These cases will likely require further factual discovery to resolve factual issues that may have been avoided through the use of a well drafted social media policy.
Social media accounts, the goodwill they represent and the customers and prospective customers who follow them are valuable assets. While the ultimate outcome of the PhoneDog lawsuit is yet to be determined, it is clear that companies should include provisions in their social media policy that govern the ownership and control of social media accounts. Companies should avoid allowing agents or employees to establish social media accounts in their own name for company business — otherwise companies risk potential loss of the account and interruption of customer communications when the account holder leaves.
Training on use of company accounts, and monitoring of such usage is also an important aspect of mitigating company risk of litigation and potentially adverse publicity. It is certainly less expensive to prospectively clarify these issues by policy or contract rather than later seek relief through the courts.