Wine and other alcoholic beverage industry members, along with everyone else trying to advertise and sell just about anything online, are constantly being reminded to use social media to market their businesses. While the possible benefits of social media are well known, today’s post is a reminder to use discretion and sound business judgment when launching a social media campaign, just as you would for other aspects of your business. Three recent cases highlight the importance of developing social media policies before problems arise.

In Phonedog v. Kravitz, Northern District of California, Case No. C 11-03474, Phonedog, a website that reviews mobile devices, sued its former employee over issues surrounding the ownership of a Twitter account. Kravitz was a product reviewer for Phonedog, and was tasked with maintaining a company Twitter account. While Kravitz worked for Phonedog, the Twitter account had approximately 17,000 followers. At some time after Kravitz resigned from Phonedog, the company requested that the Twitter account be returned, but Kravitz instead changed the name of the Twitter account to his own name and declined to give Phonedog access to the account (the details of when Phonedog did or did not request access to the Twitter account and related issues are up for debate and are key issues in the ongoing case). Phonedog first brought suit against Kravitz on July 15, 2011, alleging four causes of action related to Kravitz’ unauthorized use of the Twitter account, including: 1) misappropriation of trade secrets, 2) intentional interference with prospective economic advantage, 3) negligent interference of prospective economic advantage, and 4) conversion. Phonedog claimed that it suffered $340,000 in damages as a result of Kravitz’ actions. That damages calculation is based on 17,000 followers, valued at the “industry standard” of $2.50/month per follower, for an 8-month period. The case is still in its early stages, but so far the court has largely rejected Kravitz’ efforts to dismiss the lawsuit, and has allowed the case to go forward over Kravitz’ claim that the case could not meet the required jurisdictional minimum ($75,000) because Phonedog could not prove that it has ownership or the right of possession of the account or its followers. The court determined that those are factual issues not appropriate for early dismissal, paving the way for more fighting over the Twitter account.

Another ongoing federal case, Christou v. Beatport, District of Colorado Case No. 10-cv-02912-RBJ-KMT, is instructive on the issue of the ownership of social media accounts. In Christou, one of several issues is whether a nightclub owner’s Myspace page and the associated friend list can be protectable trade secrets. In this case a former business partner left the business and kept the login information and friends list of the nightclub’s Myspace account, and began using the account for his competing business. Similar to Phonedog, the court has allowed the case to survive a motion to dismiss, meaning that the court has allowed the argument to go forward that social media account information may be considered a protectable trade secret.

Lastly, in Ardis Health, LLC v. Nankivell, Southern District of New York Case No. 11 Civ. 5013, the plaintiff employer sought a preliminary injunction against its former employee, Nankivell, seeking the return of the employer’s login information for its online accounts, including its social media accounts. The court granted the preliminary injunction with respect to the account information, and required Nankivell to return the information, finding that “it is uncontested that [the employer] own[s] the rights to the Access Information.” In its decision, the court referred to the employment agreement Nankivell signed when she was hired, which included language that work created during her employment “shall be the sole and exclusive property of [the employer].”

There are several important legal tenets which will continue to evolve with the resolution of the Phonedog, Christou, and other similar cases, including whether social media customer lists can qualify as trade secrets. But regardless of how those cases get resolved, they are instructive for anyone marketing with social media. Most importantly, companies should consider several issues before launching social media campaigns, including: a) making clear who owns all social media accounts, including customer lists, friends, and followers, etc., b) developing written social media policies, addressing issues such as username and password access, customer information access, and issues related to the authority to post messages online, and c) return and/or use of company information by agents or contractors. We’ll keep you posted as the legal issues surrounding social media continue to evolve.

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