Who Owns Your Friends? PhoneDog V. Kravitz and Business Claims of Trade Secret in Social Media Information

By McNealy, Jasmine E. | Rutgers Computer & Technology Law Journal, Spring 2013 | Go to article overview

Who Owns Your Friends? PhoneDog V. Kravitz and Business Claims of Trade Secret in Social Media Information


McNealy, Jasmine E., Rutgers Computer & Technology Law Journal


I.   INTRODUCTION II.  SOCIAL MEDIA AND TRADE SECRET         A. TRADE SECRET LAW            1. SECRECY            2. THE CUSTOMER LIST CONUNDRUM            3. THE CASE OF DEPARTING EMPLOYEES III. TURNING SOCIAL MEDIA INFORMATION INTO PROPERTY         A. EAGLE V. MORGAN         B. CHRISTOU V. BEATPORT, LLC IV. PARSING TRADE SECRETS AND SOCIAL MEDIA V. ON PROTECTING SOCIAL MEDIA TRADE SECRETS 

I. INTRODUCTION

In April 2006, PhoneDog, a technology news and review web site, hired Noah Kravitz to review products, create video blogs, and use other social media outlets to connect current and potential PhoneDog customers to the PhoneDog web site. (1) To connect with customers, PhoneDog tasked Kravitz with maintaining and updating the Twitter account @PhoneDog_Noah, from which he would tweet links to newly posted information and reviews. (2) By all accounts, Kravitz was successful in his employment, as "the @PhoneDog_Noah account generated nearly 17,000 Twitter followers," (3) and Kravitz became a contributor on CNBC's "Street Signs" and "Fox Business Live" representing PhoneDog. (4) In October 2010, Kravitz left PhoneDog, but instead of relinquishing the @PhoneDog_Noah account as PhoneDog requested, he changed the account handle to @noahkravitz, which he continued to use. (5) In December 2010, Kravitz began working for TechnoBuffalo, a PhoneDog competitor, (6) where he writes product reviews, creates video blogs, and connects with customers, much as he did with PhoneDog. (7)

In 2011, PhoneDog initiated a lawsuit against Kravitz claiming that the @PhoneDog Noah Twitter account, renamed @noahkravitz, along with its 17,000 followers, was a trade secret. (8) PhoneDog argued that Kravitz's continued use of the account to communicate with followers and connect them to a competing service is misappropriation of that trade secret. (9) According to PhoneDog, Kravitz's misappropriation of trade secrets has caused damage to the company's business and a loss of advertising revenue. (10) As such, the company claims it is owed $340,000 for the industry value of the Twitter followers as well as punitive damages for both intentional and negligent interference with prospective economic advantage and conversion. (11) The federal district court in California granted Kravitz's motion to dismiss on the interference with prospective economic advantage claims. (12) The trade secret and conversion claims will go to trial. (13)

Although yet to be decided, the PhoneDog case raises a novel issue with regard to social media and intellectual property. In an era when businesses are attempting to use new media to gain customers, what does it mean for an employee tasked with maintaining and maximizing the company's social media presence? Will every connection that an employee makes belong, as property, to the company, or will some connections be considered to belong to the employee? Also, should companies be able to claim as a trade secret information that is publicly available to anyone browsing a social media site? PhoneDog is not the first case to deal with these issues, yet, very few others do.

This article will examine these issues and related questions. First, this article examines social media, how social media is used to make connections, and business use of the new media platforms. Next, section three explores trade secret and the rules surrounding misappropriation of trade secrets and employee mobility. Section three also offers an analysis of claims of social media as trade secret. Section four analyzes the few other cases found in which a company has asserted an ownership right over a former employee's social media information. Finally, this article will analyze the principles that courts should examine in these cases, and concludes with suggestions on how to avoid these kinds of conflicts.

II. SOCIAL MEDIA AND TRADE SECRET

In general, social media allow users to interact, forming networks and otherwise associating with others that they do or do not know. …

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