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It may seem hard to believe that anything permissively listed on a social media site could be considered a secret. After all, isn’t the very purpose of these forums – sharing information (sometimes more than than the rest of us would like to know) – the direct antithesis to secrecy? As evidenced by the recent case PhoneDog v. Kravitz, that idea is being challenged in the employer-employee context of trade secrets.
PhoneDog runs an interactive website that offers reviews and comparisons of mobile phones and services. According to the complaint, PhoneDog uses different social media outlets, such as Facebook and Twitter, to market its services to online users. Until October of 2010, Noah Kravitz worked for PhoneDog as a blogger and product reviewer. Part of Mr. Kravitz’s job included managing a Twitter account, “@PhoneDog_Noah”, to promote the company and give his opinion on new mobile phones and related content. Using that account, Mr. Kravitz attracted about 17,000 followers over the course of his employment.
When Mr. Kravitz stopped working for PhoneDog, he continued to use the same Twitter account for personal use, but changed the name to “@noahkravitz”. All other aspects of the account remained the same, including the retention of 17,000 followers who would no longer receive company updates. PhoneDog, upset over losing a valuable marketing resource, brought a claim against Mr. Kravitz for, among other things, misappropriation of a trade secret.
In a claim for misappropriation of a trade secret, the aggrieved party must show that 1) the information is a trade secret, and 2) the defendant misappropriated the information. Most states have adopted the Uniform Trade Secrets Act (UTSA), which defines a trade secret in terms of 2 requirements: the information must be economically valuable to the owner simply by virtue of its secrecy, and the owner must take reasonable efforts to protect the information from exposure to outside parties. Additionally, “misappropriation” can occur in various ways, such as the defendant using improper means (like theft) to take the information, or using the alleged trade secret when he or she owed a duty to maintain its secrecy.
PhoneDog alleges that it provided Mr. Kravitz with a Twitter account for the sole purpose of promoting its business and likens the account, with its followers, to a company customer list, claiming that the account and its password are confidential information owned by the employer. PhoneDog is seeking $340,000 in damages, calculating that each of the 17,000 followers was worth $2.50 per month for the 8 months that Mr. Kravitz has used the account since leaving PhoneDog. Mr. Kravitz countered with a motion to dismiss, stating that the 17,000 followers are publicly available to see, the password derives no economic benefit from being a secret, and the account’s terms of service dictate that it is the exclusive property of Twitter and its licensors (thus, it could not be PhoneDog’s property).
At first glance it seems implausible that PhoneDog could show its “customer list” derived economic value from being secretive, much less that the company took steps to prevent the list from exposure to outside parties. But obviously, it is not implausible enough. On November 8, 2011, Magistrate Judge Maria-Elena James denied Mr. Kravitz’s motion to dismiss, allowing the case to go forward in the United States District Court for the Northern District of California. This may be the first case in the U.S. to address the specific issue of Twitter accounts in an employer context, though a somewhat related suit in the UK, involving online contacts, was recently decided in favor of the employer. In that case, a former employee of an agency started a competing firm using many of his LinkedIn contacts. However many of these contacts had initially been made through the employer’s confidential client list, and the court ruled the contacts were trade secrets, forcing the former employee to turn them over.
PhoneDog v. Kravitz engenders many questions, and it will be interesting to see where the court ultimately lands. Should this sort of information be granted trade secret status? Does it matter that PhoneDog was the entity to register the account, granting Mr. Kravitz the right to use it? What if Mr. Kravitz used it to send out personal tweets as well while he was employed? And what about the fact that Twitter followers are free to come and go as they please, following whoever they prefer? Should it matter how Mr. Kravitz is using the account now (i.e. is he competing in some way with PhoneDog)? Though social media issues may frame trade secret law in a new light, they still highlight the same, basic struggle that is so common in these cases: who owns the work and has a right to the “customers”? The employee who put in the daily effort to make contacts, or the employer who provided the resources, and for whom the work is ultimately meant to benefit?
– Katharine Skinner
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