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

Image Source

Tagged with:
 

8 Responses to The Possibility of Keeping a (Trade) Secret on Twitter

  1. Susan Reilly says:

    I think the most difficult thing will be for PhoneDog to prove the twitter account is a “trade secret.” If anything, the Twitter account was a mere marketing tool, especially since customers chose whether to follow or not; they weren’t sent updates just on the discretion of PhoneDog, like a mailing. Additionally, Kravitz isn’t really “misappropriating” the information, because he is using the account for personal use, and hasn’t gained any real “value” from the Twitter account. Finally, it will be difficult for PhoneDog to prove the amount of their loss, as well as putting any value on Kravitz’s “gain.”

  2. Edwin Chadwick says:

    I agree this is an interesting case and that while there’s obviously a legal issue, it doesn’t seem to fit comfortably within the category of trade secret. I would think this type of thing needs to be handled on the front end with the initial employer/employee contract; I liked Caroline’s comparison of an employee turning in their Blackberry. At the same time, I can’t even begin to imagine how PhoneDog is going to prove damages in this case; the $2.50 per follower seems completely arbitrary. Even if they can show a drop of sales after their employee left, can they associate that with the ‘lost’ trade secret? How does one show damages/economic value in this type of case?

  3. KM says:

    I think this raises another important aspect of social media about which employers need to be aware. There should be a defined understanding concerning which entity each social media account belongs to—a twitter account bearing the company’s names seems like a company asset. However, I think that this line can be kind of blurred by the way the account is actually set up and maintained. What does it mean that the company “provided” him with a twitter account? It takes two seconds to set up a twitter account…it’s not the same as providing an employee with a blackberry or laptop.

  4. Collins Kilgore says:

    It certainly doesn’t seem to “fit” as a trade secret claim due to the fact followers are public. Marina is right that it feels like there’s a wrong here. I think if we accept that Phone Dog has a property interest in the followers then there has been a wrong. It isn’t just that these users have a public association with Phone Dog. They chose to follow Phone Dog, making an affirmative association with the company. This is a form of goodwill the company earned. Although it was achieved through the efforts of Noah, he was Phone Dog’s employee. So, the goodwill simply doesn’t belong to him. This sounds to me like it would make a better conversion or unjust enrichment claim. If the followers are really worth what Phone Dog claims they are (or, if they have any value at all), Noah should be liable for taking that value from the company as his own.

  5. Caitlin Angelette says:

    This reminds me of a case where a salesman’s collection of private contacts were nevertheless trade secrets because they were stored on a Blackberry the company provided. If the court sees an analogy between business contacts and followers on twitter, the fact that the account was initially “provided” by the company might be enough to be a customer list. I still don’t see the benefit from being a secret, if the followers are all publicly available. You cannot claim the phonebook as a trade secret, after all.

  6. Marina Visan says:

    I think this is one of those cases where it seems/feels like there has been a wrongdoing, but it is difficult to determine exactly what it is. It does seem unfair of Mr. Kravitz to keep the followers, but at the same time I’d think it’s incredibly difficult to prove that the list of followers should be considered a trade secret.

    Usually, I would think that a trade secret needs to at least be secret. With the list of followers being public, the courts would be expanding the definition of a trade secret if it would decide that the list constitutes a trade secret. Not only is the list public, but it’s on a forum that courts have been hesitant to apply privacy laws to, the internet. Courts in the past have held that once information is on the internet, it should be considered public and privacy laws do not govern. Not only is this list public, but it is on the internet and can easily be accessed by anyone.

    It will be interesting to see the approach the court will take. I also wonder whether another claim, apart from misappropriation of a trade secret, could have been brought. With the current privacy laws in relation to the internet, it is difficult for a plaintiff to find the most relevant claim.

  7. Caroline Fleming says:

    Couldn’t Kravitz have just tweeted that he was no longer with the firm, provided his new personal handle, and switched to that account? I think it should matter that Phone Dog set up the account. It’s kind of like when you leave a company, and you have to give back your company Blackberry. It’s their property, and you have been using it mainly for business, but also probably for some personal use. You have to let people know that your phone number has changed.
    But from looking at @noahkravitz’ tweets, it looks like he uses it for mostly personal use now, so he is not really competing with Phone Dog. And it’s not like his followers can’t follow both him and Phone Dog. You can follow as many people as you like.
    I’m glad this didn’t get dismissed, because I agree that it will be interesting to see what the court does, and I’m not sure which way I would go.

  8. Andrew Harline says:

    Interesting post. I wonder if the distinction will turn on the fact that the customers self-identified themselves as such, by choosing to follow Noah on Twitter. Even though the list is public, it certainly seems plausible that a customer list was created by virtue of each follower choosing to follow Noah. It doesn’t seem like a “secret” per se, but it definitely seems like business marketing material.