Wednesday, February 1, 2012

Social Media and California Trade Secrets Litigation

Most companies now utilize social media as a critical marketing vehicle. However, many times the job of managing a company's social media account is poorly defined. This can lead to problems when an employee or contractor charged with managing a social media campaign leaves. In fact, it is possible that social media followers may be treated as company trade secrets under common law or California's Uniform Trade Secrets Act ("CUTSA").

In the case of Phonedog v. Kravitz, Phonedog is suing its former employee/contractor Kravitz for allegedly converting a Phonedog Twitter feed to Kravitz's own personal use. Kravitz had previously set up the company's Twitter feed and tweeted regarding the company. Kravitz filed a motion to dismiss the lawsuit but a federal judge has decided Phonedog may proceed with its California trade secrets litigation. Phonedog is claiming, among other things, that the followers of the Twitter feed constitute company trade secrets with an independent economic value. Phonedog is claiming over $300,000 in damages.

In the wake of this lawsuit, companies like Phonedog should consult with a California trade secrets lawyer who can provide advice or representation in litigation. A fundamental step would be to insert terms into employment contracts and NDA's which make clear that social media content belongs to a company and that social media followers constitute trade secrets. That way, the company enjoys contractual protection even if the social media followers are determined to not constitute trade secrets.

This case presents interesting legal questions such as whether or not social media followers deserve the same protection as a confidential customer list. Also, what is the independent economic value of each such follower? Are all social media followers equally valuable or is there differentiation?