Who owns a social media account that an employee sets up for the purpose of promoting her employer’s business? In Eagle v. Morgan, the federal district court for the Eastern District of Pennsylvania became one of the first courts to address the issue of ownership of employer social media accounts. Now, 11 state-law claims related to this issue are slated for trial next month. Here’s what employers need to know about what claims didn’t make it, which ones did, and how they can protect their online presence.

The Factual Background. In Eagle, the employee, Dr. Linda Eagle, founded Edcomm, Inc. and then created a LinkedIn page that she used to promote herself and Edcomm. Dr. Eagle’s former co-worker, who was named as an individual defendant in the lawsuit, assisted her in maintaining the account and as a result, knew Dr. Eagle’s LinkedIn password. After Edcomm was subsequently sold and Dr. Eagle terminated, the new owners changed Dr. Eagle’s LinkedIn password, removed her name and picture from the LinkedIn profile page, and represented that Dr. Eagle had resigned from the company. All other information was left unchanged. Edcomm claimed that Dr. Eagle’s LinkedIn connections belonged to the company and that Dr. Eagle stole the connections. Edcomm also claimed that Dr. Eagle subsequently reaped the benefit of the time and efforts it put into maintaining her LinkedIn account.

Dr. Eagle sued her former employer for illegally accessing her LinkedIn account in violation of the Computer Fraud and Abuse Act ("CFAA"); the Lanham Act (which prohibits a number of activities, including trademark infringement, trademark dilution, and false advertising) in connection with the company’s unauthorized use of Dr. Eagle’s LinkedIn account; unauthorized use of her name in violation of the Pennsylvania Constitution; invasion of privacy and misappropriation of identity; misappropriation of publicity; identify theft; conversion; tortious interference with a contract, i.e., the LinkedIn User Agreement; civil conspiracy; and aiding and abetting.

In terms of damages, Dr. Eagle claimed she lost $100,000 in lost business opportunities because she was unable to access her LinkedIn messages – she went approximately 22 weeks without access; that she spent money to regain access to her account; suffered damage to her reputation; and that the account lost value due to the disruption.

Faced with Dr. Eagle’s lawsuit, the company filed a counterclaim and claimed, in relevant part, that Dr. Eagle misappropriated trade secrets, i.e., the LinkedIn account it claimed belonged to the company; violated the CFAA; engaged in unfair competition; and misappropriated an idea under Pennsylvania common law.

Edcomm’s Trade Secret Claims Don’t Make it Past the Motion to Dismiss Stage. At the motion to dismiss stage, Dr. Eagle asked the court to dismiss the company’s claims. The court threw out some, including Edcomm’s trade secret claim because the information sought to be protected was generally known in the wider business or capable of being easily derived from public information. LinkedIn connections are not trade secrets, the court held, because they are generally known in the wider business community or are capable of being easily derived from public information. However, the court denied Dr. Eagle’s motion to dismiss Edcomm’s remaining claims and held that, under certain circumstances, an employer may claim ownership of its former employee’s LinkedIn connections. This decision is available here.

Dr. Eagle’s Federal Claims Don’t Make it Past the Summary Judgment Stage. Months later, Edcomm filed for summary judgment on Dr. Eagle’s CFAA and Lanham Act claims and the court granted Edcomm’s motion. This decision is available here.

The court first looked at Edcomm’s bid to throw out Dr. Eagle’s CFAA claims. Edcomm argued that Dr. Eagle had no evidence that she suffered a legally cognizable loss or damage in the brief period in which her LinkedIn account was accessed and controlled by Edcomm and could not set forth a claim. For her damages, Dr. Eagle claimed she was denied access to her LinkedIn account for nearly four months, during which time she was unable to receive "invitations to connect, business opportunities and ongoing communications with clients, potential clients and other business and personal contacts." She further claimed that her loss included her lost reputation, relationships, and trust with clients and potential clients. The court concluded that none of these so-called losses damages were sufficient to create an issue of fact as to the existence of cognizable damages under the CFAA because Dr. Eagle was not claiming she lost money because the computer was inoperable or because she expended money to fix damage to her computer  the types of damages recoverable under the CFAA. To the contrary, the court found that Dr. Eagle’s claimed damages of lost business opportunities and loss to her reputation by her inability to attend to her account, which made her appear unresponsive, were not compensable under the CFAA. And even if they were, such damages were too speculative to amount to a recoverable "loss" under the CFAA. It is notable that the court did not say that a CFAA claim could never exist in this type of situation; it merely held that Dr. Eagle could not set forth a claim because her alleged damages were not cognizable under the CFAA. The other side to this coin, however, is what type of damage resulting from Edcomm’s allegedly illegal actions could ever be cognizable under the CFAA?

The court then dismissed Dr. Eagle’s Lanham Act claims wherein she claimed that replacing her name with her successor’s violated trademark law.

But This is Not the End … Not By a Long Shot as Eagle Heads to Trial. While Dr. Eagle’s federal claims are gone, her eight state law claims remain, which include: (1) unauthorized use of a name in violation of Pa. C.S. § 8316; (2) invasion of privacy by misappropriation of identity; (3) misappropriation of publicity; (4) identity theft under Pa. C.S. § 8315; (5) conversion; (6) tortious interference with contract; (7) civil conspiracy; and (8) civil aiding and abetting.

In addition, Edcomm has three counterclaims also based in state law to be decided: (1) conversion; (2) unfair competition; and (3) misappropriation. Edcomm claims the following in damages: (1) $2,000,000 for its conversion claim that includes loss of the value of a laptop computer (though where the remaining $1,898,000 in damages comes from is unclear); (2) loss of business as a result of Dr. Eagle’s procurement of the LinkedIn account and direct competition with Edcomm on its unfair competition claim; and (3) loss of business as a result of Dr. Eagle’s procurement of the LinkedIn account for its misappropriation claim.

Even though only state law claims remain, the court declined to send the case to state court and decided to hear the state law claims where trial, originally set to begin Tuesday, October 16, 2012, will begin on November 19, 2012.

The Potential Impact. Eagle will set precedent in the online world as it relates to ownership of social media accounts and it will be interesting to see how courts handle this ownership of social media account issue because it will affect how companies advertise their brand. Eagle is important because it also concerns a former employee’s suit against an employer for alleged wrongful conduct in connection with a LinkedIn account.

Four Steps to Protect Your Company:
Start at the Beginning. An Ounce of Prevention is Worth a Pound of Cure

  1. Put it in Writing: Have a written non-competition, non-solicitation, non-disclosure, confidentiality agreement with employees, contractors, and vendors with whom confidential information may be shared. This agreement should prohibit conduct over social media and clearly set forth the company’s expectations regarding social media, including, among others:
  • The company owns its social media accounts and personas created and/or associated with those accounts;
  • During employment, the employee will not access the company’s social media accounts and make comments on behalf of the company that portray the company in a bad light or misrepresent the company’s position ; and
  • The employee will not access the company’s social media accounts after the employee separates from employment.

Employees using corporate-branded or other official social media accounts should additionally be required to sign an agreement that clearly sets out the company’s rights and expectations, including, among others:

  • The company owns the social media account and any online personas created and/or associated with those accounts;
  • The company will choose the password and username for the account, neither of which can be changed by the employee without employer permission;
  • All social media accounts, including log-in information and passwords, usernames, online personas, etc, must be relinquished at the end of employment;
  • The employee has no right to use the account after separation from employment;
  • The employer may change account names, settings, password, privacy, and all other account-setting information at any time and without prior notice;
  • The employer will be given rights of control of, or access to, the social networking accounts; and
  • Regardless of how social media is updated to corporate-branded or official social media accounts, (i.e., Smartphone, personal computer, tablet), the employee is acting on behalf of the company and is responsible for complying with all company policies regarding proper behavior.
  1. Protect Your Trade Secrets: If something is truly a trade secret, a company should go to work immediately to protect it. One way to do this is by using computer-based protections, e.g., personalized logins and passwords, monitoring computer use and employee access. These protections may include requiring personalized logins and passwords for users having access to the information; monitoring their access and use of the information.
  2. Update employee handbooks to reflect the realities of social media. In addition to including a social media policy addressing the do’s and don’ts for employees personal social media use, make sure those policies also communicate to employees about the company’s social media presence and the expectations associated with it.

    And, Don’t Forget To Clean Up.

  3. Act Promptly To Remove Employees From Social Media Accounts When You Know The Employment Relationship Is Ending. Change the password when employees leave. Make sure that you know the account password at all times and immediately change it when employees leave your company. That will reduce the risk that your former employee will act first and lock you out.