Companies have taken painstaking steps to protect their brands and intellectual property in recent years, but they may have overlooked an external, ubiquitous technology source that needs safeguarding as well. Many people have created ad hoc social-media sites that promote both their companies and their personal lives. But does your company have a handle on all those accounts? In light of a recent court case, executives should think about canvassing the Twitter accounts emanating from their company, including those generated by their investor-relations, sales, and marketing departments. If a company finds that its presence on Twitter or other social-media outlets is supporting the business, then it should take steps to preserve this goodwill.
A dispute between a company and its former employee in California suggests these evaluations are necessary. Earlier this year, PhoneDog LLC, which reviews mobile products and services across various carriers and platforms, sued Noah Kravitz, an ex-employee who left the company in 2010. PhoneDog accused him of taking a company Twitter account with him — including the follower list — by simply changing the name on the account from PhoneDog’s to his own, without PhoneDog’s permission.
PhoneDog’s business model relies on enticing people to visit its website. A significant portion of its revenue is derived from selling advertisements on it: advertisers pay a fee for every 1,000 page views generated by its website users. PhoneDog uses social-media outlets, including Twitter, Facebook, and YouTube, to help bring visitors to its site, as well as to market and promote its services.
As part of Kravitz’s job, he generated written and video reviews of mobile products. Those assessments were transmitted to various PhoneDog users via a variety of media, including a Twitter account under the name @PhoneDog_Noah. During the course of Kravitz’s employment, this account accumulated approximately 17,000 followers. PhoneDog claims these followers were worth $42,500 a month to the company as of Kravitz’s departure in late 2010.
In the lawsuit, PhoneDog alleges that Kravitz violated California’s trade-secret laws and improperly took company property. As a result, the company claims, “PhoneDog has suffered damages to its business, reputation, and goodwill, including lost users and user opportunities.”
Last month a federal court denied Kravitz’s motion to dismiss, and therefore the case is moving forward. Among other hurdles, PhoneDog will need to prove it has an ownership interest in the Twitter account and that it took appropriate steps to keep key information confidential, such as the account’s password. In order to recover damages, PhoneDog will also need to prove the value of the lost Twitter account (the company says in its complaint that, based on industry standards, each Twitter follower is valued at about $2.50 per month).
How can you prevent the same thing from happening at your company? Three steps come to mind:
1. Evaluate how your company is using social media.
Internet-based companies are no longer the only ones using social media to support their marketing efforts. Brick-and-mortar companies increasingly are reaching out to potential customers via social media. Moreover, many companies encourage their employees to tweet or blog about the company’s business. If employees are generating valuable contacts for your business on their “personal” social-media platforms, this is something your company needs to discover and take steps to protect.
2. Review and update your written policies.
Many companies have long required employees to acknowledge that any work product developed during work hours that is related to the company’s business is the property of the company. This is especially true for high-tech companies engaged in scientific research and product development. Companies should put the same protections in place for valuable assets being generated on social-media platforms, such as Twitter accounts, that drive customers to your website. If your employees, such as key marketing people, spend their working hours tweeting about the company’s business and have developed valuable follower lists (and, ideally, revenue-producing visits to your website or stores), then the company should require those employees to acknowledge formally that their social-media contacts belong to the company and not to the employees as individuals.
3. Monitor and measure how your company is benefiting from its social media activities.
Because of the rapid changes in the way companies and customers use social media, it is important for companies to continue monitoring who is using social media and how that work is driving the company’s revenues and bottom line. This information should help your company get the most out of its social-media efforts and identify key players whose employment agreements and acknowledgements may need updating. The data will also help you evaluate how to respond in the event that you find yourself in PhoneDog’s position and need to decide whether to sue a former employee who is seeking to provide his or her social-media contacts — ones that were developed on company time and with company resources — to your competitor.
Sara Jane Shanahan, a partner in the litigation department of Sherin and Lodgen LLP in Boston and co-chair of the firm’s Social Media and Digital Technology Practice Group, focuses her practice on complex business litigation and insurance coverage disputes.