July 14, 2015

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Wyche Inside IP
By Terrell W. Mills

There is no question about the growing importance of social media to businesses’ marketing strategies.  Communications about a business are generally more effective and, therefore, more valuable, when coming from an individual and not a corporate account.  As a result, promotion of businesses often comes from personal accounts.  But when the employee leaves, who owns the account?  The courts have been wrestling with this issue for the last four years and there are still far more unanswered questions than answers.

In a recent bankruptcy case in Texas ( In re: CTLI, LLC, Case No. 14-33564, Bankr. S.D. Tex.), the court held that the owner’s personal Facebook page and Twitter account were the property of the company because the owner used his Facebook page and Twitter account to promote the business.  The court cited an example of the owner sending out notices about his presence at weekend show at which the company was exhibiting and selling its products as evidence of use in support of the company’s business.  The court ordered the owner to hand over the access and control of the Facebook page and Twitter account.  The owner refused, stating that “Any 3-year-old can look at this and tell this is my Facebook account and not the company’s.”  The owner subsequently spent seven weeks in jail before handing over control, notwithstanding the knowledge of 3-year-olds.

To mitigate the risk of social media account ownership, it is valuable for companies to establish a social media policy that outlines ownership of the account, the account name, the content and the followers, friends, and other connections.  Here is a link to a presentation by my colleague Mark Bakker addressing social media in the work place.  Additionally, for company social media accounts, it is best to have multiple administrators so control is not vested in only one person.

Similarly, it is important to consider social media when drafting agreements.  For example, when a former employee changes his or her job status on LinkedIn a notice of the change will be sent to all the contacts of that person on LinkedIn.  As a result, you may want to include in a non-solicitation agreement some limits as to what the former employee can say in such untargeted announcements.  It is also important to include social media accounts and relationships in business acquisition transactions.  As part of the due diligence, ownership of the accounts should be verified and transferred to the company if in the names of individuals.  In the purchase agreement the definition of assets needs to include the social media platforms.