Can social media profiles be trade secrets of your company?

Yuri Mikulka, chair, Intellectual Property Department, Stradling Yocca Carlson & Rauth

In the age of social media, it seems everything is transparent. In the case of social media contacts, which can be visible to the public through sites such as Facebook, LinkedIn and Twitter, there are questions as to whether that information can, nonetheless, be deemed a trade secret, and if so, who owns the trade secret.

“It was only a few years ago when businesses began incorporating social media in their marketing strategy,” says Yuri Mikulka, chair of the Intellectual Property Department at Stradling Yocca Carlson & Rauth. “Now, it’s recognized as one of the most powerful marketing and PR tools for companies, whether big or small. In fact, when positioned well, social media data can serve as an important asset of the company, especially for those relying on Web traffic and member lists to generate revenue.”

Smart Business spoke with Mikulka about ensuring social media information receives the highest possible protection and remains an asset even when employees leave.

What constitutes a trade secret?

Generally speaking, a trade secret is information that derives independent economic value, actual or potential, from not being generally known to, and not readily ascertainable through, proper means by the public. A company can enforce its exclusive right to possess and use such information as long as reasonable measures are employed to keep such information secret.

Can you protect your social media profiles as a viable trade secret?

This emerging area of law was preliminarily addressed in two recent court cases. Christou v. Beatport, LLC centered on ownership of a MySpace list used by a nightclub to promote its events. When an employee opened a competitive venture, the club sued him for misappropriating its MySpace profiles. The employee responded that MySpace is public and cannot constitute a trade secret. The Colorado federal court disagreed, noting that ‘Friend- ing’ a business or individual grants . . . access to some of one’s personal information, information about his or her interests and preferences, and perhaps most importantly for a business, contact information and a built-in means of contact . . . ’ and that this information is not necessarily public.

Another case in a California federal court, PhoneDog v. Kravitz, centered on a Twitter account maintained by an employee on behalf of the employer. The departing employee kept the account for his own use but changed its name and erased any reference to his former employer. The employer sued, seeking $340,000 in damages, allegedly based on an industry value of $2.50 per follower. The court rejected the employee’s argument that a Twitter follower list cannot constitute a trade secret.

These recent decisions seem to indicate that even if social media profiles are visible online, they can receive trade secret protection — as long as some portion remains inaccessible to the public and employee passwords and login are required to view the information. Nonetheless, because these decisions were issued during early stages of cases, keep an eye out for new cases in your jurisdiction on these issues.

How do you protect social media information as potential trade secrets?  

Here’s what your company can do:

• Put in place policies, procedures and employee agreements that outline and define acceptable and prohibited use of social media.

• Make it clear in writing that any work-related social media is company property.

• Have employees sign a social media policy. At least one court recognized the importance of the employee’s signature in determining whether the company owned social media contacts.

• Get employee buy-in to effectively enforce your policy by providing training and seeking participation to protect the company’s confidential information.

• Maintain employees’ login and password information to company-related social media, and change it when employees leave.

• Periodically monitor employee online activity because trade secrets lose protection when disclosed. If disclosure is inadvertently made, quickly take down the information.

• Consult an attorney to review your social media policy, agreement and practice.

• Periodically update your policy because law and technology are changing so fast.

Yuri Mikulka is chair of the Intellectual Property Department at Stradling Yocca Carlson & Rauth. Reach her at (949) 725-4000 or [email protected]

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