Can Social Media Information be a Protectable Trade Secret?

Social media has become an increasingly important tool for businesses to market their products and services. As the use of social media in business continues to grow, companies will face new challenges with respect to the protection of their confidential information and business goodwill. One of those potential challenges is protecting valuable social media information as trade secrets.

Consider this scenario: An employee creates or manages a social media sites for their employer. The employee is privy to the user name and password credentials in order to access and operates the site on behalf of the employer to share information, interact with users, and obtain new “friends” for the company. The employer and employee gain valuable competitive information through the site’s unique list of friends, along with their personal information and their preferences.  Following a resignation or termination, the former employee retains the login credentials for their employers’ business social media accounts, refuses to turn over the credentials, and uses the information and friends list in connection with their new employment.  Would the employer have the ability to protect their social media information as a trade secret?

In the article Are employer social networking accounts protectable trade secrets?, Kara Maciel and Matthew Sorensen analyze several recent federal district court decisions addressing whether social media accounts can be considered protectable trade secrets. In each of the reported decisions, the court determined that the plaintiffs alleged sufficient facts to state a claim that their social media accounts were trade secrets. Factors the courts considered in reaching these decisions included:

• The significant negative consequences on the employer’s ability to effectively compete and market their products and services.

• The list of “friends” and other information could only be access through password protection.

• The “friend” connections for social media pages were more than just lists of potential customers, they also provided personal information about the “friends” and their preferences.

• The lists of “friends” could not be duplicated without a substantial amount of effort and expense.

• In one instance, the former employee had entered an agreement in which she had agreed that any work she created or developed during her employment would be the property of the company.

Maciel and Sorensen note that the courts did not find that the plaintiffs had established that their social media accounts were trade secrets, but rather held that they had alleged sufficient facts to state a claim that those accounts were trade secrets. The question of whether the employers will be able to prove the facts necessary to prevail on their claims was left open for determination at an evidentiary hearing or trial.

Trade secrets are one of many emerging areas where social media is affecting the law in unique ways. Unlike traditional websites, a social media site’s list of “friends,” followers, or connections and their corresponding personal information arms employers, companies, and social media users with unique access to valuable customer information.  On Thursday, I will share the authors’ advice on how employers and other social media users can protect their social media information and hopefully avoid the situation described above in the future.