While it has been established by many courts that a customer list may constitute a protectable trade secret, the question of whether a former employee’s maintenance of social media contacts constitutes misappropriation of trade secrets is a relatively new question that has come before the courts in the past few years, with decisions falling on both sides of the question.
In a 2014 California district court case — Cellular Accessories For Less, Inc. v. Trinitas, LLC — defendant David Oakes was a sales account manager for Cellular Accessories for Less, Inc., a company that sells mobile phone accessories to businesses. As a Cellular Accessories employee, Oakes signed an employment agreement stating that proprietary company information, including customer lists, remains the property of Cellular Accessories and forbade the disclosure or use of that information without prior consent.
After Cellular Accessories terminated Oakes’ employment, he started a competing business, Trinitas, LLC. Cellular filed suit against Oakes and Trinitas alleging copyright, contract and tort claims, including that Oakes pilfered its trade secrets when he emailed himself a list of Cellular Accessories customers and contact information for Cellular Accessories’ purchasing agents. Cellular Accessories also alleged that Oakes maintained his LinkedIn contacts, which included company clients, after his dismissal.
Defendants argued that Oakes’ LinkedIn contacts couldn’t be considered trade secrets under the California Uniform Trade Secrets Act, stating that these contacts are viewable by all of Oakes’ LinkedIn connections, thereby defeating trade secret protection.
Defendants also argued that many of Oakes’ LinkedIn contacts were made in response to suggestions made by LinkedIn, and that those contacts could easily be replicated by any competitor by searching LinkedIn’s business directory. In addition, defendants argued that Oakes and other sales personnel were encouraged by Cellular Accessories to use LinkedIn for business development, and the company failed to inform employees that their LinkedIn contacts were proprietary or confidential company information.
Plaintiffs argued that on LinkedIn, a member’s contact list is not automatically visible to everyone, since the member chooses the level of privacy setting for his or her account.
As to trade secret misappropriation via LinkedIn, the Court found genuine issues of material fact, ruling that maintaining the LinkedIn contacts may have been a misappropriation of the company’s trade secrets. The court found that social media contact lists may qualify as a trade secret because the account holder has the ability to limit who can see the list.
Since social media is used extensively by companies for business development, employers should consider the following to protect trade secrets:
- Institute clear rules and educate employees on the proprietary and confidential nature of customer information on social media networks.
- Require employees who maintain a social media account for business purposes to keep that account totally separate from any personal social media accounts.
- Ensure that an employee’s business social media accounts are inaccessible once employment is terminated.
- Review and update employment, non-disclosure and non-compete agreements as well as company social media policies with terms and conditions regarding trade secrets.
- Maintain customer lists on an internal database that is password-protected instead of relying on social media accounts for customer information.
- Track time and money spent by the company to develop its customer lists.
When you are facing any type of business dispute, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Williams Mestaz, L.L.P., at (602) 256-9400 to speak with us about your case.