Summer 2012

HAWKLAW

Make Sure Social Media Marketing Accounts Are Company Property

By Robert S. Hawekotte, Esq.

Many companies allow their employees to conduct marketing and other business through social media (e.g., LinkedIn, Facebook, Google, Twitter, etc) using individual accounts that are held in the employees own name. Recent cases, as well as proposed legislation (i.e. Cal. Assembly Bill 1844) which is likely to become law soon, demonstrate why your company needs to own such marketing accounts.

In the first case example, an employee responsible for marketing was out on extended medical leave. Without contacting the employee and requesting her permission, her employer accessed her social media accounts to send marketing messages to what the employer believed were its clients and prospects. The employee sued the company under the "Computer Fraud and Abuse Act" for illegally accessing her personal accounts without permission.

In the second case example, a former employee refused to turn over control of her social media accounts used in the employer's business. The court held that social media accounts may constitute a form of property that is protectable by the employee.

In the third case example, a departing employee and her former employer disagreed as to who "owned" a social media account, and the clients and prospects on her in her account. This lead to litigation to resolve the issue of ownership of the social media accounts.

In the fourth proposed legislative example, if the employee uses their own social media marketing account, then under the proposed legislation the employee may not required to disclose to their employer their user names and passwords. The safest course of action to avoid any problems, is for the employer to own the social media marketing account.

Finally, ownership and control of social media accounts is also increasingly becoming an issue in mergers& acquisitions during the due diligence phase, and valuation of high-tech businesses.

As with all potential problems that a business can face, the employer needs to make it clear to its employees that for those social media accounts that are created while employed by the company, that the company owns the social media accounts used in the conduct of its business. The employer also needs to make it clear that company business should be done only through company-owned accounts. Finally, as with all accounts, it is important to document what accounts a new employee is bringing to the employer, so that new accounts that are established after the employee commences her sales efforts for her new employer, are the company's.

The following are some of the ways to implement the company's ownership of social media marketing accounts:

• When a new sales employee is hired, document what accounts the employee is bringing to the job.
• Include a clause on social media account ownership in the employee's contract with the company.
• Include a clause on social media account ownership in the company's Employee Handbook.
• Confirm that the employee has created new social media accounts for conducting business.
• Obtain a copy of the account login and password for the company accounts.
• Confirm the user profile indicates that the account is a company-owned account.
• Periodically confirm that the account is being used only for business purposes.

As with all employee issues, the employer needs to follow-up on a regular basis with its sales personnel to make sure that their social media accounts are in the company's name, and, that such accounts are only being used for business purposes.

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No One Ever Gets Credit for Anticipating and Preventing Problems

By Richard E. Blasco, Esq.

As Benjamin Franklin once said, "an ounce of prevention is worth a pound of cure." However, no one ever seems to get credit for anticipating and preventing a problem from ever happening.  When a problem doesn’t happen, there is no triggering event, such as the filing of a claim or the commencement of litigation, which brings management’s attention to the particular problem.  However, once a specific problem is identified, and it is brought to management’s attention, it is the problem solver, usually a member of the management team, paired up with an attorney who is a litigator, who receives the credit for expending the resources necessary to obtain a resolution of the problem.  Whether the resolution is favorable or unfavorable to a company, a substantial investment of resources is usually required, whether it is in the form of the time and effort expended by management, or the fees and costs paid to outside counsel to obtain a final resolution of the problem.  However, the resources that can be expended in obtaining a resolution of the problem, whether favorable or unfavorable, can be in the hundreds of thousands of dollars, usually far in excess of the cost of the “ounce of prevention” necessary to head off the problem from ever occurring in the first place.

Management’s Duties 
The issue management is confronted with, is a balancing test.  How much time, money and other resources should be invested by your company to prevent the specific “problem” from ever occurring?   As we all know, ever business faces potential problems on a daily basis.  It is management’s duty to try to reduce the volume and extent of the effect of these daily problems on the company. 

A common strategy that is used by many companies is to avoid investing in risk management, hope for the best, and then wait to address problems as they arise in the normal course of business.  Hopefully, none of the problems that arise will be of such magnitude as to threaten the very existence of the company.

Another strategy is to make a serious commitment to the disciplines and methods associated with risk management, before the potential problem ever arises.  It is important to note that the term that we are using is risk "management." By modifying term risk with the term “management”, this phrase expresses the recognition that some risk is always inevitable.  However, the duty of management is to manage such risk.

The Basics 
Whether it is a simple problem, dispute, or legal action has been commenced, planning ahead by having the appropriate agreements, rules, policies and guidelines in place ahead of time, can prevent potential problems from happening in the first place, thereby saving a company the time, money and emotional stress that are invested in resolving the particular problem.  There are specific basic preventative steps that a company can take reduce the number of problems that occur.  These basic steps are:

• Including the right clause in an internal or external contract.

• Documentation of a companies rules, regulations and policies.

• Contemporaneous documentation of the facts surrounding an event that could give rise to potential liability.

• Knowledge of how to document the right facts surrounding an event that could give rise to potential liability.

Get professional legal help  
While legal advice is costly it is worth it in terms of preventing disputes and bad publicity. When the rules governing relationships are reduced to writing before potential problems arise, and, everyone is aware of the rules when their respective contractual relationship begins, there are fewer disputes.  This includes disputes with employees, customers, vendors, and other third parties who may have a potential problem with a company. A lawyer can advise management of the company’s rights and responsibilities, as well as anticipate common problems which other clients have experienced.  They can also help with the writing of effective business rules, regulations, policies, contracts and other agreements. That is why it is always important to hire attorneys who have the most experience. 

Having this kind of support early can stop your company from entering into relationships and transactions that it later regrets.

© Blasco & Hawekotte General Counsel Services LLP 2012.  All rights reserved.