Who Owns an Employee’s Social Media Account? New York Courts Tackling Novel Issue

Who Owns an Employee’s Social Media Account? New York Courts Tackling Novel Issue

Lawsuits over the ownership of employee social media accounts have become increasingly common...

It may seem like an obvious question: Who owns an employee’s social media account? Lawsuits over the ownership of such accounts have become increasingly common. The Second Circuit Court of Appeals recently tackled the issue and held that wedding dressmaker JLM Couture Inc. cannot seize the social media accounts of its employee, designer and influencer Hayley Paige Gutman, while the parties’ dispute works its way through the court system.

Dispute Over Social Media Accounts

In 2011, Hayley Paige Gutman (“Gutman”) signed an employment agreement with bridal design and fashion company, JLM Couture, Inc. (“JLM”) to design wedding dresses, which was set to expire in August 2022.

In the summer of 2019, JLM and Gutman entered into a new round of contract negotiations, which were ultimately unsuccessful. Following this failed negotiation, Gutman locked JLM out of the Instagram account by changing the access credentials. She then changed the Instagram account bio from its earlier version—which included descriptions of Gutman, but also linked to JLM’s “Hayley Paige” website—to read “Personal & Creative account of designer Hayley Paige.” She also created a new “misshayleypaige” account on TikTok.

On December 15, 2020, JLM sued Gutman in the United States District Court for the Southern District of New York asserting breach of contract, trademark dilution, unfair competition, conversion of social media accounts, and trespass to chattels on social media accounts, among other claims. In its case, JLM Couture, Inc. v. Gutman, JLM specifically alleged that Gutman violated the parties Noncompete Agreement by agreeing to appear at the bridal expo in her capacity as a designer; breached the Name-Rights Agreement and infringed on JLM’s trademarks by using the  “@misshayleypaige” Instagram account for third-party promotional deals; and converted social media accounts (the “Disputed Accounts”) to her own use by locking JLM out of the Instagram account and refusing to cede control of it or the TikTok or Pinterest accounts.

JLM sought injunctive relief, which the district court largely granted. The court concluded that JLM had shown a likelihood of success on its claims for breach of contract under the Noncompete Agreement and the Name-Rights Agreement, as well as on its trademark-infringement claim.

The court declined, however, to decide whether JLM had shown a likelihood of success on its conversion and trespass claims or opine on the “novel” and “nuanced” question of who owns the Disputed Accounts. Nonetheless, it ordered Gutman to deliver to JLM the current login credentials, including the current username and password for the Instagram, Pinterest and Tik Tok account and take any action necessary to enable JLM to regain access and control of the JLM HP Social Media Accounts, including linking the accounts to one of JLM’s email addresses and/or phone numbers and/or other social media accounts as requested.

Second Circuit’s Decision

On appeal, the Second Circuit found that the district court exceeded its discretion by granting exclusive control over the social media accounts to JLM while explicitly declining to assess JLM’s likelihood of success on its claim that it owned the accounts. “The district court recognized that the question of social media account ownership was ‘novel’ and declined at the PI stage to evaluate the merits of those claims. The court nevertheless entered JLM’s proposed provision transferring control of the Disputed Accounts nearly verbatim,” the appeals court wrote. “We do not see how a grant of indefinite, exclusive control over the Disputed Accounts could be a proper remedy for any of JLM’s other claims.”

The Second Circuit upheld the injunction as far as it prohibited Gutman from competing with JLM until the end of their contract term or using her name as a trademark without JLM’s permission while the lawsuit proceeds, agreeing that Gutman signed away those rights in her employment agreement. The district court must now decide whether some or all of the disputed social media accounts belong to Gutman and whether additional relief is appropriate.

Lesson from Other Court’s Social Media Decisions

While some courts have addressed the ownership of social media accounts, their decisions have been inconsistent. In PhoneDog v. Kravitz, a California court held that a Twitter account/password could constitute a company’s trade secret. Meanwhile, in Eagle v. Morgan a Pennsylvania district court sided with an employee who filed suit against her former employer for continuing to use the LinkedIn profile she created for the company after her employment was terminated. Citing the company’s lack of a clear social media ownership policy, the court found that the employee was the rightful owner of the LinkedIn account. Since this area of the law is still evolving, one of the best ways to avoid a costly legal dispute is to ensure that employment agreements, independent contractor agreements, and similar contracts clearly address the ownership of social media accounts. Such contracts should expressly state that the employee’s use of a social media account is on behalf of her employer and prohibit the employee from changing the username or withholding the password. As highlighted in JLM Couture, Inc. v. Gutman, it is also advisable to clearly distinguish a company’s social media assets from its employees’ social media assets and address what happens to those assets when the relationship ends.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.