PhoneDog LLC, a South Carolina company that compares the performance of mobile phones, has sued former employee, Noah Kravitz, alleging that he is harming its business by continuing to use a Twitter account that he started while he was an employee.
PhoneDog estimates in the suit that the value of each Twitter follower to a business is roughly $2.50 per month. That might sound meager, but if Justin Bieber, for example, was a business, his 16 million Twitter followers would produce his enterprises $480 million annually, if PhoneDog is right in its calculations.
The San Francisco federal suit, which was filed in July, accuses Kravitz of wrongfully converting the Twitter account to pursue business opportunities adverse to PhoneDog after he resigned. The company says it owns the account and is seeking $340,000 for conversion, in addition to punitive damages. A jury trial has been set.
The case could have great consequences on how businesses form and maintain employer-employee social media policies and agreements. It could impact the scope of employee use of social media for personal pursuits in the workplace and for the employer. The suit may also produce guidance on determining the value of Twitter followers to businesses and define ownership of accounts offered by an internet service provider, associated with a company, and maintained by an individual.
Case has potential for major consequences
It will be closely watched by companies anxious for guidance on how their employees are using social media, according to attorney James Gatto, partner at Pillsbury, in Northern Virginia, and founder of its Social Media, Entertainment and Technology team.
“It’s a crapshoot as to which way this case goes,” Gatto says, adding that the case about employee-produced social media content is “the tip of the iceberg.”
The PhoneDog case will also likely affect e-discovery protocols and policies of businesses, firms and government agencies. Social media content has become a routine target of information requests in litigation and investigations. A recent Symantec survey of IT and legal personnel at 2,000 companies worldwide reported that social media data is included in 41 percent of all e-discovery requests. This will likely grow as employers expand their presence on Twitter, Facebook, YouTube and other outlets and continue weighing the liability of employee social media use against increased business opportunities.
Company says former employee diverted Twitter followers
Kravitz used the Twitter account to advertise PhoneDog products and tweet non-work related material, which was a standard practice of PhoneDog employees. The account was created with the handle “@PhoneDog_Noah” and grew to 17,000 followers between the time he was hired in April 2006 and October 2010 when he resigned. Kravitz changed the name of the account to “@noahkravitz” when he departed. Later, he began working for PhoneDog competitor TechnoBuffalo. His account now has 24,000 followers.
PhoneDog says it owns the account and the password, which it calls proprietary information. The Twitter followers are the equivalent of a company list, it says, while accusing Kravitz of using the account to communicate with its customers without permission, and benefiting from relationships formed through PhoneDog, including appearances on network and cable television programs.
Employer gave permission to change account name, employee says
Cary Kletter, Kravitz’s attorney in San Francisco, told ACEDS the allegations are baseless. He says PhoneDog gave his client permission to continue using the Twitter account and directed customers to his new handle, “@noahkravitz,” on its website and in a farewell video.
Kravitz says PhoneDog contacted him several times after he changed the account name asking that he “tweet” about products and publish favorable articles. He has produced emails showing that PhoneDog CEO Tom Klein contacted him two months after he left the company asking that he tweet about a PhoneDog Christmas promotion.
“I obliged without hesitation,” Kravitz states.
Kravitz says PhoneDog did not ask that he return the account before June 8, 2011, the day he sued the company for unpaid wages in California state court.
PhoneDog’s attorneys at Donahue Gallaher Woods, in San Francisco, did not respond to requests for comment.
Parties joust over value of a Twitter follower
Kletter says the $2.50 monthly value PhoneDog estimates each Twitter follower is worth is “not based on any logical criteria.”
“I think it’s a ridiculous claim,” Kletter says. “The suit in general is without merit, but that claim in particular defies reason.”
PhoneDog, which derives much of its revenue from web advertising, says it reached that valuation “according to industry standards.” It bases its claim of $340,000 on the number of account followers Kravitz acquired at PhoneDog, and subsequently retained in the eight months between his departure and the filing of the suit.
Kletter says it will be difficult to show that the account’s followers had an economic relationship with PhoneDog or Kravitz. Twitter users follow each other for different purposes, including personal, business and news interests and other reasons. Some users become followers based on “followback” arrangements by which one follows the other if the action is reciprocated. Spam accounts and accounts that operate automatically complicate valuations.
Federal magistrate Judge Maria-Elena James, who is hearing the preliminary issues, ruled in November that PhoneDog must establish it has a property interest in the account or the password and follower list before she rules on value.
“The parties have proffered competing methodologies for valuing the account, and on this limited record, the Court is unable to resolve this dispute at this juncture,” she wrote.
A hearing on a motion by Kravitz to dismiss the complaint is set for January 26. Kravitz previously failed on a similar motion.
Question of social media ownership is key part of case
Because it focuses on the ownership of social media accounts, the case has caught the attention of media outlets and firms dealing with information policy, information governance and other fields. PhoneDog asserts that the account and the followers it generated are its sole property. Kravitz says the account belongs to Twitter.
Twitter states in its terms of service that “All right, title, and interest in and to the Services (excluding Content provided by users) are and will remain the exclusive property of Twitter and its licensors,” adding that it reserves the right to terminate users or reclaim usernames.
Gatto, the Pillsbury lawyer, says the case highlights the need for Twitter and other internet service providers to more clearly define issues of ownership. He says Twitter, the corporate entity, is not likely to play a central role in the case.
The case may also affect policies as to whether employees may create non-work related content with work-related social media accounts. PhoneDog asked its agents and employees to maintain Twitter accounts to help generate traffic to its site and had no policy on employee social media use, according to Kravitz. He says he regularly used the account to tweet about sports, television, music, and other personal interests. His attorney says less than half of his tweets dealt with PhoneDog while he worked for the company.
Businesses likely to tighten social media policies, says social media attorney
The PhoneDog suit and others that may follow will persuade companies to better define social media policies, says Tyson Snow, partner at Mumford West & Snow, in Salt Lake City and author of the website Social Media, Esq. He recommends that social media policies should specify:
• that the business owns the employee account,
• that the employee has no right to use the account after termination of employment,
• that the employee must turn over the account upon termination of employment,
• who is allowed to change account names and settings.
“Social media policies will become more restrictive and define account owners,” Snow says, adding that it is just as important for employees to know what the policy states.
Snow cites a scenario in which a company hires an employee because he already has a significant Twitter following. Does the employee retain the rights to that account if the two part ways?
Gatto suggests that a sound policy might render this and similar questions moot.
“It’s easy enough to address these issues,” he says. “You don’t want to wait to get sued to focus on what you should already be doing.”