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October 14th, 2014
Can An Employee’s LinkedIn Account Affect Trade Secret Protection?
If your company safeguards its trade secrets but encourages employee social media use, you may want to review the recent California federal court decision in Cellular Accessories for Less, Inc. v. Trinitas LLC. The court focused on whether LinkedIn use could interfere with a company's efforts to safeguard customer contact lists. Here's what happened.
In Cellular Accessories, a mobile phone accessories company ("Cellular") terminated a sales account manager who promptly left to start his own company - a company that would compete with Cellular. The former manager continued to maintain a LinkedIn account created during his time with Cellular and, he alleged, at Cellular's behest. Among the former manager's LinkedIn connections were Cellular customers and prospects. In addition to maintaining his LinkedIn contacts, the former manager also allegedly emailed himself Cellular customer contact information.
Cellular sued the former manager and his new company for - among other things - misappropriation of trade secrets. (Customer lists have in some cases been deemed trade secrets under both California and other states' laws.)
The former manager and his new company asked the court to dismiss the trade secret claim. They argued that the former manager's LinkedIn contact information could not constitute trade secrets because "Cellular encouraged its employees to create and use LinkedIn accounts." In addition, they argued that the former manager's Cellular contacts on LinkedIn would have been "viewable to any other contact he ha[d] on LinkedIn." Cellular argued back that LinkedIn contact information was "only available to the degree that the user chooses to share it."
The court refused to dismiss the trade secret claim against the former manager and his new company. It was not clear to the court whether the former manager had set his LinkedIn privacy settings to permit his non-customer connections to view information about his Cellular customers. Absent a settlement, there would have to be a trial on the trade secret claim.
What the case means.
While the court refused to dismiss the claim that LinkedIn contacts were not trade secrets, the decision indicated that if the contacts "were indeed made public," the trade secret protection may have been forfeited. In other words, the decision on the social media/trade secrets issue came down to an employee's privacy settings on LinkedIn - an interesting ruling at the intersection of technology and employment law. Thus, in addition to the question of whether to list clients on websites and in printed marketing materials, employers must now also consider whether to permit employees to accept and disclose clients as LinkedIn and other social media contacts.
If you have a question about the Cellular Accessories case, or about any other employment or executive compensation issue, please contact Gavin McElroy at (212) 826-5541 or firstname.lastname@example.org, Wendy Stryker at (212) 705 4838 or email@example.com, or any other member of the Frankfurt Kurnit Executive Compensation and Employment Group.
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