As an attorney who is intimately connected with the use of social media on the front and back end, I believe I can authoritatively say these are really exciting times we live in! Long time followers of this blog know law is to me what music is to musicians or fashion to designers etc. It is creative, sexy, powerful, explosive, innovative and of course life changing. The current case I am about to discuss and its mind blowing intricacies underscores the above point.
If you are just joining me for the first time, welcome. My name is Uduak Oduok. I am a trial lawyer. I am also an online publisher who has been in the digital media space for almost five years (www.ladybrillemag.com, www.africamusiclaw.com and www.ladybrillenigeria.com). I have said before, on this blog, that today’s 21st century lawyers must have a strong command of social media, among other technological developments, and be prepared to meet the demands of our time by accurately informing and educating the bench (Judges), legal profession and the jury as they render decisions and/or craft laws in the inevitable situations where social media and the law collide.
The current case is one where social media primarily collides with intellectual property law, business law, employment law and contract law. Roll your sleeves people let’s dive in!
The Key Facts
As reported by the New York Times the key facts are as follows: “In October 2010, Noah Kravitz, a writer who lives in Oakland, Calif., quit his job at a popular mobile phone site, Phonedog.com, after nearly four years. The site has two parts — an e-commerce wing, which sells phones, and a blog.
While at the company, Mr. Kravitz, 38, began writing on Twitter under the name Phonedog_Noah, and over time, had amassed 17,000 followers. When he left, he said, PhoneDog told him he could keep his Twitter account in exchange for posting occasionally.
The company asked him to “tweet on their behalf from time to time and I said sure, as we were parting on good terms,” Mr. Kravitz said by telephone.
And so he began writing as NoahKravitz, keeping all his followers under that new handle. But eight months after Mr. Kravitz left the company, PhoneDog sued, saying the Twitter list was a customer list, and seeking damages of $2.50 a month per follower for eight months, for a total of $340,000.
PhoneDog Media declined to comment for this article except for this statement: “The costs and resources invested by PhoneDog Media into growing its followers, fans and general brand awareness through social media are substantial and are considered property of PhoneDog Media L.L.C. We intend to aggressively protect our customer lists and confidential information, intellectual property, trademark and brands.”
Mr. Kravitz said the lawsuit, filed in the United States District Court in the Northern District of California, was in retaliation for his claim to 15 percent of the site’s gross advertising revenue because of his position as a vested partner, as well as back pay related to his position as a video reviewer and blogger for the site.” –New York Times
What Jurisdiction (Location) Is this Case Taking Place?
In Northern California where I practice law.
What Type of Case is this?
This is a case of “first impression.” It means there is no case like this existing. This here is exciting because it allows the trial lawyers in this case to help fashion law that will go down as precedent and guide present and future generations of people and businesses.
What are the Challenges Present in a Case of “First Impression?”
Since it is a case of first impression, one of the challenges will be to see how our current laws work with an ever evolving digital media age. As an aside, as a matter of public policy, should we rethink existing laws, especially as it relates to intellectual property law and social media?
What Practice Areas of Law Are We Dealing With?
Plaintiff PhoneDog’s reported statements raises legal issues in Intellectual Property Laws (Copyright, Trademarks & Trade Secrets), Employment and Contract law.
Defendant’s Kravitz’s reported statements raise legal issues in Business Law, Employment Law and Contract Law.
Why Do We Care Who Owns What?
Life is so much more than a tweet “innit?” Why should you reading this be concerned about “twitter followers” and who owns them? Like seriously?
Here is Why You Should Care:
First understand the numbers: It’s a new world where social media rules and those who refuse to move with the times will be left behind. It just is what it is. Translated in English, it means there is a compelling case for using social media as a business owner or talent. Here are some compelling numbers:
•US Internet Users Spend 3x (24%) more minutes in blogs and social networks than email. (Nielsen Company Nov. 2010)•Social media was the leading “emerging channel” for lead generations in 2010 at 74%. (Unisfair May 2010)•Linkedin drives the most Business to Business (B2B) referrals (Lead Force June 2010)•Facebook drives the most Business to Consumer (B2C) referrals (Lead Force 2010)•There are now 152 million blogs online (UM, October 2010)More stats as reported by Hubspot.com•Most people read 1 blog a day. Most also read 5-10 blogs.•B2C Companies that Blog Generate 88% more leads per month than those who don’t.•B2B Companies that Blog Generate 67% More lead•93% Internet Users are on Facebook•US Twitter Users are more educated than the general population
Finally understand the implications and what is at stake:
1. Radio & Television Owners: Media business owners, if you have radio/television hosts or personalities with twitter names such as Twitter.com/CNNAndersonCooper, you need to answer the fundamental question whether you want Anderson Cooper or personalities like him walking away with thousands/millions of followers he built using your brand name.
2. Celebrities (Designers, Musicians, Filmmakers): If you hire your Publicists to tweet for you and help build much needed buzz on your twitter handle, you need to know that if anything happens and that relationship is severed, your publicists will not claim he/she owns your twitter followers and possibly block access to your account.
3. Publicists: if you use your connections and contacts to help a no name talent, company etc. become famous, you need to know that they can’t just replace you and keep the followers who got on the bandwagon strictly because of you and your name. Plus, what about your actual tweets? Per copyright law, the tweets belongs to you, not so?
4. Employees and Independent Contractors: If there is money to be made in twitter followers, surely you want to know so you can up the stakes when you negotiate compensation and copyright ownership of your tweets.
5. Business Owners: You want to know whether you own your followers on Twitter, your “friends” on Facebook fan page and group members on Linkedin because it is ridiculous to think you have invested all these money, time and energy so someone can walk away with thousands of followers who you believe are rightfully yours.
6. Lawyers: Hello fellow legal minds. If you are an employee of a law firm and decide, for reasons known to you, to leave the firm, should you be permitted to walk away with your twitter followers even though you tweeted through the firm’s name and firm’s twitter account?
The above examples illustrate the numerous layers of what is at stake in this very interesting first impression case. Now let’s really get to the legal issues before us.
Issue #1: Who Does Twitter Say Owns Your Twitter Followers? Twitter’s current policy provides copyright ownership only in the tweets that you tweet as a twitter user. It claims ownership of everything else. While its terms of service is silent as to ownership of followers, it would seem to suggest that if twitter did not give its users a right over followers, then its users cannot claim they own twitter followers. Strategically, either party could sue Twitter and ask for some sort of “Declaratory Judgment” that Twitter acknowledge that either one owns the Twitter followers. Doing this would be thinking outside the box and would also permit the court to decide that issue so Twitter does not turn around and sue the winner of this lawsuit. Plus, we all really want to know if twitter ultimately owns our followers.
Issue #2: What was the true legal status of Noah Kravitz when he worked for Phonedog.com? We need to know the exact legal status Noah Kravitz had when he worked for Phonedog.com. The reported facts say Noah claims he was a “vested partner.” Working with the reported facts, “Mr. Kravitz if indeed you had a partnership, why did you keep ALL 17,000 followers? *Blank stare.* Partnerships under Partnership law includes shared profits and liabilities. How does Kravitz get to be a partner yet he did not share any of his 17,000 followers? It makes no sense.
Issue #3 : Was Kravitz an Independent Contractor (IC)?Some news websites report Phonedog.com claims Kravitz’s was an independent contractor. That is one argument, if true, that could hurt Plaintiff Phonedog.com. Why?
If Kravitz was an employee, then the tweets he created while working for Phonedog was created within the scope of employment and belongs to Phonedog. Phonedog owns the account and also the tweets. They hired him, provided the resources, tools (computer etc.) for him to do his work. In contrast, if he was an independent contractor, then the work he did as a writer may be a “work made for hire” ONLY IF: 1) both Phonedog and Kravitz signed a work-for-hire agreement pursuant to law and 2) the work is one of the types of works that may be considered works made for hire by nonemployees.
The problem is tweeting on twitter does not fall neatly into the nine enunciated categories. One more reason I ask if our current legal regime needs to be reassessed where social media collides with the law.
Issue #4: What is the distinction between employees and independent contractors.
1. Employers are required to fulfill tax obligations for employees (workers comp., social security, medicare etc.). In contrast, Employers are not required to do anything with an IC than to send them a form 1099 at the end of each tax year ONLY if you paid $600 and above to the IC.
2. Employers are required to have worker’s compensation insurance in case an employee gets injured on the job. IC status does not require such obligations from employers.
3. To cut straight to the point on this, The IRS has enunciated several rules that helps an employer determine who is and who isn’t an employee. A key one is the degree of control an employer has over the worker. If Phonedog.com controlled Kravitz’s work i.e. how and when it was to be done, then Kravitz was an employee. For example, if Kravitz stayed home and tweeted whenever he wanted, then he might be more of an IC. Please visit the IRS website for more of these distinctions.
Issue #5: Does the Twitter User Handle (Twitter Name) “PhoneDog_Kravitz” confer Employee or IC status? Again it is critical to determine what status Kravitz occupied when he worked for Phonedog.com. In the past, under the IRS rules identifying or using a company’s name in the course of business dealings, in behalf of that company, would mean you are an employee of that company. Today, the IRS views it as a neutral factor. If Defendant Kravitz wins on this issue, there is still a problem. Plaintiff counsel for Phonedog.com can try to argue trademark infringement. Will it hold water? See Fashionentlaw.com recommended reading Chris Aire v. Louis Vuitton for a breakdown of Trademark Law.
Issue #6: Should There Be a Battle Over the Trademark “PhoneDog_Kravitz”: Plaintiff Phonedog has said it spent a lot of time and resources to build a strong social media brand through its employment of Defendant Kravitz to create buzz for its brand, among other duties. I don’t doubt the Plaintiff one bit. I believe they can easily prove up and provide exhibits/evidence in court. The bigger question, however, is what is the value of the name Kravitz? Phonedog has its own trademark. But thinking outside the box, “Kravitz” is also a trademarked name, albeit unregistered. Why is this significant?
Let’s go back to my Anderson Cooper reference with CNN. While CNN is a strong brand, there is no doubt that Anderson Cooper is an equally strong brand and name. By that I mean, he is a strong personality and does not lose being a personality just because he worked for CNN, if he leaves CNN. The personal brand strength of Anderson Cooper is what attracts the followers on twitter in the first place, after all there are many who work for CNN who do not enjoy the amount of followers he does.
Similarly, the same argument can be made for Kravitz. While the Plaintiff argues resources it invested in social media and alleged intellectual property infringement including trademarks, the Defense Counsel certainly should be arguing that PhoneDog_Kravitz required Kravitz’s unique brand name and attributes associated with the brand to be successful. This argument is further strengthened because after Kravitz left Phonedog and changed his twitter handle (name) to Noah Kravitz, all 17,000 followers stayed on with Noah Kravitz.
The followers choosing to stay with Noah Kravitz negates any argument of a “likelihood of confusion” which is the hallmark of Trademark disputes. In making the above argument, however, what does this mean as a matter of public policy for us as a society? This is where this case gets very tricky and difficult. It is also why I asked in the first place whether we need to rethink or carve out new laws that better address the collision of social media with the law.
For example, if we argue that Anderson Cooper is a personality unto himself, how do we ignore the fact that, but for CNN, we would not have been exposed to Anderson Cooper’s strong personal brand? What about the resources, marketing and promotions CNN expended in shaping Anderson Cooper to be the personality and voice we all resonate with? Do we split the baby in half, like the famous story of King Solomon in the Bible. What should be the right result as we continue to march forward in this 21st century?
Two final points and then I will wrap this up.
Issue #7: Show Me the Money! Who determines the Value of Twitter Followers? Trial lawyers LOVE our experts. The Plaintiff claims $2.50 per tweet. But, who determines the value of a tweet? Do we have economists that have determined the value of Twitter followers? Err… no! Okay. Timeout. Somebody press the replay button on the scene from the movie my Cousin Vinny. Okay. Stop. Yes. Stop right there. Remember the scene where Defense Lawyer Vinny tendered Ms. Veto “an out of work hair dress”as an expert witness on automobiles? (LOL!) Remember when opposing counsel challenged the witness for not being an expert in “general automotive knowledge?” She was a woman. a hairdresser. What did she know about cars? LOL! Remember how she silenced him when she coughed up her real life expert CV? Delicious stuff right? Maybe Plaintiff Counsel has a Twitter expert like that? The problem is, even Twitter, the company, has not valued its own tweets. It values the amount of persons it has and uses that pursuant to the online advertising model to lobby for advertisers and investments in Twitter’s growth and expansion. So, valuing tweets is definitely a first.
This is where Defense Counsel for Defendant Kravitz would and should attack ferociously. If we can’t determine damages, then aren’t we wasting the court and everyone’s time? Everyone pack up and go home now. Thank you. Court is adjourned.
Issue #8: Shhhhhhhhhhhhhhhh It’s a Secret! Trade Secret!
Finally, let’s get back to Intellectual Property Laws to wrap this up. Phonedog.com does something interesting. They say, “We intend to aggressively protect our customer lists and confidential information, intellectual property, trademark and brands.” I believe Phonedog is on shaky legal footing on most of its arguments. I think its strongest argument would be that Kravitz was an employee and in the capacity of working as an employee, Kravitz could not walk away with the 17,000 followers. Its shaky footing is emphasized in its attempt to argue that the 17,000 followers constitute a customer list and confidential information. Really? That argument is quite attenuated and very weak, at best. There has to be a more aggressive thinking outside of the box that is more in line with the times. The Anderson Cooper CNN example I gave may be a better analogy in furtherance of an argument within the Employment Law context.
Let’s see why.
What is a Trade Secret?
A Trade secret is any and all information that has commercial value AND employers have been zealous in keeping confidential. Courts have found blueprints, customer lists, pricing information, non-public financial data to be trade secrets.
Saying something is a trade secret does not make it one. Phonedog’s arguments falls flat on its face just by the legal definition of a trade secret. DO Twitter Followers have commercial value? Specific to Twitter owners, yes. Specific to a Twitter User, it is a case of first impression. Assuming the court rules that a Twitter user’s followers have commercial value and you can independently make money off your follower even on twitter, how are public tweets confidential? The second part of the test must be met.
How are 17,000 followers confidential? What steps have been taken to keep them confidential? These 17,000 joined Phonedog_Kravitz as a result of their own freewill so I am unsure where the Plaintiff is headed with this argument.
Taken a step further, how do courts determine what constitutes trade secrets? The courts will look at several factors to determine what constitutes trade secret. They include:
1. To what extent is the information (secret) known outside a company’s particular business?
2. To what extent is the information (secret) known to those within the business? i.e. your employees.
3. Have you the employer and holder of the trade secret taken precautionary measures to guard the secrecy of the information?
4. What is the value of information to the business when weighed against your competitors? and;
5. What is the difficulty with which the information could be properly acquired or independently duplicated by others.?
Look at the above factors. Now answer my rhetorical question. How exactly do Phonedog’s followers on Twitter constitute a “customer list” or “confidential information”? It doesn’t fit. This means two things: 1) Phonedog loses on that argument or 2) the court decides on its own to address the collision of social media and the law; upon arguments and written motions by both attorneys for the litigants. The court then concludes there is a need to expand the legal reasoning and analysis to include a new way of thinking about customer lists so that Twitter Followers now constitute customer lists. Is it necessary for the court to get to this analysis? I don’t think so. The court can stop at categorizing Kravitz as an employee, should the facts lean that way.
I could discuss and stress the importance to you all, especially business owners, reading this to have a social media policy in place at your businesses. I could encourage celebrities, talents etc. to maintain control over their accounts. Indeed you all should do this. But, I think the bigger question is posed to my legal colleagues reading this. In the 21st century, with the speed at which our digital age society moves and is moving, how are legal professionals and the legal industry preparing to meet the demands of an ever evolving and complex 21st century society? The rules we fashion through our zealous advocacy have the potential to create an effect that will either grow or stifle our economy. I think we can no longer, as many in the industry do, ignore the relevance and impact of social media on the law. There is a need to be proactive. There is a need to gather the best of the best legal, technology and social media minds to create a roadmap for the way forward. Waiting for the lawsuits to happen and then trying to fashion legal solutions with laws that need to be expanded or overhauled is not going to cut it.
Having said all that, I am happy to be in a jurisdiction (California) where this lawsuit is filed. I can’t think of a better place for this kind of lawsuit than California, and specifically, Northern California, the home of Silicon Valley. . . Now let’s all see how it shakes out!
NOTE: Special Shoutout to one of my fans Dozie David for bringing this to my attention. I read about it but Dozie David’s email further compelled me to write. Thank you.
For further information or legal commentary and analysis (radio, TV, or print) please contact my office at (916-361-6506) or email (email@example.com).