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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

Employers May Have Sweat Equity In Their Executives LinkedIn Accounts, But Employees Score Win In War Over The Applicability Of The Federal Computer Fraud And Abuse Act In The Workplace

Posted in Computer Fraud and Abuse Act, Trade Secrets

By Scott Schaefers

In the age of social media and networking, where employees undoubtedly use their company-issued computers to network with customers, vendors, colleagues, and friends, a legal question presents itself: can employers claim an interest in their employees’ LinkedIn accounts, or other social networking accounts, which the employees use in part to grow and maintain their relationships for the benefit of their employers? 

A.        Can An Employer Claim Ownership Of Its Executive’s LinkedIn Profile?

A federal court in Philadelphia recently said “Yes,” though not definitively. In Eagle v. Morgan, No. 11-4303, 2011 WL 6739448 (E.D. Pa. Dec. 22, 2011), the court held that an employer may claim ownership of its former executive’s LinkedIn connections where the employer required the executive to open and maintain an account, the executive advertised her and her employer’s credentials and services on the account, and where the employer had significant involvement in the creation, maintenance, operation, and monitoring of the account. More specifically, the court refused to dismiss employer Edcomm’s counterclaims for “misappropriation of an idea” and unfair competition against its former chief executive, Dr. Linda Eagle, who allegedly accessed and used her Edcomm-generated LinkedIn account three weeks after she was terminated. Edcomm had an established policy requiring its executives to create LinkedIn accounts using an Edcomm-prepared template, and requiring them to respond to LinkedIn client and colleague inquiries using an Edcomm template. This policy and participation regarding the executive’s LinkedIn account and activities was enough to state a valid claim for misappropriation of Edcomm’s alleged ownership of the account. Notably, the court did not cite any social-networking-related precedent in its decision.

And interestingly, the court dismissed Edcomm’s claims of statutory trade secret misappropriation and common law conversion to the extent they were premised on Eagle’s alleged misuse of the connections and content in her Edcomm LinkedIn account. The court held that such connections could not be trade secret if they were posted on the internet.

There is another active case in the Northern District of California that we previously blogged on that addressed similar issues. 

The lesson here is that employers and their lawyers should consider getting more involved in their employees’ social-networking activities, particularly to the extent that such activities are used for company business and where employees are required or expected to promote themselves on behalf of the company using these networking sites. The day may come where the employer wished it would have kept a closer eye on departing employees’ online profiling.

B.        The Eagle Court Sides With The Pro-Employee Line Of Cases Which Hold That Employers Cannot Use The Federal Computer Fraud And Abuse Act To Sue Employees Who Misuse Their Employers’ Computers

The Eagle decision is noteworthy for another reason: it agreed with other federal courts which held that employers may not sue unfaithful employees under the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq. (CFAA) for stealing or misusing company computer files, so long as the employees had authorized access to the computers for company business. 

The court noted the existing divide between federal courts – some which hold that employers may sue employees under CFAA (e.g. EF Cultural Travel BV v. Explorica, Inc., 274 F.3d 577 (1st Cir. 2007), Int’l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006), see also U.S. Rodriguez, 628 F.3d 1258 (11th Cir. 2010)), and some which hold they may not (e.g. Int’l Ass’n of Machinists & Aerospace Workers v. Werner–Masuda, 390 F.Supp.2d 479, 498 (D. Md. 2005) and similar Pennsylvania federal cases).  Congress and the Supreme Court have yet to resolve this conflict among lower federal courts. Until then, whether employers may sue their employees under the CFAA may depend largely on the federal circuit court of appeals in which the employer or employee is located.