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

Court Issues Decision in Eagle v. Morgan: Employee Owns LinkedIn Account But Fails To Recover Any Damages Against Former Employer

Posted in Social Media, Trade Secrets

By Jessica Mendelson and Robert Milligan

The ownership of social media accounts in the employment context remains a very hot topic. We’ve previously blogged about the the case of Eagle v. Morgan, Case No. 11-4303, E.D.Pa.. The case went to trial in November 2012, and the court has recently issued its trial order, finding that even though the plaintiff successfully proved three causes of action, she failed to prove damages with reasonable certainty, and thus, was unable to recover against her former employer.

Linda Eagle, the former CEO of a banking education company, sued her former employer Edcomm following her termination from the company. After Eagle’s termination, Edcomm allegedly changed the password for her LinkedIn account, preventing her from accessing it, and then replaced her name and photo with that of Sandy Morgan, Eagle’s replacement. In October 2012, the U.S. District Court for the Eastern District of Pennsylvania granted the defendants’ motion for summary judgment on Eagle’s Computer Fraud and Abuse Act and Lanham Act claims. The court denied summary judgment with respect to the state claims asserted by Eagle and retained jurisdiction over state law claims for invasion of privacy by misappropriation of identity, tortious interference with contract, unauthorized use of name in violation of Pa. C.S. § 8316, misappropriation of publicity, identity theft under Pa. C.S. § 8316, conversion, civil conspiracy, and civil aiding and abetting. A bench trial was held in November 2012.

In its most recent ruling, the court found that although Edcomm encouraged the use and creation of LinkedIn accounts, the company had no clear ownership policies in place. In fact, the court’s order suggests that company officials were aware that the lack of such policies might prove problematic in the future, yet declined to adopt any social media ownership policies. Eagle reportedly provided her account information to other employees who assister her in maintaining the account, allowing Edcomm to gain control of the account following her departure, and allegedly to divert users searching for Eagle’s account to the company account which contained Morgan’s photo and information.

Although these facts enabled Eagle to successfully prove her claims of invasion of privacy by misappropriation of identity, misappropriation of identity, and unauthorized use of name in violation of 42 Pa. C.S. § 8316, the court found that Eagle had failed to plead damages with certainty, and therefore, she could not recover. Although Edcomm had engaged in unauthorized use of Eagle’s name, which had commercial value, Eagle’s assessment of damages was too speculative. Eagle argued that she had generated approximately $1 million in revenue annually from her 4000 LinkedIn contacts, and therefore, each contact was worth $250 annually. She argued that she had been locked out of her LinkedIn account for three months, and therefore, was entitled to $250,000. However, the court found this calculation was overly speculative and lacked corroborating evidence. There was no evidence that Eagle had failed to obtain any deals as a result of the loss of her LinkedIn account, nor was there any evidence that she would have actually made any deals during this time period if she had the account. In fact, Eagle’s own expert admitted to “guestimating” on the damages, and more importantly “failed to connect Dr. Eagle’s successful sales with any use of LinkedIn.“

The court found in favor of Edcomm on the remaining causes of action. According to the Court, there was no identity theft, as the only information of Eagle’s that was used was her name, and that was publicly available. The court similarly found conversion did not apply, as the LinkedIn profile was intangible property. Furthermore, the court rejected Edcomm’s counterclaims for misappropriation, as there was no evidence that Eagle’s contacts were developed through an investment of Edcomm time and money, as opposed to her own time and past experience. There was also no evidence of Edcomm’s ownership of the account. The counterclaim for unfair competition was also rejected, due to the lack of evidence of unfair competition through the use of the LinkedIn account. Finally, the court declined to award punitive damages, as the lack of an ownership agreement meant it was just as likely that Edcomm was acting to protect its property rather than acting to harm Eagle.

The case serves as a reminder of the difficulties of placing social media, such as LinkedIn accounts, into existing intellectual property framework. Furthermore, the case suggests that employers need to be proactive and develop social media policies and ownership agreements concerning social media accounts before the need actually arises. Agreements and policies should establish who owns the company social media account, and specify a procedure for returning login information upon termination. Employees should be reminded of the agreements and policies at the time of termination and employers should ensure that they obtain the relevant usernames and passwords. Additionally, the company should register or create the account, and change the password at the time of termination in order to avoid confusion. Agreements and control over the account are key in such disputes, as they are determinative to who actually owns the account.

We will continue to keep you apprised of future social media ownership and trade secret issues. For more information on the Eagle v. Morgan case and social media/trade secret issues, please see our recent webinar on Trade Secrets and Social Media.