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Socially Aware Blog The Law and Business of Social Media

District Court Considers Value of Twitter Account

Posted in Employment Law, IP, Terms of Use

“Man, what do I write here? And what’s it going to be valued at?” So read Noah Kravitz’s Twitter profile soon after Magistrate Judge Maria-Elena James of the Northern District of California denied Kravitz’s motion to dismiss a number of claims brought against him by his former employer related to the Twitter account. While Kravitz continues to control the @noahkravitz Twitter account currently, the case raises questions as to whether he will retain control of the account and how the account should be valued.

October 15, 2010 was Kravitz’s last day at PhoneDog, an “interactive mobile news and reviews web resource.” After about four and a half years of providing product review and video blogging services for PhoneDog, Kravitz moved on to work at a competing website called TechnoBuffalo. While at PhoneDog, Kravitz used the Twitter account @PhoneDog_Noah to publish content related to mobile products and services. During the course of Kravitz’s employment at PhoneDog, the @PhoneDog_Noah account accumulated approximately 17,000 Twitter followers.

After Kravitz ended his employment with PhoneDog, the company requested that he relinquish use of the Twitter account. Instead, Kravitz kept the account and changed the account handle to “@noahkravitz.” Kravitz’s farewell post, published on the PhoneDog website days after Kravitz left the company, told PhoneDog website visitors that they could continue to follow Kravitz using the new @noahkravitz handle. As of February 2012, the @noahkravitz Twitter account more than 26,900 Twitter followers.

PhoneDog proceeded to file a complaint against Kravitz in the United States District Court for the Northern District of California that asserted a number of claims, including trade secret misappropriation, conversion, and intentional and negligent interference with economic advantage. Kravitz filed a motion to dismiss PhoneDog’s complaint based on, among other things, the argument that PhoneDog could not establish that it had suffered damages over the $75,000 jurisdictional threshold.

The jurisdictional amount-in-controversy issue raises interesting questions regarding the ownership and proper valuation of a Twitter account and its followers. PhoneDog asserted that Kravitz’s continued use of the @noahkravitz Twitter account resulted in at least $340,000 in damages to the company, using a calculation based on the total number of followers, the time during which Kravitz had controlled the account, and a purported industry standard value of $2.50 per follower. Kravitz disputed PhoneDog’s calculations and argued that any value attributed to the account came from his efforts in posting tweets and the followers’ interest in him, not from the account itself. Kravitz also argued that, to the extent a value can be placed on a Twitter account, it cannot be determined simply by multiplying the number of followers by $2.50, but rather requires consideration of a number of factors, such as: (1) the number of followers, (2) the number of tweets, (3) the content of the tweets, (4) the person publishing the tweets, and (5) the person placing the value on the account.

Kravitz also disputed whether PhoneDog had any ownership interest in the Twitter account or its followers at all. Kravitz argued that Twitter’s terms of service state that all Twitter accounts belong to Twitter, not to Twitter users such as PhoneDog. Kravitz also asserted that Twitter followers are “human beings who have the discretion to subscribe and/or unsubscribe” to the account and are not PhoneDog’s property. Finally, Kravitz argued that “[t]o date, the industry precedent has been that absent an agreement prohibiting any employee from doing so, after an employee leaves an employer, they are free to change their Twitter handle.”

For its part, PhoneDog claimed that it had an ownership interest in the @noahkravitz Twitter account based on the license granted to it by Twitter to use and access the account, and in the content posted to the account. PhoneDog also argued that it had an “intangible property interest” in the Twitter account’s list of followers, which PhoneDog compared to a business customer list. Finally, PhoneDog asserted that, regardless of any ownership interest in the account, it was entitled to damages based on Kravitz’s interference with PhoneDog’s access to and use of the account, which (among other things) affected PhoneDog’s economic relations with its advertisers.

The court determined that the amount-in-controversy issue was intertwined with the factual and legal issues raised by PhoneDog’s claims and, therefore, could not be resolved at the motion-to-dismiss stage. Accordingly, the court denied without prejudice Kravitz’s motion to dismiss for lack of subject matter jurisdiction. The court also denied Kravitz’s motion to dismiss PhoneDog’s trade secret and conversion claims, but granted Kravitz’s motion to dismiss PhoneDog’s interference with prospective economic advantage claims.

While we wait to learn the final disposition of the @noahkravitz Twitter account, employers should consider explicitly addressing ownership of company-related social media accounts in their agreements with their employees and independent contractors, including providing for transfer of control (including passwords) of such accounts to the company at the end of the employment or independent contractor relationship. In addition, if a social media account is intended to constitute the employer’s property, the account name or handle should refer only to the company and should not include the employee’s name.