Guest post by Anthony Lieu, Lawyer at LegalVision
Who owns your social media connections when you connect as a business acquaintance? Do you own them or does your employer? The use of social media for business has blurred the lines regarding ownership of social media connections. This is particularly the case on B2B networking sites such as LinkedIn. According to the site's terms, users own the connections associated with their account. But what if an employee makes those connections in the course of and as a direct result of their employment?
A business' client database is one of its most valuable assets - no employer wants to see their former employee spin that database into their ' personal network'. As a result, the question of who owns social media connections on LinkedIn has become highly contentious.
The answer to this question remains unclear in Australia. However, the courts did consider this issue in a case that was ultimately settled outside of court - Naiman Clarke v Tuccia  NSWSC 314. Individuals in areas such as sales and business development where ownership of LinkedIn connections is a hot issue may find this decision especially useful.
Are Social Media Contacts Confidential Information?
It is standard for employment contracts to contain restraint of trade and confidentiality clauses that prohibit employees from:
- using their employer's confidential information;
- soliciting their employer's current/potential clients; and
- setting up a rival business.
The common law and section 182(1) of the Corporations Act 2001 (Cth) also protect confidential information, establishing that an employee cannot misuse a company's information for their own benefit.
But are social media connections confidential information and does use of them amount to an ex-employee competing with their former employer?
Case of Naiman Clarke v Tuccia
In this case, Naiman Clarke, a legal recruitment specialist, argued that Ms Tuccia, a former employee, had breached her duty of confidentiality. Ms Tuccia allegedly used her Naiman Clarke spreadsheets to acquire 350 new connections on LinkedIn in the months before her employment ending.
Naiman Clarke contended that this breach had resulted in a 'lost opportunity' because Ms Tuccia used these connections while employed at other companies and placed candidates that Naiman Clarke might otherwise have placed.
Restraint of Trade Clauses Must be Reasonable
A valid restraint of trade clause must be reasonable. The reason for this is simple: undue restriction inhibits market innovation and growth.
An employer cannot prohibit a former employee from using skills and knowledge (including their network) acquired in the course of employment unless this will unfairly damage the employer's legitimate business interests. It is important to have a review of an employment contract before signing.
Networking and personal branding via social media have become increasingly important for job seekers. Preventing former employees from using their online social network might, therefore, be deemed unreasonable in many circumstances. On the face of it, there is little difference between asking the modern employee to delete their LinkedIn contacts upon leaving the company and asking an employee in the 50s to shred their address book and pretend to have never met connections made at business events.
Establishing that Loss Has Occurred
Even in cases like Naiman, where an employee was making use of a database to make new connections as part of an allegedly deliberate strategy, it's difficult to identify concrete loss or damage. The court pointed to this issue during interlocutory proceedings.
How, exactly, did Tuccia's use of her LinkedIn connections result in a 'lost opportunity' for Naiman Clarke? After all, Naiman Clarke and Tuccia both had the opportunity to place the individuals whom Tuccia had connected with on LinkedIn - any loss to Naiman Clarke would only occur where Tuccia saw and capitalised on an opportunity to place someone before them. The court did, however, note that Naiman Clarke's claim might more successfully be reframed as an issue of damage sustained due to undue competition.
International Guidance from Whitmar Publications v Gamage
Despite the potential issues outlined above, employers have successfully prohibited their employees from making use of social media connections in other jurisdictions. Notably, in the UK case, Whitmar Publications v Gamage, the court prevented three former employees of Whitmar, a publishing company, from using its confidential information, including a LinkedIn account that one of the employees had maintained.
Importantly, in this case, the court was convinced that the employee had only created and maintained the account as a result of the employer's directions. In other words, it was a company account an employee maintained. As a result, the employee was ordered to hand over the login details to the account.
The question of whether the employee would also be prevented from creating a personal account and then adding the connections they had on their employer's account remains unsettled. But if LinkedIn connections are considered confidential information, then employees who do so might be considered to be using their former employer's information for their personal benefit in a breach of s182(1) of the Corporations Act. For Australian employers, Whitmar is a heartening decision, an indication that the protection they receive as a result of the law surrounding confidential information won't be entirely unsettled in the social media era.
Laws relating to confidential information have protected employers from having their client lists and databases stolen by former employees. Today, with client lists becoming digital, and often part of interactive, social media platforms such as LinkedIn, questions are being asked about whether these laws apply to social media contacts.
It might, on the face of it, sound ridiculous to hold that anyone can 'own' a LinkedIn connection (although, according to LinkedIn's terms, the individual user owns the account and its associated connections). But a business' LinkedIn account is the modern equivalent of a rolodex of contacts.