Social media continues to reshape the legal landscape for businesses. A recent ruling by a federal district court indicates that the list of "connections" stored in an employee's LinkedIn account could constitute a protectable trade secret of the employer under the California Uniform Trade Secret Act.
Like the iterations of the Uniform Trade Secrets Act enacted in other states – including Michigan, Ohio, and Texas, among many others – the California statute defines "trade secrets" as including, among other things, compilations of information that (1) derive independent economic value from not being generally known to others who can obtain economic value from their disclosure or use; and (2) are subject to reasonable efforts to maintain their secrecy.
In Cellular Accessories for Less, Inc. v. Trinitas, LLC, a seller of mobile phone accessories sued a competing company and a former employee who had founded the competing company in the United States District Court for the Central District of California for causes of action including misappropriation of trade secrets and breach of confidentiality agreement. Shortly before his termination, the former employee emailed himself a file containing contact information for more than 900 customers and contacts. Further, after his departure, he retained contacts in a LinkedIn account that he had created and maintained while working for the former employer.
TRADE SECRETS ARE TRADE SECRETS, WHETHER GENERATED AND MAINTAINED ON A SOCIAL NETWORKING SITE OR BY MORE TRADITIONAL MEANS
The defendants moved for summary judgment on the claim for misappropriation of trade secrets, arguing that the LinkedIn contacts did not constitute a trade secret because the former employer encouraged employees to use LinkedIn, and because the former employee's list of contacts on LinkedIn would have been viewable to any of his LinkedIn contacts. In opposition, the plaintiff submitted a declaration stating that a LinkedIn user's information is only viewable to contacts to the extent that the user chooses to share it. Emphasizing that the declarants did not make clear whether and to what extent the former employee's contacts were in fact made public, the court found that there were triable issues of fact precluding summary judgment on the trade secrets claim.
This case illustrates that trade secrets are trade secrets, whether generated and maintained on a social networking site or by more traditional means. Nevertheless, the law in this area remains unsettled; indeed, a Pennsylvania federal court found not long ago that LinkedIn connections are not trade secrets under the Uniform Trade Secrets Act as enacted in that state. Proactive employers can help reduce confusion and minimize litigation costs down the road by crafting confidentiality and trade secret agreements and social media policies that address employees' connection lists and other social media activity and content in appropriate detail.