Businesses and entrepreneurs have spent much of the past decade building their social media presences. Companies now know that a strong social media following can help them broaden their reach, target specific demographics, and build customer loyalty. As the value of social media connections has grown, courts have started sorting through the scenarios in which such connections might qualify as a trade secret.
Under California law, a trade secret is information that: (1) “[d]erives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use”; and (2) “[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Cal. Civ. Code § 3426.1(d).
There’s one obvious problem with characterizing social media connections as trade secrets: on most platforms, users’ lists of connections are public. Publicly available information clearly cannot meet the first part of the definition of “trade secret.” That said, companies can and occasionally do make those lists private, and sometimes use social media networks’ private messaging or private group features as well. Indeed, at least one court applying California law followed that logic and held that LinkedIn connections might qualify as trade secrets in some situations. See Cellular Accessories for Less Inc. v. Trinitas LLC, No. 12-06737, 2014 WL 4627090 (C.D. Cal. Sept. 16, 2014).
Knowing that, businesses should review their current approach to social media and determine whether to make any changes to better protect their information. They should, at the very least, make informed decisions about what information to make publicly available and how to protect private information on social media. Setting those expectations clearly for employees at the outset can help reduce the risk of future misuse or misappropriation of valuable proprietary information.
About the authors:
Stephen Stanwood is an attorney at Chan Punzalan, an intellectual property and business law firm in San Mateo and San Francisco. Daniel Douglas is a law clerk with the firm.