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Executive Summary: A District Court in Pennsylvania entered judgment in favor of the employer on a former employee's Computer Fraud and Abuse Act ("CFAA") claim in a dispute over the ownership of the employee's LinkedIn account created during the scope of her employment. The Court ruled that the employee's allegations of the loss of potential business opportunities, goodwill, and/or interference with customers are not cognizable losses under the CFAA, even though it was undisputed that the employee lost control of the LinkedIn account after she was terminated. The Court also dismissed the employee's trademark claim because she failed to demonstrate that the employer created confusion, or the likelihood of confusion, when it replaced the employee's name and photo on the LinkedIn profile with her successor's name and photo on the same account.
While the Court dismissed the federal claims, it retained jurisdiction over the employee's state law claims, which are set for trial on November 19. The outcome of this trial should provide much needed guidance on the issue of ownership rights of social media accounts that are created within the scope of employment.
Factual Background: This dispute involved Edcomm, a banking education company, and its former president and majority shareholder, Dr. Linda Eagle. During Dr. Eagle's tenure, Edcomm's chief executive officer recommended that all employees maintain a LinkedIn account. The company generally followed a policy that once an employee left the company, Edcomm effectively owned the account and could "mine" the information and incoming traffic.
After Edcomm terminated her employment, Dr. Eagle unsuccessfully attempted to access the LinkedIn account that she developed during her employment. The company had changed Dr. Eagle's password so that she would no longer have access and changed her profile so that her replacement's name and picture appeared instead of Dr. Eagle's. After being unable to access the account from late June 2011 through July 12, 2011, Dr. Eagle ultimately managed to regain access but continued to be unable to receive messages for a substantial period of time thereafter.
Dr. Eagle sued Edcomm for violations of the CFAA, the Lanham Act, and several claims arising under Pennsylvania state law including invasion of privacy, misappropriation of publicity, identity theft, conversion, tortious interference with contract, civil conspiracy, and civil aiding and abetting. Dr. Eagle claimed she suffered damages because she was unable to access her account and receive communications from clients and prospective clients.
District Court Grants Summary Judgment in Favor of the Employer on the CFAA Claim: The CFAA is a federal anti-hacking statute that provides, "[a]ny person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator." 18 U.S.C. § 1030(g). The statute defines "loss" as "any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." 18 U.S.C. § 1030(e)(11). Courts have held that, to fall within this definition, the alleged "loss" must be related to the impairment or damage to a computer or computer system.
In this case, the District Court granted Edcomm's summary judgment motion on the CFAA claim because Dr. Eagle was unable to demonstrate the existence of any cognizable damages. Dr. Eagle did not allege that she lost money because her computer was inoperable or because she expended funds to remedy damage to her computer. Instead, she alleged that she lost "potential business opportunities" as a result of Edcomm's actions. The court ruled that such speculative damages are not compensable under the CFAA. Dr. Eagle also alleged damage to her reputation because she was unable to respond to clients and potential clients from her LinkedIn account, which damaged her goodwill. The court noted that allegations of loss of goodwill or interference with customers are not cognizable losses under the CFAA.
Employers' Bottom Line:
This case highlights the need for employers to have clear policies regarding the use and ownership of social media accounts with their employees. While it appears likely that an employee may not be able to successfully pursue a CFAA claim against an employer, it remains to be seen whether an employee can establish damages under a tort theory of recovery.
If you have any questions about the court's decision, please contact the author of this Noncompete News Article, Michelle B. Abidoye, firstname.lastname@example.org, in our Los Angeles office, or Jeff Mokotoff, email@example.com, who is the editor of the Noncompete News, or the FordHarrison attorney with whom you usually work.