Employee Misuse of LinkedIn Contacts

July 29, 2013

The issues of ownership and use of LinkedIn contacts have been widely debated but little judicial guidance exists. In Whitmar Publications Limited v Gamage and Others [2013] EWHC 1881 (Ch), the High Court has confirmed that LinkedIn contacts can constitute confidential information belonging to an employer, to which it granted injunctive relief.

The problems for an organisation attempting to assert ownership of LinkedIn contacts are well known. LinkedIn’s terms and conditions say that ownership of the account is personal to the account holder. Many companies attempt to claim ownership of accounts that are opened by employees during the course of their employment.

In Hays Specialist Recruitment (Holdings) Ltd & Anor v Ions & Anor [2008] EWHC 745 (Ch) the court found that contacts uploaded to a personal LinkedIn account could constitute company property when the employee left. The High Court ordered pre-action disclosure in relation to a potential claim by Hays that an ex-employee had, whilst employed, copied and retained confidential information which he used after leaving Hays. Hays alleged that he had deliberately migrated business contacts from a confidential database to his personal LinkedIn account by uploading those contacts so that LinkedIn could e-mail the contacts, inviting them to join his network. The employee argued that the migration was carried out with Hays’ consent – since it had encouraged him to join LinkedIn – and that, once the business contact had accepted the invitation, the information ceased to be confidential as it could be seen by all his contacts. The High Court held that Hays had reasonable grounds for considering that it might have a valid claim, and ordered pre-action disclosure of certain documents.

In Pennwell Publishing (UK) Ltd v Ornstein [2007] IRLR 700 – not a case specifically concerned with a LinkedIn account but rather a list of contacts – the High Court held that, where an employee (a journalist) created and kept all his contacts on his employer’s computer system, that database or list of information belonged to the employer. This included personal contacts and business contacts which the employee had prior to joining the employer. If the employee had kept a separate list of contacts and selectively copied those which he regarded as long-term or journalistic contacts (as opposed to those which would also be useful to the competing business he was setting up) and maintained them on his own computer, he would have been able to use them.

In Whitmar, an ex-employee Mr Gamage, attempted to use LinkedIn groups maintained by Whitmar to further his competing business, even after this activity had been discovered by Whitmar and whilst he and his co-defendants remained employed. The court granted a ‘springboard’ injunction to Whitmar to prevent the defendants from gaining a competitive advantage in their new business, based on their theft of confidential information and activity which included use of LinkedIn contacts. This judgment is interesting because it confirms that, where a LinkedIn group is owned and maintained by an employer, the court will find that contacts which appeared as the employee’s contacts on his employer-controlled LinkedIn account belong to the employer.

The judgment does not, however, provide a detailed analysis of the LinkedIn accounts in question. It is unclear, for example, whether they were simply maintained for the employees in question – such as, for example, is common for high-profile individuals whose social media accounts are frequently managed by a third party. In such circumstances it would arguably be unreasonable to assert that the LinkedIn account belonged to the employee. Although Whitmar does not discuss ownership, the granting of an injunction supports this view. The result is that where a LinkedIn account is misused by an employee in the course of establishing a competing business, then the court is likely to find in the favour of the employer.

It is also consistent with the position in US law, most recently in the Eagle v Edcomm case, that the court will look at the circumstances in which an employee’s LinkedIn profile is established and maintained, to determine the ownership of that LinkedIn account. In the Eagle case, the court sided with the employee, finding that she owned the LinkedIn account – which is consistent with LinkedIn’s terms and conditions – because she had created her own account, albeit encouraged by her employer, and her employer had attempted to lock her out of the account when her employment terminated. Significantly, however, Eagle could not prove that she herself lost any business as a result of Edcomm locking her out of the account, so she was not awarded any damages.

It is clear from Whitmar that, in circumstances where employees are seeking to establish a business in competition with that of their employer, the LinkedIn contacts of their employer will have the same status as any other confidential information belonging to their employer, misuse of which is very clearly prohibited.

It is also notable that Whitmar has been granted an interim injunction rather than damages. In the US decision in PhoneDog, the employer claimed loss of advertising revenue (PhoneDog generated advertising revenue from its former employee via clicks on its web site and the defendant tweeted on behalf of the company in order to increase web site traffic) calculated at £2.50 per LinkedIn follower. The employment contract specifically included the name of the Twitter account in the definition of confidential information. The case settled out of court, but the employee retained the Twitter account and the followers. The settlement amount is unlikely to have exceeded the amount claimed meaning that the LinkedIn contacts were of limited value.

The difficulty of proving financial loss (especially where contacts are only prospective business partners), in addition to the costs of an injunction application means that litigation may not be as cost-effective as including appropriate protection in employment contracts. It is also important to differentiate between valuable business contacts and social contacts, as it is difficult to see how an employer could assert a valuable proprietary interest in a purely social contact. If an employer considers that the financial value of LinkedIn contacts merits protection, it is hard to see why it would rely on the courts to develop guidance (perhaps aligned to the developing area of case law in foreign jurisdictions) when a suitably drafted employment contract gives good protection. Looking at the limited amount of observations the judge in Whitmar made in respect of LinkedIn, it seems that the judiciary also considers this to be the appropriate step forward.

When setting up social media accounts, the wise employer will:

• use the company address as the employees’ address;

• use a work photo when setting up the LinkedIn account for the employee;

• input all of the text;

• tell the employee what password to use;

• make building up the employees’ LinkedIn profile with contacts a requirement of the employee’s role; and

• tell the employee that, upon leaving its employment, content has to be surrendered and the password changed because the employee has in fact been building up a database on the employer’s behalf during working hours.

In this way, the employer will have the best chance of the courts finding in its favour. The decision in Whitmar supports this approach.  

Stephen Musgrave is Of Counsel in Bird and Bird’s International HR Services Group, bascd in London. His practice covers all aspects of the employment relationship and related disputes, business immigration into the UK, and LLP/partnership disputes: Stephen.Musgrave@twobirds.com