In PhoneDog v. Kravtitz, a case proceeding in the US District Court of Northern California between an employer and former employee that deals with an a dispute over the ownership of a Twitter account.
PhoneDog, LLC brought the suit against a former employee who, allegedly, while working for PhoneDog amassed over 17,000 Twitter followers and “took” those followers when he left the company. In its complaint, PhoneDog asserts claims for (1) misappropriation of trade secrets; (2) intentional interference with prospective economic advantage; (3) negligent interference with prospective economic advantage; and (4) conversion.
Kravitz filed a motion to dismiss – first arguing the Court did not have subject matter jurisdiction because PhoneDog failed to establish that the amount in controversy exceeded $75,000. PhoneDog asserts that according to “industry standards” a twitter follower is worth $2.50 (PhoneDog offered no support for the $2.50 per follower figure) and, based on the 17,000 users at issue, it alleged $340,000 in damages. The court stated that there was not sufficient evidence to determine the value at this point in the case.
The valuation issue is perhaps the most interesting aspect of the case. Simply, the world has been trying to figure out what a Twitter follower is worth for quite some time. What will go into legally determining the value of a Twitter account. This valuation will be paramount to the outcome of that case as it will provide the damage amount should damages be awarded. (While the court initially dismissed two claims, PhoneDog amended its complaint and the claims will now go forward.)
“The numbers the company submitted—$2.50 a month per follower—don’t really add up. There’s literally no industry standard for the value of a Twitter follower. What’s the value of a friend? Online, and in real life, it’s very much a world of quality over quantity, and any attempt at establishing a rate is generally derided. If numbers do exist, they most likely were fudged together for new business pitches fused in the fires of social-media gurus and new-media entrepreneurs.” Brian Reis: What Are Your Twitter Followers Worth, and Who Owns Them?
The Twitter follower valuation formula, should one be developed and accepted, will almost certainly be the product of hard fought expert battles and industry analysis from as the effect could be far reaching given the lack of such valuation now.
In the meantime, consider your employee’s use of social media and the value it brings to your company. What would happen if one of your employees’s left and took the account with them? A well drafted company policy regarding social media use would help protect your company. Moreover, as the use of social media, like Twitter, increases (Twitter claims 250 million tweets per day; Facebook has 850 million users), we may see employees market themselves in part by tier social media “reach.” For instance, a salesman with 10,000 twitter followers may be a more attractive hire than an industry veteran with no Twitter account at all – why? Because the former has a direct (and free) pipeline to 10,000 people. These are issues all employees and employers will face in the social media dominate marketplace. The key is to embrace and understand how social media affects your business – it is not going away.
The Boulder Business Lawyers at LaszloLaw provide legal counsel to for-profit and non-profit businesses on a variety of business needs including corporate formation, employment issues, risk management, corporate protection and legal compliance. Contact our Boulder business lawyers today to discuss your business and legal needs.