Can Business Contacts On An Employee’s LinkedIn Account Be A Protectable Trade Secret?

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Over the last few years, ownership of LinkedIn contacts has become a continuing source of disputes. If employees decide, or are even encouraged, to connect with an employer’s customers on LinkedIn, must they “unlink” with those contacts when they leave the company? According to a California federal court, an employee’s retention of those contacts “might” be considered misappropriation of the employer’s trade secrets.

In Cellular Accessories for Less, Inc. v. Trinitas, LLC, CV 12-06736, 2014 U.S. Dist. LEXIS 130518 (C.D. Cal. Sept. 16, 2014), the court was asked to decide, among other issues, whether to dismiss on summary judgment an employer’s trade secret misappropriation claim where the employer argued that a former salesperson’s LinkedIn connections with its customers constituted a trade secret. The salesperson, David Oakes, established LinkedIn connections with over 80 customers of his employer, Cellular Accessories for Less, Inc., during his employment. Upon leaving Cellular and starting a competing company, Oakes retained his LinkedIn account and all of his connections.

Cellular then brought its case against Oakes and his new company, Trinitas, LLC, arguing that, by maintaining his LinkedIn contacts with Cellular’s customers, Oakes had violated the employment and confidentiality agreements he signed with Cellular. In those agreements, Oakes agreed that he would not take “physically or electronically” any of Cellular’s “proprietary information,” including information regarding its customer base. Cellular argued that the fact that its customer information could be found on LinkedIn should not affect its claim that the information is a trade secret.

In opposition, Oakes claimed that Cellular encouraged him to use LinkedIn as a tool for garnering business, and that at no time did Cellular assert ownership over the LinkedIn accounts of its employees nor did it instruct its employees that the LinkedIn contact information of its customers could not be used without its permission. Oakes further argued that because his LinkedIn contacts were “viewable to any other contact he has on LinkedIn,” they could not be considered a trade secret.

Because trade secrets are generally defined as information “not … generally known to the public” and “the subject of efforts … to maintain its secrecy,” the court here focused on whether, and how, Oakes utilized LinkedIn’s privacy settings. While Oakes maintained that his contact list was viewable to others on LinkedIn and thus not “secret,” Cellular asserted that would not automatically be the case if Oakes had his account settings set to “private.” Unfortunately, neither Cellular nor Oakes provided evidence to the court regarding Oakes’s LinkedIn privacy settings and whether his account was publicly viewable.

As a result, the court decided that Cellular’s trade secret claim could not be resolved on summary judgment because “issues of material fact” remained regarding the LinkedIn information. According to the court, the issue was one for a jury to decide. However, soon after the court denied summary judgment, the matter settled, leaving neither a court nor jury to decide the issue over the LinkedIn account in this case and continued litigation in other cases.

 

Laurie Perez focuses her practice on labor, employment and general commercial litigation matters. She regularly counsels clients on a wide range of legal issues relating to business practice and personnel management.

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