Increasingly SaaS suppliers encourage employees to use social media accounts i.e. LinkedIn and Twitter to promote their products and business. However this often results in a conflict arising between claims of misuse of confidential information and “ownership” of accounts and contacts when the employment relationship comes to an end.
The High Court has recently highlighted the need for SaaS suppliers to have a clear policy on the ownership of such social media accounts and contacts when they are used by employees for business purposes.
Whitmar Publication Ltd
The High Court granted an injunction to Whitmar Publication Ltd against 3 ex-employees (and their newly established rival company) to prevent the individuals and the company from using 4 LinkedIn groups. One of the individuals had been responsible for dealing with the LinkedIn groups as part of her responsibilities at Whitmar Publication Ltd.
In a ruling using arguments similar to those used in the decision of the High Court against a former Hays employee in 2008 ordering him to hand over all of his LinkedIn contacts after leaving the company to set up his own consulting business, an injunction was granted on the basis that the individuals had misused confidential information belonging to the company, infringed the company’s database rights and breached duties under their employment contracts.
This will depend upon who set up the account, why it was set up, whether it is also being used for private use and who is paying for and maintaining it.
In the Whitmar injunction the court determined that the following factors were key:
- the extent to which the account or group was created for the benefit of the employer; and
- the extent to which the account or group promoted the employer’s business.
Social Media Policy
The above emphasizes the need for SaaS suppliers to have a clear social media policy in place with their employees. This should cover:
- ownership and use of accounts on termination of employment;
- access details to accounts;
- use of information collected through social media accounts.
If a SaaS supplier has a signed social media policy it will restrict what ex-employees can and cannot do with social media accounts and/or contacts after leaving the company.
Additionally, SaaS suppliers should include non-solicitation or non-compete clauses in all of their employment contracts which specifically prevent ex-employees from using social media accounts or contacts upon termination of their employment. Employment contracts should also include general clauses preventing employees from using confidential information.
In view of the above, SaaS suppliers need to consider “ownership” of social media accounts and contacts before encouraging employees to use these tools at work. There must be a clear written agreement governing what happens to such data when an individual leaves the company – usually set out in a social media policy and/or employment contracts.
Other measures that SaaS suppliers could consider taking are:
- simply banning all use of social media accounts such as Facebook, LinkedIn and Twitter; or
- ensuring that relevant employees add all new social media contacts to the company’s CRM database.
By considering the risks and taking necessary measures to prevent these issues arising SaaS suppliers should be able to avoid costly litigation when employees leave, potentially taking their contacts, accounts and followers with them.
Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:
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