Contacts are an important part of any profession or business. Careers are built on them, businesses develop through them, commercial transactions are made with them. But when an employee leaves who owns them?
The case law in this area is still developing. To date the courts have only intervened in extreme scenarios. Therefore the legal background is not clear-cut.
Employers can protect a legitimate business interest where that protection is no more than is reasonably necessary. Fail to meet this and any restriction will be deemed void as a restraint of trade. Businesses commonly seek to protect connections with customers, clients and suppliers through a mixture of non-deal or non-solicitation clauses, confidentiality and intellectual property provisions. However, an employer should take care to distinguish its business connections from an employee’s personal connections.
The actual ownership of LinkedIn contacts has been determined with reference to various factors; including whether they have been created in the course of employment and whether they result from the employee’s independent efforts. This, like broader issues of ownership of intellectual property, depends on the nature of the employee’s role and scope of employment.
In one case the court found that contacts accumulated in the course of employment constituted the employer’s confidential information. Therefore the employee was ordered to hand over details of the contacts that he had migrated to his personal LinkedIn account. However, he was not required to disclose all of his LinkedIn contacts to the employer because those contacts could include persons with no connection to the employer. In another case an employee who used a LinkedIn account solely for business purposes as part of her duties did not own the contacts.
In respect of intellectual property protection there is no legal right to raw data as such. However, legal protection may be afforded to databases where there has been a 'substantial investment in obtaining, verifying or presenting the contents of the database'. The owner of the database can prevent someone else extracting or reusing all, or any substantial part, of it. In the absence of an agreement to the contrary, if the database is made by an employee in the course of his employment the employer will be regarded as the owner of the database. A UK court has found that a database maintained and backed up on an employer’s computer system belongs to that employer. The position is unlikely to be different even if the contacts are maintained using the employee’s (paid or unpaid) subscription to a social media platform, if all of the contacts result from the employment.
It is more difficult to allocate rights and responsibilities where employee and employer contacts are intermingled within one list, built up over a long period of time, and spanning different employment relationships.
Employers should ensure that employees understand the parameters of their LinkedIn use and place express restraints on that use. The best way to tackle any potential issues with social media in the workplace is by implementing an effective social media policy that covers the use of contacts and is tailored to specific business needs. If LinkedIn contacts post-employment are likely to be an issue a separate section dedicated to LinkedIn use and contacts should be included. This should contain instructions on how social media accounts should be used during employment, how contacts made through the business and cemented on LinkedIn should be treated on termination of employment, in addition to other practical issues such as how the company name should feature in articles or marketing pieces.
Social media policies should be updated regularly and brought to employees’ attention on an annual basis, with employees being asked to acknowledge and agree to comply with the policy. Social media policies should not be considered in isolation and should be used in conjunction with and refer to other policies and the employment contract. For example, employers could require, as part of their general IT policies, that all business contacts be entered into the employer’s customer relationship management database, which would clearly be owned and maintained by the employer. From a practical perspective these issues should be addressed as part of any exit process and interview with employees, particularly those in business development or sales roles.
Huw Beverley-Smith is a partner and Katherine Newman is an associate at Faegre Baker Daniels