Finance

Cellular Accessories For Less in legal brawl with former employee: Who owns your LinkedIn connections?

Cara Waters /

The ownership of LinkedIn contacts is in question after a judge in the United States ruled LinkedIn contacts could be considered a trade secret.

California-based Cellular Accessories for Less sells accessories for mobile phones and is embroiled in a legal dispute with one of its sales account managers, David Oakes.

When Oakes was initially employed by Cellular he was required to sign a contract in which he agreed that Cellular’s “proprietary information” would not leave the company “physically or electronically”.

Read more: LinkedIn leads the pack for social SMEs – how your business can get on board 

Oakes maintained an electronic contacts list at Cellular which included LinkedIn connections.

Shortly before his employment was terminated in 2010 he emailed himself the contact list. 

Oakes then started his own competing company, Trinitas.

Cellular brought an action for damages and injunctive relief on the grounds of, among other things, trade secrets misappropriation.

Oakes argued for a summary dismissal of the trade secrets claim on the basis that neither the computer file nor his Linkedin connections could be considered a trade secret. 

This argument was rejected by US District Court Judge Pregerson, who found the electronic contact list was a trade secret under Californian law and that the LinkedIn connections may also potentially be a trade secret, leaving the matter for a jury to decide.

The judge recognised that customer lists may be considered protectable trade secrets but noted that this could not be assumed and that a determination would depend on the effort and time expended by an employee in developing the list.

Cate Nagy, partner at law firm King & Wood Mallesons, told SmartCompany lists of customers are capable of being considered trade secrets in Australia.  

“I think LinkedIn contacts probably fall into a murky area when it comes to distinction between companies confidential information and employees personal property,” Nagy says.

“It probably comes down to an employee’s role in the company as to whether they are likely to be confidential information and whether they are collected in the performance of that role.”

The issue is being considered by the NSW Supreme Court in a case where a former employee used recruitment company Naiman Clarke’s candidate database to populate her LinkedIn contacts.

Nagy says the case should clarify the legal position on the use of LinkedIn contacts in Australia.

In the meantime she says whether a LinkedIn contact is a trade secret depends on factors including: 

  • the details of any employment, confidentiality and/or restraint of trade agreement in place;
  • the privacy settings of an employee’s LinkedIn profile during their period of employment;
  • the instructions given to the employee by the employer;
  • whether the employer pays for the employee’s Premium LinkedIn account;
  • what notes the employee may have made in relation to each contact on LinkedIn; and
  • the skill and effort required to collect the connections. 

“If [employers] do want to retain some rights in LinkedIn contacts it needs to be expressed in the employment contract,” Nagy says.

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Cara Waters

Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times' website and worked for The Sunday Times in London.

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