A recent decision (Ardis Health LLC et al. v. Nankivell)of the U.S. District Court for the Southern District of New York dated 19 October 2011, provides a good insight into the best practices for parties contracting in the social media space.
“Social media” refers to any online medium that includes community features such as user-generated content, the ability to form groups and the ability to recommend, comment on, and share the content of others. Examples include Facebook and Twitter.
The plaintiffs in the proceedings were three companies that market online herbal and beauty products. The three plaintiffs are wholly owned and collaboratively operated by Jordan Finger. The defendant was hired by one of the plaintiffs, CYC, as a “Video and Social Media Producer”. The defendant signed a Work Product Agreement that provides that work created and developed by the defendant “shall be the sole and exclusive property of CYC, in whatever stage of development or completion”, and that it ”will be prepared as ‘work-for-hire’ within the meaning of the Copyright Act”. The agreement also provided that the defendant return all confidential information to the plaintiffs upon request, and that “actual or threatened breach of the agreement will cause irreparable injury and damage”.
The U.S. District Court for the Southern District of New York judged that the plaintiffs own the rights to the Access Information, as the plaintiffs provided the Court with sufficient evidence to support this claim.
However according to the U.S. District Court the plaintiffs were not entitled to the return of the laptop computer at this time, nor were they entitled to prohibit the defendant from displaying Whatsinurs’ content on her website, as the plaintiffs presented little evidence in support of their claim.
Ardis Health LLC et al. v. Nankivell is therefore a further warning to businesses with an online presence. Such businesses must develop strategies to protect their social media presence and content. If content is developed and managed by an independent contractor, ownership of the content should be established by contract. However, even when a contractual relationship exists, enforcement is not always straightforward. As there is no similar “work for hire” concept under Irish law, the position here may be even murkier in circumstances where parties do not set out their rights clearly under contract.
Jordan Finger and the defendant developed a social media website for cosmetic products (“Whatsinurs”). The plaintiffs drafted an additional agreement, “for the organisation and governance of Whatsinurs” but the parties never signed this agreement.
These arrangements were later terminated and the plaintiffs requested that the defendant return the laptop and the passwords used to access the websites (“Access Information”). The defendant refused this, and began displaying content from the Whatsinurs website on her own personal website.