Is The Refusal To Give Up Control of a Private LinkedIn Group A Trade Secret Violation? IL ND Weighs In

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When a former media company executive refused to turn over a private LinkedIn group’s contact information, the company responded with a multi-count lawsuit.

In CDM Media USA, Inc. v. Simms, 2015 WL 1399050 (N.D. Ill Mar. 25, 2015), the plaintiff company alleged that the LinkedIn group (the “Group”), which was geared towards high-level IT professionals and administered by the defendant, was company property.  The plaintiff also claimed the Group’s comments threads were competitively valuable trade secrets.

The plaintiff joined a common law misappropriation claim premised on the allegation that the defendant downloaded confidential company data on to his cell phone and refused to return it.

In partially granting the ex-employee’s motion to dismiss, the court considered whether social media content and contacts can qualify for trade secret protection under the Illinois Trade Secret Act.

The LinkedIn Private Group: A Trade Secret? Maybe

The court first considered whether the Group (which contained nearly 700 members) fit the definition of a trade secret under Illinois law.  An Illinois trade secret plaintiff must allege (1) the existence of a trade secret, (2) misappropriation of that trade secret, and (3) that the trade secret was used in the defendant’s business. The Illinois Trade Secrets Act (ITSA) defines “trade secret” to include, among other things, “list of actual or potential customers.” 765 ILCS 1065/2(d).

A key common law trade secrets factor is the time and expense incurred in developing a client base.  The more time and money spent, the better chance of showing a trade secret.

Here, the media company’s allegation that the Group was developed at significant expense over several years and was secret enough to give plaintiff a competitive advantage over rival B2B marketers was sufficient to state a trade secrets claim under the Act for purposes of a motion to dismiss.

The court found that “too little is known” about how the Group was set up, its contents and how it impacted the plaintiff’s business to definitively rule that the Group wasn’t a trade secret as a matter of law.

The Group Communications/Comments: Not A Trade Secret

The court rejected the plaintiff’s trade secrets claim based on the Group comments.  While the court allowed that in some cases a social media group’s communications might qualify as a trade secret, the plaintiff failed to pinpoint the specific Group content that was secret or that gave the plaintiff advantage over the competition.  Because the Group trade secrets allegations were too vanilla, that claim was dismissed.

Defendant’s Cell Phone Data: No Allegation of Use in Business

The plaintiff’s trade secrets claim premised on the allegation that the defendant swiped information from plaintiff’s private database and downloaded it to his cell phone also failed.  Trade secrets misappropriation requires an allegation that defendant actually used a trade secret in his business.  Here, the plaintiff failed to allege that defendant used any of the cell phone data in the course of his current employment.

Lastly, the court found the plaintiff’s “inevitable disclosure” allegations to sparse to be actionable.

Under the inevitable disclosure rule, a trade secrets claim will succeed if the plaintiff shows the defendant can’t function or operate in his new job without relying on the plaintiff’s trade secrets.  Here, the plaintiff failed to allege any facts to support his bare-bones assertion that defendant would inevitably disclose plaintiff’s trade secrets to defendant’s new employer.

Afterwords:

Post-worthy for its modeling of some creative lawyering: trade secrets law isn’t the typical legal theory of choice in a dispute over who owns a private social media account;

If a private social media group is secret enough to give an employer a competitive advantage and was developed over a lot of time and expense, the group can qualify as a trade secret;

Even under Federal notice pleading, a plaintiff must allege use in business to establish misappropriation and must give some specifics to support an inevitable disclosure theory.

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PaulP

Litigation attorney at Bielski Chapman, Ltd. representing businesses and individuals in business litigation, post-judgment enforcement, collections and real estate litigation.