Ownership of LinkedIn Contacts

A physical list, created in the course of employment by an employee, detailing customer contact data will clearly belong to the employer who would be entitled to request its return on the termination of the employee’s employment. Further, when an employee stores customer data electronically, for instance on Outlook or other software database used in the course of the employment, then once again the employer will be deemed the owner because of the Copyrights and Rights in Databases Regulations 1997.

However, many employees now use digital social networks such as their LinkedIn account to store customer contact data, and you may wonder who has the right to such customer contact details ‘compiled’ on LinkedIn by the employee in the course of his employment? In this edition we will consider what the development of digital social networks will mean for employers and employees when it comes to ownership of any customer data. We will also consider the interrelation with post-termination restrictive covenants such as non-solicitation of and non-dealing with customers after termination of employment.

Who owns the employee’s LinkedIn contacts?
A systematic collection of data will usually be enough to fall within the legal definition of a database which is set out in the Copyright, Designs and Patents Act 1988. Accordingly, the collection of data on any type of network or system is likely to be covered by database law. Legally, it is the maker of the database who will be the owner, except when it is made in the course of employment, in which case it will always belong to the employer. However, the LinkedIn database is owned and managed subject to the terms of LinkedIn which the member signs up to. This means that when it comes to digital social networks like LinkedIn the database belongs neither to the employer nor to the employee but in fact to a third party.

Non-solicitation and non-dealing restrictive covenants
With the existence of LinkedIn and other digital social networks comes the difficulty of enforcing post-termination restrictive covenants such as non-solicitation and non-dealing. Since the employer does not own the LinkedIn database it will have very little control over who the employee is linked with. Although it may be possible to ask a departing employee to delete customer details from LinkedIn collected in the course of his employment pursuant to non-solicitation or non-dealing clauses in the employment contract, practically it will be impossible to control that the employee does not simply link with that customer again shortly afterwards.

Enforcing a non-compete clause is notoriously difficult as the courts are generally reluctant to do so unless it can be shown that non-solicitation and non-dealing clauses alone would not be sufficient to protect an employer’s legitimate business interests. However, the difficulties LinkedIn and other digital social networks now cause employers in terms of controlling non-solicitation and non-dealing provisions may encourage the courts to increasingly decide that non-compete clauses are justified on the grounds that it would be very difficult to manage non-solicitation and non-dealing clauses.

Management of digital social network accounts
Employers who are concerned about losing control over customer contacts should consider setting up digital social network accounts in the employing company’s name for the employee to use (for instance a company LinkedIn account) and incorporate clear terms into the employee’s employment contract. Such terms should ensure that the account belongs to the employer and that the employee is contractually required to handover the username and password on termination of his employment. We would also recommend that employers have adequate digital social network policies in place (this could for instance be integrated into a general social media policy or an intellectual property policy).

Employment law updates
Remember that employees employed on or after 6 April 2012 will not be entitled to claim unfair dismissal until they have been employed for 2 complete years (increased from 1 year). Further, on 1 April 2012 statutory sick pay increased from £81.60 per week to £85.85.

At ebl miller rosenfalck we specialise in employment law issues and if you have any questions relating to the issues raised in this newsletter or any general employment law queries, please do not hesitate to contact the Employment Team.

The material contained in this newsletter is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© , April 2012

Please contact:

Sara Kenneady

DD +44 (0)20 7553 9937

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