10th Circuit: Social networking profiles can be 'trade secrets'

March 16, 2013 (Press-News.org) 10th Circuit: Social networking profiles can be 'trade secrets'

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Protecting trade secrets has always been a valuable part of any business strategy. In order to thrive, businesses need to guard the products, ideas and processes that make them unique.

As it has with many other aspects of the business world, the digital age has brought new complications to the world of trade secrets. Many companies find themselves wondering if and when their digital assets will be protected. This is especially true when it comes to social media profiles.

A recent Colorado trade secrets case is shedding light on this issue. The case involved a dispute between a Denver-area nightclub and one of its former employees, who left the business to start a competing venture. The nightclub alleged that the employee misappropriated MySpace profiles and login information. It further alleged that the employee wrongfully took lists of names, addresses, phone numbers and other information from the nightclub's online "friends."

The employee asserted that the nightclub's MySpace profile could not be considered a trade secret because it was it was generally available to the public. The nightclub, on the other hand, contended that social networking profiles are basically the same thing as customer lists, and therefore should be protected under the same rules.

Prior to this case, the issue had not been decided under Colorado law. Ultimately, the 10th Circuit Court of Appeals sided with the nightclub and ruled that there was sufficient evidence for the trade secrecy claim to move forward. While the court did not rule that the employee had violated trade secret law (since that is a job for a lower court), it did decide that the nightclub's MySpace profile could qualify for trade secret protection. It based its ruling in large part on the fact that, although a list of the nightclub's "friends" is available to anyone who views the profile, more detailed information about these "friends" would only be visible to the profile's administrators and could not be readily obtained from public directories or other outside sources.

Protecting trade secrets

The 10th Circuit's ruling will likely prove to be a valuable tool for Colorado businesses seeking to protect their social networking profiles. As social networking sites like Facebook, Twitter, LinkedIn and MySpace become bigger and bigger parts of doing business, companies will want to protect these assets from misuse by competitors or departing employees.

Of course, it is better for businesses to try and prevent trade secret theft before it occurs by taking steps to protect their social media profiles from misuse or misappropriation. This can include restricting access to the profiles' administrative functions and requiring employees who do have access to sign comprehensive social media policies.

Colorado businesses that have questions about trade secrets or social media use would be wise to discuss the issue with an experienced business law attorney. An attorney can help companies protect themselves and can pursue legal action if trade secrets have been violated.