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INTELLECTUAL PROPERTY l Issue No. 09 l Social media promotes battle over contacts
April 2015
For more than 600 years Courts have recognised that (in
certain circumstances) former employees may be
restrained from competing with a former employer and/or
from using the employer’s confidential information.
However, that issue is taking on a new complexion in the
digital age and in the context of the development or
widespread use of social media by business.
Restraints have always been read strictly as it is
accepted, as a matter of public policy, that a person
should generally be entitled to earn a living. That interest
is balanced against the employer’s ability to protect their
own legitimate business interests.
In Dyer’s case (heard in 1414), the question was whether
a former employee should be restrained from offering his
services (as a dyer) in the same town for a period of six
months, which was refused due to lack of consideration
from the former employer.
In far different times, in considering whether a restraint
was reasonable, Lord Macclesfield queried “what does it
signify to a tradesman in London what another does in
Newcastle?” (Mitchell v Reynolds – heard in 1711).
In the 21st century, the law is faced with an online
economy, global markets, social media and digital
products, all of which provide new challenges in
answering those same questions.
One example of the problem manifests through the
development of tools such as LinkedIn, which is now
commonly accepted as a mechanism for online
networking for most businesses.
Of course, LinkedIn has a number of features which
include allowing users to network with others, to
encourage introduction through shared contacts, to post
material/information which may be shared with contacts
and to keep contacts informed of career development,
milestones and movements. Employees are generally
encouraged to develop and maintain contacts,
sometimes as part of their role.
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In some cases, this has led to a turf war between a
former employee and employer as to who in fact “owns”
the contacts and as to what degree of interaction a
former employee should be entitled to maintain with
those contacts after leaving their employment.
For example, in Naiman Clarke v Tuccia, the New South
Wales Supreme Court was asked to consider the position
of a recruiter who had set out to connect with people on
the employer’s candidate list before leaving to work for a
competitor.
In another example, in the US (Cellular Accessories v
Oakes), a sales manager was encouraged to network
and generate contacts, including via LinkedIn, as part of
his role. One issue which the court flagged in that case
was whether the contacts were public or private and, if
the latter, whether they could be considered to be a trade
secret.
Of course, the answer to the question is not one size fits
all. However, it highlights the need for companies who
use social media in the promotion of their business (and
individuals who do so as part of their role) to consider
those matters carefully and to be aware of any further
developments or changes in the use of available
technology.
Parties may also need to consider employment
agreements, social media policies and the intellectual
property rights provisions which are set out in those
documents.
Andrew Nicholson
Partner
Mullins Lawyers
t +61 7 3224 0261
anicholson@mullinslaw.com.au