corporate counsel review

152 Pages·2014·0.36 MB·English

CORPORATE
COUNSEL
REVIEW
MAY 2014
Journal of the
Corporate Counsel Section
State Bar of Texas
Corporate Counsel Review
Corporate Counsel Review is the journal of the Corporate Counsel
Section of the State Bar of Texas. The mission of the Corporate Coun-
sel Section includes the exchange of ideas through the dissemination
of materials of interest and concern to the members. The Review is
published semiannually by South Texas College of Law and has a cir-
culation of approximately 4,100.
Editorial Policy
The Editorial Board seeks to stimulate thought, discussion, and
implementation of improvements in the corporate law underlying our
system of capitalism and business enterprise. The Board encourages
expression of the considered opinions of our contributors, some of
which are controversial and will not meet with agreement from others.
Ideas expressed in the Corporate Counsel Review do not necessarily
express the official policy of the Corporate Counsel Section of the State
Bar of Texas.
Solicitation of Manuscripts
The Review seeks as authors members of our Section and other
lawyers who can make a significant contribution to this publication as
a result of scholarship and experience. We seek to present scholarly
writing of balance which may serve as source material for practioners
of corporate law. It is contemplated that internal working papers in
the legal departments of Texas corporations will include significant
research which would be of interest to those having responsibility for
legal affairs of other corporations. We will accept for consideration the
submission of outlines for proposed articles on recent developments in
corporate law, which may include thoughts on the practice of preven-
tive law and the analysis of corporate legal problems. Such materials
may be sent directly to the Editor of Corporate Counsel Review at
[email protected].
© 2014 Corporate Counsel Review. Copyright to individual articles remains in the
authors, or, if previously published, in some cases, in a prior publisher.
ii
CORPORATE
COUNSEL
REVIEW
MAY 2014
Volume XXXIII, Number 1
Editor: Val D. Ricks
Professor at Law
South Texas College of Law
1303 San Jacinto Street
Houston, Texas 77002
Articles Editors:
Alison Smith
Jamie Wilson
Student Note Editor:
Elizabeth Maxwell
Associate Editors:
Jeremy Clarke Eduardo Prado
Gage Fender Patrick Raspino
James Graham Jared Rougeau
Brandon Jalnos Giovanna Schillaci
John Morkovsky Heather Scruggs
Linda Nguyen Lauren Teare
Meghna Patel
iii
CORPORATE COUNSEL SECTION OF
THE STATE BAR OF TEXAS
OFFICERS AND COUNCIL MEMBERS
OFFICERS MR. JAY GRIFFITH MARTIN
VICE PRESIDENT, CHIEF COMPLIANCE OFFICER
CHAIR: AND SR. DEPUTY GENERAL COUNSEL,
MR. MICHAEL D. MARIN BAKER HUGHES INCORPORATED
PARTNER, BOULETTE & GOLDEN LLP
MS. TONI DINH NGUYEN
CHAIR ELECT: ASSISTANT GENERAL COUNSEL,
MR. CLAY B. SCHEITZACH LUMINEX CORPORATION
VICE PRESIDENTAND SENIOR CORPORATE
LITIGATION COUNSEL MS. ALMA REYES
AFFILIATED COMPUTER SERVICES, INC.
MR. SHELBY R. ROGERS
VICE CHAIR:
MR. LAWRENCE BRADLEY HANCOCK MR. THOMAS JASON SMITH
SHAREHOLDER, GREENBERG TRAURIG, LLP DUFF & PHELPS
SECRETARY:
MR. STEPHEN E. STEIN
MS. SYLVIA ANN CARDONA PARTNER, THOMPSON & KNIGHT LLP
SHAREHOLDER, LANGLEY & BANACK, INC.
MS. LARRIET ELAINE THOMAS
TREASURER:
ENTERPRISE LEGAL SERVICES COUNSEL,
MR. REX R. ROGERS LIBERTY MUTUAL INSURANCE
IMMEDIATE PAST CHAIR:
MR. JEFFREY J. WALKER
MS. JANE MALLOR MCBRIDE VICE PRESIDENT, ASSOCIATE GENERAL
PRINCIPALAND GENERAL COUNSEL, OPTIMUS COUNSELAND CORPORATE SECRETARY,
LEGAL MANAGEMENTAND CONSULTING ENERGY FUTURE HOLDINGS CORP.
COUNCIL MEMBERS
ADVISOR MEMBERS:
MS. PAT E. ALLISON MR. EUGENE L. RICCETTI
ALLISON & SHOEMAKER, LLP
MR. VAL D. RICKS
MR. AARON G. CARLSON PROFESSOROF LAW,
ASSOCIATE GENERAL COUNSELAND SOUTH TEXAS COLLEGEOF LAW
ASSISTANT SECRETARY,
NOBLE ENERGY INC. STATE BAR BOARD ADVISOR
MR. THOMAS MARK KELLEY
MS. ALICE REYLA L. GINSBURGH
ASSISTANT GENERAL COUNSEL,
STATE BAR ALTERNATIVE
KINDER MORGAN, INC.
BOARD ADVISOR
MR. ELISEO RUIZ III
Complete contact information for Corporate Counsel Section Officers, Council
Members, and Advisors is available at www.texascorporatecounsel.com under
the heading “Leadership.”
iv
CORPORATE
COUNSEL
REVIEW
ARTICLES
1 Social Media Accounts and
Ownership Rights .......................David A. Bell
27 Achieving a Sensible Definition
of “Gross Sales” ..................... Michael K. Kuhn
35 Confidentiality Agreements:
How to Draft Them and
What They Restrict ....................Byron F. Egan
83 State and Federal Statutes Affecting
Real Estate that Are Not in the
Property Code ...................... Richard Melamed
CASENOTES
v
vi
Social Media Accounts and Ownership Rights
By David A. Bell*
I. INTRODUCTION ............................... 1
II. SOCIAL MEDIA USE........................... 2
A. Definition and History of Social Media ...... 2
B. Social Media Marketing ..................... 3
III. PROPERTY RIGHTS IN SOCIAL MEDIA
ACCOUNTS AND FOLLOWERS ............... 5
A. Confidential Information and Trade Secrets. 5
1. Eagle v. Morgan......................... 6
2. PhoneDog, LLC v. Kravitz............... 8
3. Christou v. Beatport, LLC............... 10
4. Sasqua Group, Inc. v. Courtney ......... 11
5. Maremont v. Susan Fredman Design
Group, Ltd............................... 12
6. Ardis Health, LLC v. Nankivell ......... 13
7. Takeaways from Ownership Cases
Involving Employee Disputes............ 14
B. Trademarks, Copyrights, and Right of
Publicity .................................... 15
1. Trademarks as Usernames .............. 15
2. Copyrighted Material in Social Media
Accounts................................. 19
3. Fair Use and Other Defenses to
Trademark and Copyright Claims ....... 20
4. Right of Publicity........................ 22
IV. RECOMMENDATIONS ......................... 23
I. INTRODUCTION
To protect their assets, companies and former employees
have sued one another to dispute social media accounts, raising
interesting questions including:
• Who owns business-related social media accounts?
• Can a follower list constitute a trade secret?
* David A. Bell is a partner at Haynes and Boone, LLP, practicing in
Dallas.
2 Corporate Counsel Review
• Can an employer access and post to an account having a
business purpose?
II. SOCIAL MEDIA USE
The immense popularity of social media has made it both
an influential tool and a desirable platform for companies to
leverage for many purposes, including marketing and retail en-
gagement. Social media accounts supplement, and in some
cases have dwarfed or entirely replaced, company websites.
A. Definition and History of Social Media
Merriam-Webster defines social media rather succinctly:
forms of electronic communication (as web sites for social
networking and microblogging) through which users create on-
line communities to share information, ideas, personal
messages, and other contents (as videos).1
Social media is often viewed as a relatively new phenome-
non. Yet, the initial online social community arose in the late
1970s, when two computer hobbyists created a bulletin board
system to inform friends about meetings, post announcements,
and share other information.2 The 1990s saw the rise of GeoCi-
ties and SixDegrees.com.3
At the turn of the century, social media truly took off. In
2002, Friendster launched and almost immediately grew to
three million users.4 Myspace and LinkedIn launched in 2003,
followed by Facebook in 2004, and Twitter in 2006.
The year 2012 was dubbed “the rise of the visual web,” as
Pinterest, Tumblr, and Instagram each gained more than ten
million users that year.5
1. MERRIAM-WEBSTER ONLINE DICTIONARY (2013), http://www.merriam-
webster.com/dictionary/social%20media.
2. Dr. Anthony Curtis, The Brief History of Social Media, UNIVERSITY OF
NORTH CAROLINA AT PEMBROKE (2013), http://www.uncp.edu/home/
acurtis/NewMedia/SocialMedia/SocialMediaHistory.html.
3. Posting of Shea Bennett, TWITTER (Feb. 17, 2012), http://www.media
bistro.com/alltwitter/social-media-history_b18776; see also Posting of
Jolie O’Dell, MASHABLE (Jan. 24, 2011), http://mashable.com/2011/01/24/
the-history-of-social-media-infographic/.
4. Posting of Jolie O’Dell, MASHABLE (Jan. 24, 2011), http://mashable.com/
2011/01/24/the-history-of-social-media-infographic/.
5. Andrew Lipsman et. al., U.S. Digital Future in Focus 2013: Key Insights
from 2012 and What They Mean for the Coming Year, COMSCORE (Feb.
2013), available at http://www.comscore.com/Insights/Presentations
_and_Whitepapers/2013/2013_US_Digital_Future_in_Focus.
Social Media Accounts and Ownership Rights 3
Other popular social media sites among U.S. residents in-
clude YouTube, Google Plus, eBay, Craigslist, and Flickr.
B. Social Media Marketing
One study in December 2012 noted that sixty-seven percent
of internet users in the U.S. used social media.6 The amount of
time spent on social media also is remarkable. Another study in
December 2012 reported that more than ten percent of time
spent online, and three of every four minutes spent on a social
media site, was spent on Facebook alone.7
Because potential customers are on social media, so are
savvy businesses. Most sizeable companies have their own
Facebook, LinkedIn, YouTube, and/or Twitter accounts. Partici-
pating in social media allows companies to connect to, and in-
teract directly with, current and prospective customers, obtain
instantaneous feedback, and promote new products and
services.
As of 2012, forty-eight percent of all Fortune Global 100
companies had Google Plus accounts, and twenty-five percent
were on Pinterest.8
The amount of traffic to a company’s social media site
sometimes exceeds – and even far exceeds – the traffic to a com-
pany’s standalone website. For example, www.skittles.com at-
tracted 23,000 U.S. unique visitors, while www.facebook.com/
skittles attracted almost fifteen times that number (320,000) in
March 2012.9
Some businesses’ social media accounts have followers in
the millions. Facebook accounts for the Nike and Adidas
6. Maeve Duggan and Joanna Brenner, The Demographics of Social Media
Users—2012, PEW INTERNET & AMERICAN LIFE PROJECT (Feb. 14, 2013),
http://pewinternet.org/Reports/2013/Social-media-users.aspx.
7. Mike Shaw, The State of Social Media, COMSCORE REPORT (Feb. 2012),
available at http://www.slideshare.net/karanbhujbal/the-state-of-social-
media2012-comscore-report;see also Lipsman et. al., supranote 5, at 13.
8. Sonya Strnad & Cynthia G. Burnside, E-discovery in the Age of Social
Media, 2012 A.B.A. Litig. Sec. Annual conference, at 4 (noting a previ-
ous study indicating that seventy-one percent of companies use
Facebook, fifty-nine percent use Twitter, and thirty-three percent use
YouTube).
9. Lipsman et al., supra note 5.
4 Corporate Counsel Review
brands boast more than sixteen million fans apiece as of April
2014.10
Retail and marketing activities have penetrated the social
media experience. Companies use social media to advertise, ei-
ther through traditional display advertisements or with brand
pages. Facebook and Twitter allow users to buy items through
their platforms, either by clicking on a “Buy Ticket” button on a
Facebook Event page, or by tweeting a special hashtag on
Twitter.11
In 2012, one in every eight online ads was “socially ena-
bled.” That is, those ads requested people to like or follow
brands on social networking sites.12
Businesses acknowledge that investments in social media
marketing will only increase.13 This is understandable as com-
panies clearly perceive social media as a beneficial way to ad-
vertise their brands, increase their web presence, enhance their
relationships with customers and clients, and acquire informa-
tion regarding customer preferences, among other things.
Research supports the hypothesis that social media adver-
tising efforts pay off. A 2011 study found that the purchasing
decisions of approximately thirty-eight million people are influ-
enced by social media.14 Additionally, seventy-seven percent of
business-to-consumer companies and forty-three percent of bus-
iness-to-business companies have reported acquiring customers
from Facebook.15
10. ADIDAS OFFICIAL FACEBOOK PAGE, https://www.facebook.com/adidas?
ref=br_tf (last visited Apr. 13, 2014); NIKE OFFICIAL FACEBOOK PAGE,
https://www.facebook.com/nike (last visited Apr. 13, 2014).
11. Posting of KS Sandhya Iyer, NDTV GADGETS (Feb. 12, 2013), http://
gadgets.ndtv.com/social-networking/news/facebook-testing-buy-tickets-
button-for-events-329810;see also Posting of Bridget Carey, CNET (Feb.
12, 2013), http://news.cnet.com/8301-33692_3-57569038-305/shop-on-
twitter-with-a-hashtag/.
12. Lipsman et. al, supra note 5, at 21.
13. Posting, SALESFORCE MARKETING CLOUD (Oct. 4, 2011), http://www.
buddymedia.com/newsroom/2011/10/booz-company-and-buddy-media-
research-highlights-capabilities-key-to-capturing-value-from-social-
media/.
14. Social Media Statistics: By-the Numbers, BANKING.COM (July 5, 2011),
http://www.banking2020.com/2011/07/05/social-media-statistics-by-the-
numbers-july-2011/.
15. Posting of Brian Honigman, HUFFPOST (Nov. 29, 2012), http://www.
huffingtonpost.com/brian-honigman/100-fascinating-social-me_b_21852
81.html.