This is the latest entry in a long-running legal battle between Hayley Paige Gutman, a bridalwear designer, and JLM Couture, her one-time employer. Gutman created a Pinterest account in 2011 and an Instagram account in 2012, shortly after she began working for JLM. Over time, “Promotional posts were interspersed with more personal content, in a strategy that JLM referred to as the ‘personal glimpse,’” and other JLM employees helped manage the accounts.
The last time we blogged this case, the district court had sided with JLM, initially restricting Gutman’s use of the social media accounts and then awarding control over the accounts to JLM. On appeal, the Second Circuit vacates the account transfers to JLM.
The district court decided that JLM owned the accounts using a six-factor test it created. However, the appellate court seems to invalidate that six-factor test: “Determining he ownership of social-media accounts is indeed a relatively novel exercise, but that novelty does not warrant a new six-factor test.”
Instead, the “Disputed Accounts should be treated in the first instance like any other form of property. This includes determining the original owner.” (Cite to Pierson v. Post…seriously? What does a 200+ year old fox have to say about who owns social media accounts?). Thus:
When Gutman created the Disputed Accounts, any associated property rights belonged to someone. And if she created them using her personal information and for her personal use, then those rights belonged to her, no matter how the Disputed Accounts may have been used later [cite to the Blackstone Commentaries–Judge Parks is a TAFS judge, which might explain why he’s citing very old authority]
The district court noted that Gutman’s employment contract contained a work-for-hire clause, which specified that JLM owned “any other works conceived of or developed by [Gutman] in connection with her employment with the Company involving bridal clothing, bridal accessories and related bridal or wedding items.” The appellate court says this clause isn’t relevant because the examples given before the “any other works” phrase were “designs, drawings, notes, patterns, sketches, prototypes, samples, [and] improvements to existing works” and social media accounts are qualitatively different than these examples. The court explains:
They describe steps in the process of fashion design and capture much (if not all) of the creative output that Gutman might produce in her role as a designer. Moreover, the enumerated terms are all items that JLM might conceivably sell to the public and appear to be presumptively copyrightable. The Disputed Accounts by contrast share none of these core attributes, despite featuring content that does, such as sketches and drawings of wedding dresses
The court summarizes its stance:
the analysis of social-media-account ownership begins where other property-ownership analyses usually begin—by determining the account’s original owner. The next step is to determine whether ownership ever transferred to another party. If a claimant is not the original owner and cannot locate their claim in a chain of valid transfers, they do not own the account….The district court may thus consider on remand what rights are inherent in “ownership” of the Disputed Accounts and whether they include the right to transfer or assign those accounts
All of this makes sense in the abstract. Any second-comer should have the burden to prove that asset ownership transferred. But if the WFH provision isn’t dispositive, then HOW should the lower court use to determine who owned the account initially?
Not a word on this from the appellate court. Rather than guide the district court in how it should determine initial ownership with a useful test, the appellate court instead leaves the district court to fend for itself and only provides some unhelpful musings about considerations when determining account ownership:
Consideration: the use of Gutman’s name in the account aliases doesn’t support any presumption that JLM owns the accounts, even though Gutman had licensed use of her name to JLM. The court explains that, despite the license, Gutman could use “her name for noncommercial purposes, including personal social-media accounts.”
Consideration: even if the WFH clause transferred specific posts made by Gutman, that doesn’t support an inference that she transferred ownership of the entire account. The court says: “Rights in the Disputed Accounts and rights in content posted on them—including ancillary content like direct messages, captions, profile pictures, and the like—need not be intertwined.” Could there be a scenario where the employer owns all of the individual posts and yet the employee retains account ownership? In the modern world, social media “influencers” cannot really delink their personal and professional profiles. See the Bang Energy ruling for more on this morass.
Consideration: It doesn’t matter if “an account owner permits others to assist in managing the account, or whether one or the other party holds itself out as owning it.” Why not? Turning over login credentials to coworkers seems like a pretty big clue to me. And who is identified to the public as the owner has important implications in analogous doctrines, like copyright joint ownership.
As you can see, the appellate court doesn’t offer any rigorous methodology to determine who owns these accounts. It’s just taking potshots from the gallery. Worse, these random musings, without any structure, virtually ensure that this case will show up on the Second Circuit docket yet again (these parties seem to have limitless appetite for fighting in court). If anything, the Second Circuit musings give the parties more to fight over, rather than providing enough clarity to estimate the Coase Theorem entitlement and facilitate a settlement.
I note again that a decade ago, a number of states passed laws banning employers for asking for employees’ social media login credentials–without defining when an account was the employee’s or the employer’s. A decade later, we still have no clue even how to decide who is the proper owner of the account. This reiterates how those laws put employers in the impossible position of making the ownership determination without any guidance from the courts. Fortunately, virtually everyone has ignored those laws, so they haven’t wreaked as much havoc as they suggest.
This case involves a commercial dispute, but questions about social media account ownership are pending before the Supreme Court in the context of government employee-operated accounts. Social media account ownership depends on many disparate facts and arises in many disparate contexts, so it will be impossible for the Supreme Court to resolve the issue for the government employment context, let alone also provide a clean rule for a commercial context like this dispute. Nevertheless, the Supreme Court cases cast a long shadow over future proceedings in this case.
I’d love to see an accounting of the time and money the parties have spent on this litigation. Can you imagine how much better off they both would have been if they had worked out a deal initially and then spent all of their time and money doing marketing and focusing on their customers’ needs rather than paying lawyers?
Case citation: JLM Couture, Inc. v. Gutman, 2024 WL 172609 (2d Cir. Jan. 17, 2024)
Selected Related Posts: