Legal Marketing

Who Owns Your Firms Online Assets?

Who Owns Your Firms Online Assets?

Ownership of Digital Assets: The Battle for Social Media AccountsWho Owns Your Firms Online Assets?

In an intriguing verdict on June 16, 2023, the Southern District of Florida Bankruptcy Court delineated an innovative framework to decide ownership rights pertaining to corporate social media accounts. The crux of this legal battle was between Vital Pharmaceuticals, a firm involved in manufacturing and retailing the energy drink “Bang,” and its erstwhile CEO.

With its training series BeThe20, Local Legal Marketing emphasizes the significance of viewing all internet activities, including social media interactions, as building a digital asset. The recent court case offers a pertinent example of disputes that can arise around the ownership of such digital assets.

The recent court ruling aligns remarkably with the guiding principles that Local Legal Marketing espouses in our Digital Marketing Training. Our course emphasizes the critical importance of mastering the fundamental elements before exploring more advanced marketing strategies. Establishing a strong base for a marketing platform can significantly magnify the return on investment for all subsequent online marketing initiatives. In our BeThe20 training series, we initiate our first lesson by encouraging the participants to view every online activity, not as a mere task, but as an opportunity to construct a valuable digital asset. The recent judicial determination, which regards social media accounts as digital assets, robustly affirms our stand, strengthening the foundational principles of our BeThe20.com law office training program.

The Controversy over Ownership

Vital Pharmaceuticals had engaged in a struggle over three social media accounts utilized for marketing their products. The accounts in question were:

* an Instagram account – @bangenergy.ceo;
* a TikTok account – @bangenergy.ceo; and
* a Twitter account – @BangEnergyCEO.

The dispute was initiated by John H. “Jack” Owoc, Vital’s former CEO, who claimed ownership over these accounts. Six months prior to the dispute, Vital and its subsidiaries had filed for Chapter 11 bankruptcy. This led to the dismissal of Owoc by Vital’s board of directors. In their attempts to sell their business, which also comprised over 50 social media accounts, Vital encountered resistance from Owoc, who refused to surrender the passwords for the three disputed CEO-tagged accounts, maintaining that they were his personal accounts.

The Court Case

In response to Owoc’s claims, Vital filed a lawsuit against him, seeking a declaration that the rights to the CEO accounts were the property of the estate and a turnover of the CEO accounts. The crux of Vital’s argument was that the accounts were indisputably meant to generate revenue for the company, a fact evidenced by the inclusion of Vital’s brand name “bangenergy” in each of the account names.

Owoc, on the other hand, contended that the CEO accounts were utilized to cultivate his persona and functioned as his personal accounts, demonstrated by numerous posts commemorating personal milestones and events.

The Court’s Verdict

The court recognized Vital as the rightful owner of the accounts. In doing so, it established a three-pronged framework for determining the ownership of social media accounts:

1. Documented Property Interest: The presence of an agreement providing evidence of a property interest in the account sets up a presumption of ownership.
2. Control Over Access: Exclusive access evidence, and the power to prevent others from accessing the account, can rebut the presumption established by documented property interest.
3. Use: If a party can demonstrate both a documented property interest and control over access, they own the account rights. Otherwise, the usage of the account, including its name, promotion of products, and alignment with marketing strategies, become paramount in deciding ownership.

This verdict is notably different from the earlier framework established by In re CTLI, LLC, 528 B.R. 359, 367 – 74 (Bankr. S.D. Tex. 2015), which simply presumed that an account bearing the name of a company belonged to the company. The current court concluded that such a presumption is no longer valid, as many social media influencers like Owoc use a persona to market products, thereby blurring the lines between personal and business accounts.

Applying the New Framework for Digital Asset Ownership

Applying its new framework, the court ruled in favor of Vital, especially citing the “Use” factor. The court identified that the majority of the social media posts linked to the CEO accounts, approximately 75% (206 out of 284 posts), directly

or indirectly promoted Bang products. An additional 15% subtly advertised Bang products by emphasizing aspects of Mr. Owoc’s persona that closely mirrored Vital’s marketing approach. Only 10% of the posts were entirely personal, thereby leaving no genuine dispute about Vital’s ownership rights.

Key Takeaways from the Verdict

This landmark decision serves as an important reminder for social media directors, brand owners, and content creators to keep these considerations in mind:

1. Document Ownership of Accounts: It’s crucial to establish clear ownership of social media accounts. Ensure that any agreements related to property interests in any accounts are duly documented.
2. Understand Access Control: Regardless of the existence of ownership agreements, complete and exclusive control over an account might challenge those agreements. Hence, it’s important to manage usernames, passwords, and other access-related data judiciously.
3. Monitor Account Content and Usage: Keep track of the content published on your social media accounts and understand the primary purpose of their usage. The ratio of promotional content to personal content could play a crucial role in determining account ownership.

Local Legal Marketing’s Approach

While we have not specifically tracked incidences where we have been involved in a digital asset dispute, anecdotally, at least a few times every year we get involved in this type of dispute.   One example is a partner leaves a firm, under less than ideal circumstances, they originally setup the law firms social media and LinkedIn profiles, and now want to use them in their own firm.   Another example is an agency is hired for social media work, and on termination of their engagement, holds domain names, and social media accounts hostage to control future billings, or forcing a one time buy out as a “going away” present.  There are an many many more examples that we face regularly.

In line with the ethos of transparency, Local Legal Marketing always releases any social media properties created on behalf of our clients. We believe that our clients should have unfettered control over their digital assets. We do not hold our clients’ digital assets hostage. We believe that this recent court ruling underlines an important question that law firms should ask their current digital marketing provider: “Who owns the digital assets that are created by their agency?”

Contact Local Legal Marketing’s  at (727) 320-7686 to master the essentials of online digital asset management for your firm today!

FAQsWho Owns Your Firms Online Assets?

Q: What is a digital asset?

A: A digital asset is any text or media that is formatted into a binary source and includes the right to use it. This includes social media accounts, websites, and more.

Q: How can I protect my digital assets?

A: Just like any other asset, it’s crucial to keep track of your digital assets. A solid understanding of who has access to these assets, as well as clearly documented ownership, can offer protection.

Q: Why is the recent court ruling important?

A: This recent ruling is vital as it offers a new framework for determining social media account ownership, emphasizing the importance of proper documentation, control over access, and usage.

Original article credit: Hunton, Andrews Kurth.

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