Ownership of Social Media Accounts – The Second Circuit Speaks

Introduction

We have previously written an OnPoint about the law concerning ownership of social media accounts in light of the explosive growth in the use of such media for commercial advertising, product development and customer engagement. We presented on this and related topics at the Federal Bar Association and MyLawCLE webinar on September 6, 2023. The Second Circuit recently weighed in with the most influential and consequential opinion on the subject to date.

The Second Circuit Ruling

There have been very few cases addressing the ownership of social media accounts and two of the earliest cases were in discord and were discussed in our previous post on this topic. See CTLI, LLC, 528 B.R. 359 (Bankr. S.D. Tex. 2015); Vital Pharmaceuticals, Inc. v. Owoc, Adv. P. No. 23-1051 (Bankr. S.D. Fla. June 16, 2023).

Recently in JLM Couture, Inc. v. Hayley Paige Gutman,¹ the Second Circuit remanded a case to the Southern District of New York to determine the disputed ownership of two social media accounts.

The JLM Couture case involves a dispute between a bridal gown designer (“Gutman”) and her former employer, JLM Couture (“JLM”). The parties disagreed as to the ownership and control of two social media accounts that were created and managed by Gutman while in JLM’s employ.

On a motion to modify its preliminary injunction order, the district court held in favor of JLM, finding that Gutman created the accounts to “showcase JLM’s products” and awarded sole control of the two social-media accounts — Instagram and Pinterest— to JLM. The district court relied on Gutman’s employment contract which stated, in part, that any other work created by Gutman in connection with her employment would be exclusively owned by JLM. The district court thus concluded that JLM owned the accounts using the six-factor test applied by the Vital court.

The Second Circuit rejected the district court’s use of a special formula, noting that “[d]etermining the ownership of social-media accounts is indeed a relatively novel exercise, but that novelty does not warrant a new six-factor test.”² Instead, the Second Circuit concluded that the “Disputed Accounts should be treated in the first instance like any other form of property. This includes determining the original owner.”³

The Second Circuit instructed that ownership and control of social media accounts created during employment or in connection with one’s employment should be determined on a case-by-case basis without a pre-determined multifactor test. While acknowledging the meteoric rise in the importance and value of social media, the Second Circuit noted that historically the “law has accommodated new technologies within existing legal frameworks.”⁴ In the JLM case the existing legal framework to be applied was the law of intangible property.

Thus, the Second Circuit held that analyzing social media ownership should begin by determining the original owner and should continue with a determination of whether ownership had 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.”⁵ The Court reversed and remanded the issue for further proceedings to apply the law as set forth on appeal.

Conclusion

As we have noted in the past, those with significant social media holdings and investments should document their respective rights in social media accounts to avoid costly litigation and unanticipated results. The JLM Couture case demonstrates this point. This is particularly true given that an individual’s social media presence may often precede any significant commercial use.

Footnotes

1. 91 F.4th 91 (2d Cir. 2024).
2. Id. at 102.
3. Id.
4. Id.
5. Id. at 104.