Virginia Business Litigation Lawyer Blog

Does an employer have any sort of ownership interest in its employees' tweets or Twitter following? This very current social-media question may be tested in a lawsuit originally filed last July in federal court in California by PhoneDog, a South Carolina-based company that reviews mobile phones and services online, against former employee Noah Kravitz. An amended complaint in the case, filed on November 29, 2011, has attracted considerable media attention.

When Kravitz worked for PhoneDog as a product reviewer and video blogger from 2006 to 2010, he tweeted under the handle @PhoneDog_Noah and attracted some 17,000 followers for his comments and opinions on Twitter. When he left the company, he continued tweeting under the name @NoahKravitz. But he didn't create a new account with that name; instead, he kept the account (with all its followers) and just changed the Twitter handle to @NoahKravitz. Eight months later, PhoneDog sued Kravitz, alleging that his continued use of the account and his tweeting to his followers constitute a misappropriation of PhoneDog's trade secrets, intentional interference with prospective economic relationships, and conversion. Phone Dog said that it had suffered loss of advertising revenue as a result and that Kravitz "was unjustly enriched by obtaining the business of PhoneDog's Followers."

PhoneDog essentially claims ownership rights due to the fact that it directs its employees to maintain Twitter accounts and instructs them to tweet links to PhoneDog's website, thus increasing PhoneDog's page views and generating advertising revenue for PhoneDog. PhoneDog said in the complaint that since Kravitz now works for TechnoBuffalo, a competitor of PhoneDog, he is exploiting PhoneDog's confidential information on behalf of a competitor. PhoneDog is seeking $340,000 in damages -- $2.50 per month per Twitter follower for eight months. Although PhoneDog said in the complaint that "industry standards" peg the value of a Twitter follower at $2.50 per month, the company did not give a source for that estimate. Nor did PhoneDog attempt to distinguish between people who followed Kravitz because of his connection to PhoneDog and those followers who are merely friends of his or enjoy his commentary.

In my view, this would be a solid case if Kravitz was bound by a non-competition or non-solicitation agreement. The allegations are essentially that Kravitz took a list of 17,000 PhoneDog followers and is now soliciting business from them on behalf of a new company. Such conduct would normally violate a standard non-solicitation agreement. In the absence of a noncompete, the case is weaker but raises some interesting issues. It's not quite the same as the typical case involving theft of customer lists because, unlike in most of those cases, Twitter followers' identities are not private. Kravitz didn't need to assume control over the Twitter account in order to solicit business from those followers; doing so just made things easier for him. At a minimum, I think the intentional interference claim will stick. Kravitz should have started a new Twitter account and invited people to follow him there, not simply changed the name on the account. That's risky business.

In a dispute between two Virginia lawyers, a U.S. District Judge has rejected attorney Cynthia Smith's claim that another attorney, Timothy Purnell, interfered with her contract with a client and caused her to suffer nearly $4 million in financial losses.

Smith had been representing a Northern Virginia family, the Wieses, in a dispute with their neighbors. Eventually, the Wieses became dissatisfied with her representation and hired Purnell in her place. Smith sought her full $30,000 fee from the Wieses but ended up settling the fee dispute with them for $5,000. She and the Wieses signed a settlement agreement in 2009 that provided for a full release of all claims. Two years later, Smith sued Purnell over his role in representing the Wiese family, alleging that Purnell tortiously interfered with her right to receive the full payment from the client. She said that Purnell at one point promised her that he would ensure that she would be "paid in full" by the Wieses and that he reneged on this promise. She also claimed that she signed the settlement agreement under duress in that her "decision to trust God" led to a series of financial losses.

U.S. District Judge James Cacheris, in a December 9, 2011, ruling, rejected all of Smith's claims and dismissed the complaint. He turned down her motion for leave to amend her complaint, finding that any amendment would be futile because the facts before him did not state a cause of action. Judge Cacheris wrote that Smith's claims were barred by the release language in the settlement agreement that she signed in 2009 with the Wieses. In his ruling, the judge pointed out that the agreement extinguishes all claims that Smith might have not only with the Wieses but also with their attorneys. Judge Cacheris ruled further that Smith's financial distress at the time did not amount to legal "duress" that permitted her to avoid the provisions of the settlement agreement.

"There are no facts alleging that Defendant or the Wiese family exerted force, intimidation, or threats related to the offer to settle, and, in fact, there is evidence that they also offered to bring the dispute to mediation," the judge wrote. "That Plaintiff informed Defendant of her difficult financial position does not convert the offers to mediate and settle into coercion."

Judge Cacheris also ruled that even if it were not for the settlement agreement, Smith could have no claim against Purnell for interfering with her agreement with the Wieses. Purnell was their attorney and thus their agent, he pointed out - and Virginia law does not allow a claim for tortious interference by an agent with his principal's contract, since for this purpose the agent and the principal are one and the same entity. One cannot tortiously interfere with one's own contract. "Despite being an attorney, Plaintiff has remarkably missed the fact that the attorney-client relationship is one of agency," the judge wrote.

It's clear that dances composed by choreographers can be subject to copyright as creative works, just like paintings or photographs. It's also clear that no matter how creative a football player's evasive "spin move" can be, neither he nor his team can copyright it so as to prevent others from using it without paying royalties. What about a series of yoga poses? Where does that fit into the world of copyright? Three cases now pending in the U.S. District Court for the Central District of California involve that question, and although the issue remains very much in dispute, the U.S. Copyright Office has taken the view that yoga exercises are more like athletic activities or health regimens, which cannot be copyrighted, and less like dance routines, which can be.

In the lawsuits, Bikram's Yoga College of India, based in California, and its founder, Bikram Choudhury, have sued three yoga providers for copyright and trademark infringement, contending that they have unlawfully used the specific movements and poses of Choudhury's brand of yoga, known as Bikram Yoga. Bikram Yoga, performed for precisely 90 minutes in a room heated to 105 degrees Fahrenheit, has become quite popular in recent decades. Bikram Yoga includes 26 poses, two breathing exercises, and a carefully scripted dialogue.

Greg Gumucio is a defendant in one of the cases, along with the company he founded, New York City-based Yoga to the People. Gumucio is a former student of Choudhury. According to the complaint in that case, Choudhury "created an original work of authorship consisting of a series of instructions and commands that accompany, and correspond to, each poster of Bikram Yoga." This "original work is recited in a precise manner," according to the complaint, and the sequence of poses received protection from the U.S. Copyright Office on several occasions. Gumucio and the other yoga studio owners, Choudhury said, had infringed upon the copyrights.

Gumucio and his company replied that "Choudhury has no intellectual property rights in any method or posture," and that "the alleged 'Bikram methods' are utilitarian systems, incapable of copyright or trademark protection." Further, Gumucio replied, "there are no 'Bikram postures,' and each and every one of the yoga postures (or 'poses' or 'asanas') used in Bikram Yoga classes was developed and recorded hundreds, if not thousands, of years ago, and are in the public domain."

The defendants received very recent support from the Copyright Office. On December 9, 2011, Laura Lee Fischer, Acting Chief of the Performing Arts Division of the Copyright Office, wrote an email stating that "the Registration Program of the Copyright Office reviewed the legislative history relating to section 102(a) of the copyright law, and in conjunction with senior management, determined that exercises, including yoga exercises, do not constitute the subject matter that Congress intended to protect as choreography. Thus, we will not register such exercises (including yoga movements), whether described as exercises or as selections and ordering of movements."

This view represented an about-face from the office's previous position, which was that even if several yoga poses or exercises were in the public domain, the order in which they were to be executed could be copyrighted. Although the office's position is not binding on the U.S. District Court, it appears more likely now that yoga practitioners will be able to go ahead with their routines without fearing a copyright lawsuit.

The Virginia Supreme Court ruled on November 4, 2011, that membership in a Virginia limited liability company is comprised of two components--a control interest and a financial interest--and that only the financial interest is transferable by will when a member dies. Moreover, the court held that a devisee or assignee of a financial interest has no control interest in the limited liability company without becoming a member, just as a control interest in a partnership "cannot be bestowed on another by the unilateral act of a partner."

The financial interest involves only the right to share in the company's profits and losses and to receive distributions. It does not entail the right to participate in the management or control of the company's affairs.

In 1991, the Virginia legislature enacted the Limited Liability Company Act, creating the limited liability company as a hybrid entity, similar in some respects to a partnership and in other respects to a corporation. The statute provides that the transferability of a member's interest in an LLC should be similar to the transferability of a partner's interest in a partnership. Under the Uniform Partnership Act, the transfer of a partner's interest in a partnership entitles the transferee only to the financial rights, not the control rights.

The case arose after Admiral Dewey Monroe Jr. died in 2004. He and his wife, Lou Ann Monroe, had formed a Virginia LLC in which Dewey held an 80 percent interest and Lou Ann a 20 percent interest. The operating agreement provided that upon Dewey's death, Lou Ann would become managing member and Joseph Monroe would become the successor managing member. When Dewey died, it was discovered that his will bequeathed his entire estate to his daughter, Janet Ott. Janet asserted that this bequest transferred his membership in the company to her, including the right to control the company with the 80 percent interest. Acting on that assumption, she promptly called a meeting of the Company and proceeded to putatively remove Lou Ann and Joseph from their positions and elect herself as the Company's new managing member.

She then filed a declaratory judgment suit in Stafford County Circuit Court seeking judicial confirmation that her actions were legitimate. The court rejected her arguments, deciding that Dewey was "dissociated" from the LLC under Virginia law as soon as he died and that he had no authority to transfer the LLC control rights to her. The Virginia Supreme Court agreed with the court below, finding that Ms. Ott lacked authority to remove the LLC's managing member and successor managing member. "It was not within Dewey's power under the Agreement unilaterally to convey to Janet his control interest and make her a member of the Company upon his death because the Agreement could not confer that power on him," the court ruled.

Chanel, Inc., which like many other luxury-goods companies has been constantly plagued by counterfeiters, has taken its legal fight against unauthorized knock-offs to a whole new level. On November 14, 2011, acting at Chanel's request, U.S. District Judge Kent Dawson of the District of Nevada signed an order that not only prohibits hundreds of alleged trademark infringers from manufacturing or selling fake Chanel handbags, wallets, shoes, and the like - but also orders the defendants' domain names seized and transferred to the Web hosting company GoDaddy, which would direct them to a page describing the seizure. The temporary restraining order also orders that the counterfeiters' domain names be "de-indexed" by Google, Bing, Yahoo, and all social media websites, specifically mentioning Facebook, Twitter, and Google+.

Chanel, Inc. had filed suit against several websites for selling counterfeit versions of its merchandise. Chanel hired an investigative firm to purchase several items from three of the websites named as defendants in the lawsuit. The investigators then sent those items to a Chanel consultant who determined that the merchandise was not genuine Chanel. The consultant also examined other merchandise offered for sale on these websites and determined that none of the items offered were authentic Chanel products. The defendant websites were not authorized dealers of Chanel products and therefore were in direct violation of Chanel's trademark rights.

Chanel's trademark lawyers obtained this injunctive relief by, among other things, pointing out that counterfeiters use search engine optimization (SEO) just as legitimate companies do, and that it was necessary for the court to shut down their ability to use the Web to compete unfairly with Chanel. "Chanel does contend that it has the right to fairly compete for such search engine results space unfettered by unfair competition stemming from an illegal use of Chanel's trademarks," Chanel's lawyers wrote in the underlying motion.

But did the court even have the authority to cast such a wide net with its ruling? Facebook and Twitter, for example, have been ordered to de-index the infringing sites, but they were not even parties to the lawsuit. As the Ars Technica tech blog argues: "Missing from the ruling is any discussion of the Internet's global nature; the judge shows no awareness that the domains in question might not even be registered in this country, for instance, and his ban on search engine and social media indexing apparently extends to the entire world."

The court came down hard on the copycats and resorted to the extreme measure of attempting to have their existence scrubbed from the World Wide Web. The question now becomes whether it is the responsibility of the search engines and the social media sites to ensure that the offending websites do not show up as search results.