INTELLECTUAL PROPERTY l Issue No. 09 l Social media promotes battle over contacts April 2015 For more than 600 years Courts have recognised that (in certain circumstances) former employees may be restrained from competing with a former employer and/or from using the employer’s confidential information. However, that issue is taking on a new complexion in the digital age and in the context of the development or widespread use of social media by business. Restraints have always been read strictly as it is accepted, as a matter of public policy, that a person should generally be entitled to earn a living. That interest is balanced against the employer’s ability to protect their own legitimate business interests. In Dyer’s case (heard in 1414), the question was whether a former employee should be restrained from offering his services (as a dyer) in the same town for a period of six months, which was refused due to lack of consideration from the former employer. In far different times, in considering whether a restraint was reasonable, Lord Macclesfield queried “what does it signify to a tradesman in London what another does in Newcastle?” (Mitchell v Reynolds – heard in 1711). In the 21st century, the law is faced with an online economy, global markets, social media and digital products, all of which provide new challenges in answering those same questions. One example of the problem manifests through the development of tools such as LinkedIn, which is now commonly accepted as a mechanism for online networking for most businesses. Of course, LinkedIn has a number of features which include allowing users to network with others, to encourage introduction through shared contacts, to post material/information which may be shared with contacts and to keep contacts informed of career development, milestones and movements. Employees are generally encouraged to develop and maintain contacts, sometimes as part of their role. Mullins Lawyers l eNews Publications l Page 1 In some cases, this has led to a turf war between a former employee and employer as to who in fact “owns” the contacts and as to what degree of interaction a former employee should be entitled to maintain with those contacts after leaving their employment. For example, in Naiman Clarke v Tuccia, the New South Wales Supreme Court was asked to consider the position of a recruiter who had set out to connect with people on the employer’s candidate list before leaving to work for a competitor. In another example, in the US (Cellular Accessories v Oakes), a sales manager was encouraged to network and generate contacts, including via LinkedIn, as part of his role. One issue which the court flagged in that case was whether the contacts were public or private and, if the latter, whether they could be considered to be a trade secret. Of course, the answer to the question is not one size fits all. However, it highlights the need for companies who use social media in the promotion of their business (and individuals who do so as part of their role) to consider those matters carefully and to be aware of any further developments or changes in the use of available technology. Parties may also need to consider employment agreements, social media policies and the intellectual property rights provisions which are set out in those documents. Andrew Nicholson Partner Mullins Lawyers t +61 7 3224 0261 [email protected]
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