February 20, 2024

When the Test is a Fail

The Second Circuit recently issued a(nother) decision in the dispute between bridalwear designer Hayley Paige Gutman and her former employer, JLM Couture, Inc. over ownership of Instagram and Pinterest accounts Gutman created while employed by JLM. You can find background on this case here. 

The Second Circuit reversed the District Court’s 2022 decision, which held JLM owned the accounts. More notably, the Second Circuit rejected the lower court’s six factor test considering how the account describes itself; whether the account was promoted on the employer entity’s advertisements or publicity materials and linked to other internet platforms of the entity; whether it promoted the business; and whether employees of the entity (other than the account creator) had access to and managed the account. 

In reversing the lower court, the Second Circuit held social media accounts “should be treated in the first instance like any other form of property,” and, in figuring out who currently owns one, courts should look to who owned it when it was created and whether there is any evidence the account was ever transferred to someone else. “[T]he law has long accommodated new technologies within existing legal frameworks,” the Circuit wrote. Translation: “Enough with the new tests already. We have plenty.” 

Overall, the Second Circuit’s conclusion lines up with what I suggested in a New York Law Journal article last month: Who Owns a Social Media Account? It’s Pretty Simple, Really. The article is paywalled, but the gist is this: Courts should stop coming up with new tests to determine whether a social media account belongs to a business or an individual associated with the business and, instead, look to existing and well-established legal frameworks to determine ownership. 

Hopefully, this is what will happen when the District Court takes up Gutman’s case again. Here, the Second Circuit sent the case back to the lower court with a note that the ownership of the social accounts may turn, at least in part, on the terms of service of the relevant social media platforms and, specifically, does “ownership” of a social media account include the right to transfer the account to another. The Second Circuit also suggested that the District Court might want to separate the ownership of content posted on the accounts from the ownership of the accounts themselves, noting that rights to the accounts and rights to the accounts’ content may or may not be the same.   

And on it goes. I’ll be paying particular attention to what the District Court says about the role of the terms of service for social media accounts. As we all know, social media companies change their terms of service — a lot. Does this approach give an outsized role to the terms of service even though the litigants in cases over ownership of social media accounts have no input into the terms of those agreements? Second, how will courts factor in changes to terms of service that parties may or may not be aware of, particularly as at least one of the parties to a dispute over ownership of a social media account probably never agreed to the terms of service? I suspect these issues will mean the District Court downplays the significance of the terms of service and instead looks at doctrines governing the ownership of other intangible property. Because tests that are well established… tend not to fail.